China’s South China Sea Militarization Has Peaked

Artificial islands are becoming more trouble than they’re worth.
BY STEVEN STASHWICK
Activists burn Chinese flags and display anti-China placards during a protest at a park in Manila on June 18, 2019. 

Following years of Russian noncompliance, the United States officially withdrew from the Intermediate-Range Nuclear Forces Treaty on Aug. 2. 

The Cold War-era arms control agreement had banned land-based missiles with ranges between 500 and 5,500 kilometers, and the next day the new U.S. defense secretary, Mark Esper, told reporters that he wanted to counter China’s massive missile inventory “sooner rather than later.” 

China responded furiously.
Ironically, the threat comes as the most conspicuous flash point between the two countries, China’s military buildup on its artificial islands in the South China Sea, appears to be reaching a peak. 

In part, this is because of limits on the bases’ military usefulness in future conflict, but the key reason is that the backlash and counterbalancing its militarization encourages from the United States and other countries threaten the islands’ usefulness as a political signal at home, something that the Communist Party may value far more than their actual military potency.
Since 2013, China has constructed more than 3,000 dredged-up acres across seven features that are now studded with long-range sensor arrays, port facilities, runways, and reinforced bunkers for fuel and weapons. 

That’s a huge military footprint, despite Chinese dictator Xi Jinping’s nominal 2015 pledge not to militarize the islands and the Foreign Ministry’s claims that these “necessary defense facilities” are provided primarily for maritime safety and natural disaster support.
But as conspicuous as the bases’ capacity to project China’s offensive power is how little of that might Beijing has actually deployed there. 

The Pentagon’s latest report on China’s military notes that no new militarization has been observed since China placed air defense and anti-ship missiles in the Spratlys last year. 

Gen. Joseph Dunford, the chairman of the U.S. Joint Chiefs of Staff, recently remarked that if China’s militarization of the islands had plateaued, it was because they had achieved the military capability China required of them. 

If that’s true, then China requires much less of those bases militarily than their apparent potential to deliver.
Despite the islands’ scale, China’s maximalist regional claims, and its aggressive coercion of regional rivals, tension between China’s political and military incentives suggest it has little more to gain from expanding its buildup in the Spratly Islands and it could even have quite a bit to lose. 

Additional overt militarization doesn’t help China exert control over the South China Sea in peacetime and may not be decisive in wartime. 

It also encourages a greater and more public U.S. military presence, undermining the islands’ political symbolism. 

It also reduces China’s room for diplomacy and de-escalation in a crisis, increasing the potential for an uncertain and potentially embarrassing clash that would risk further undermining the party’s legitimacy.
The United States can leverage those incentives to its advantage as it debates how to implement the Pentagon’s National Defense Strategy, but if it pushes back too hard, the Communist Party may feel it has to escalate to preserve its legitimacy.
China is hardly reticent in asserting its maximalist claims over the South China Sea. 

Its law enforcement and paramilitary maritime militia vessels, often operating out of those same bases in the Spratly Islands, keep up a strong campaign of harassment and coercion against coastal states with competing claims and in contravention of provisions in the United Nations Convention on the Law of the Sea and a 2016 international arbitration ruling that nullified most of China’s claims.
But compared with the expanding shadow of China’s gray-zone activity, the military presence on its Spratly bases is anemic. 

In early 2016, U.S. intelligence assessed that those bases would be capable of hosting significant force projection capabilities by the end of that year. 

Three years on from that assessment, China has yet to deploy warplanes or other long-range strike weapons that can hit land targets to the islands, though they appear more than capable of accommodating them.
One explanation is that the region’s climate simply isn’t hospitable to China’s most advanced military systems. 

Chinese state media reported in 2017 on special measures required to protect a short deployment of J-11 fighter jets to the Paracel Islands from the island’s heat and humidity. 

More recent reports claim that China’s environmental problems in the Spratlys are even more serious, with heat and humidity causing structures to crumble, mechanical equipment to fail, and even some weapon systems to break down. 

This is on top of persistent concerns about the artificial islands’ ability to withstand a major Pacific weather event—and a poor record of equipment and infrastructure maintenance in general in an often corruption-riddled People’s Liberation Army (PLA).

Peacetime assets but wartime liabilities
The islands are useful during peacetime to monitor rivals’ air and sea movements and as a base for coast guard and maritime militia operations against those countries’ fishermen and hydrocarbon exploitation. 

But increasing its overt military capability on the islands neither increases China’s practical civil control over waters crowded with rival fishermen and law enforcement vessels nor deters the presence of U.S. and other foreign warships and planes. 

And in wartime, that additional militarization may not translate to a decisive advantage over the United States anyway.

Would China's South China Sea Bases Be Wiped Out In A War?

A top naval expert gives us his take.

by Robert Farley

The islands of the SCS have some military relevance, but are more important as a political claim to waterways and undersea resources. 

Militarily, they represent a thin crust on China’s A2/AD system. 

Under certain conditions this crust could disrupt U.S. freedom of action, but it won’t be hard for the United States’ Air Force and Navy to punch through.
China has built some islands in the South China Sea. 

