Sino Strategies: China's Influence & its Implications for the U.S.

Early during the week of June 17, a Philippine Navy sailor suffered “severe injuries” when, according to the country’s military, a China Coast Guard vessel blocked an Armed Forces of the Philippines resupply mission via “intentional-high speed ramming” in the Second Thomas Shoal, a reef in the South China Sea. During a regular press conference, Chinese ​Foreign Ministry Spokesperson Lin Jian responded to these claims that the “law enforcement action taken by China Coast Guard on the scene was professional and restrained,” and that the Philippines has “been trying to send construction materials and even weapons and ammunition to the grounded warship for the long-term occupation of” the Second Thomas Shoal. China’s Coast Guard spokesperson supported Lin Jian’s claims. 

Interest in the South China Sea

Tensions have been steadily rising in the South China Sea over the course of the past decade. There are several reasons for the increase in conflict in the region. 

The South China Sea is strategically significant. It connects the Indian Ocean to the Pacific and is a critical shipping channel: roughly half the world’s merchant ships pass through it. It is therefore a central component of global trade. The South China Sea is also rich in energy reserves. According to the U.S. Energy Information Administration, hydrocarbon reserves in the South China Sea amount to 11 billion barrels of oil and 190 trillion cubic feet of natural gas, the latter of which is enough to power China for nearly 30 years at current rates. The South China Sea is also a large fishing center, with up to approximately 10 percent of the world’s ocean-caught fish coming from the region. 

The South China Sea borders several countries with claims to its resources and economic interests: Brunei, Indonesia, Malaysia, the Philippines, Taiwan, Vietnam, and China. As such, cross-country disputes and territorial tensions are bound to occur. However China has been especially aggressive in the region, and in 2013, the Philippines instituted and won arbitral proceedings against the People’s Republic concerning, among other topics, the lawfulness of certain actions by China in the South China Sea. 

Prospects for Peace in the Region

As noted above, tensions in the region have not shown signs of slowing of late, and China has made no commitments to relinquish its stake or display a less aggressive stance in the region. Indeed, China maintains that, under international law, foreign militaries cannot conduct intelligence-gathering activities, such as reconnaissance flights, in its exclusive economic zone, and in recent years, satellite imagery has shown China’s increased efforts to reclaim land in the South China Sea by physically increasing the size of islands or creating new islands altogether. 

Furthermore, since Philippines President Ferdinand Marcos Jr. has taken office – and a far less reconciliatory approach to China than his predecessor, Rodrigo Duterte – Chinese Coast Guard vessels have increased harassment of Philippine missions in the South China Sea. In response, the Philippines has strengthened its partnerships with other Indo-Pacific neighbors. 

Implications for the U.S.

1. U.S. Policy Implications

U.S. foreign policymakers will likely continue to promote peace and the rules of law and international order in the region as part of the Biden Administration’s global foreign policy and regional Indo Pacific strategy. However,  the U.S. also has direct interests in promoting peace between the Philippines and China. The U.S. and Philippines have an established Mutual Defense Treaty and Bilateral Defense Guidelines, according to which “an armed attack in the Pacific, including anywhere in the South China Sea, on either of [the countries’] public vessels, aircraft, or armed forces – which includes their Coast Guards – would invoke mutual defense commitments.” Furthermore, the Philippines and other South East Asian countries would welcome increased U.S. engagement in the region.

2. U.S. Business Implications

U.S. businesses could be significantly impacted by increased tensions in the South China Sea by virtue of the volume of trade networks that run through the region. To hedge against the risk of increased conflict, American companies with supply chain nodes or trade relationships in the South China Sea may consider localizing their supply chains or broadening their potential trade routes to include regions at lower risk of geopolitical conflict. 

3. U.S. Consumer Implications

Increased security of the South China Sea benefits U.S. consumers and South East Asian consumers alike. Trade and commerce can flow more easily through the region to the rest of the world if tensions are reduced. Goods such as fish and energy resources such as oil and natural gas can be extracted and shared globally if the region is safe and economic activity in the region is fair and regulated. Increased regional security also enables increased tourism, which bolsters the local economy and enhances the livelihoods of tourists.