Can it protect them?
During World War II Japan found that control of islands offered some strategic advantages, but not enough to force the United States to reduce each island individually. 

Moreover, over time the islands became a strategic liability, as Japan struggled to keep them supplied with food, fuel and equipment. 

The islands of the SCS are conveniently located for China, but do they really represent an asset to China’s military? 

The answer is yes, but in an actual conflict the value would dwindle quickly.

The Installations
China has established numerous military installations in the South China Sea, primarily in the Spratly and Paracel Islands. 

In the Spratlys, China has built airfields at Subi, Mischief and Fiery Cross, along with potential missile, radar and helicopter infrastructure at several smaller formations. 

In the Paracels, China has established a significant military installation at Woody Island, as well as radar and helicopter facilities in several other areas. 

China continues construction across the region, meaning that it may expand its military presence in the future. 

The larger bases (Subi, Mischief, Fiery Cross and Woody Island) have infrastructure necessary for the management of military aircraft, including fighters and large patrol craft. 

These missiles, radars and aircraft extend the lethal reach of China’s military across the breadth of the South China Sea.

Missiles
Several of the islands serve as bases for SAM systems (including the HQ-9, with a range of 125 miles, and perhaps eventually the Russian S-400) and ground-launched cruise missiles (GLCMs). These missiles serve to make the South China Sea lethal for U.S. ships and aircraft that do not have stealth capabilities, or that do not enjoy a layered air-defense system. 

The SAM installations, buoyed by networks of radars, can effectively limit the ability of enemy aircraft to enter their lethal zone without significant electronic-warfare assistance. 

The GLCMs can add another set of launchers to China’s A2/AD network, although not necessarily with any greater effectiveness than missiles launched from subs, ships or aircraft.
But it is an open question how survivable the missile installations would be in a conflict. 

Land-based missiles survive air attack because they can hide among hills, forests and other natural cover. 

There is no effective natural cover on the islands that China has created, and even man-made defensive installations may not survive concerted attack. 

Moreover, missile launchers depend upon an at least somewhat robust logistical network for fuel, power and munitions, which China may not be able to reliably provide during a shooting war.

Airfields
The four largest military installations in the SCS have extensive facilities for the operation of military aircraft. 

This includes advanced fighters, but more importantly patrol, electronic-warfare and advanced early-warning aircraft. 

The ability to use these airfields effectively extends the reach of China’s A2/AD bubble, enabling the transmission of targeting data to missile launchers at sea and in mainland China. 

The fighter aircraft themselves serve to make the skies over the SCS even more lethal than they otherwise would be, as well as threaten U.S. ships at a distance with cruise missiles.
But in conflict, the durability of an airfield depends on the availability of materials and equipment to execute repairs after an attack. 

It is not obvious that the islands China has created in the South China Sea will be robust enough to continue in operation after U.S. missile and bomb attacks. 

Although the larger islands have aircraft shelters, it is an open question whether these shelters could long survive a concerted U.S. attack.

Radars
SAMs, GLCMs and combat aircraft depend on accurate targeting data for effectiveness. 

The most important contribution that the SCS islands may offer to the Chinese military is through the radar installations that China has established on many of the islands. 

These installations, while individually vulnerable, help to provide a much fuller picture of the battle space than China would otherwise enjoy. 

Together, they significantly enhance the lethality of China’s defensive networks.
That said, the radars themselves are vulnerable to a wide array of U.S. attacks. 

These include kinetic methods such as missiles (launched from submarines, stealth aircraft or other platforms), electronic warfare, cyberattacks and even special-forces raids. 

In a conflict, China could quickly lose access to the radar network that it has established. 

Still, the network offers a relatively low-cost way of complicating the job that the U.S. military faces in penetrating the SCS.

Logistics
All the military capabilities of China’s SCS islands depend upon secure communications with mainland China. 

Most of the islands constructed by China cannot support extensive logistics stockpiles, or keep those stockpiles safe from attack. 

In a shooting war, the need to keep the islands supplied with fuel, equipment and munitions would quickly become a liability for presumably hard-stretched Chinese transport assets. 

Assuming that the PLAN and PLAAF would have little interest in pursuing risky, expensive efforts at resupplying islands under fire, the military value of the islands of the SCS would be a wasting asset during a conflict. 

Unfortunately for China, the very nature of island warfare, and the nature of the specific formations that China has determined to support, make it difficult to keep installations in service in anything but the very short term.

Ships vs. Forts
As Lord Horatio Nelson may have quipped, “a ship’s a fool to fight a fort.” 

But there are situations in which ships have a major advantage over forts. 

China’s islands in the SCS are not mobile, and are not large enough to hide much in the way of military equipment and material. 

The United States will be able to meticulously map the military installations on each of the islands in the SCS, and will probably be able to track shipments of military equipment to the islands. 

This will make the islands extremely vulnerable to attack from ships, subs and aircraft, as missiles will not require real-time targeting data.
One positive step for the United States would be to reverse the decision to “retire in place” the Advanced Gun System on the Zumwalt-class destroyer. 

Making available a munition for this gun would enable the Zumwalts to strike Chinese island installations at range, potentially causing serious, practically irreparable damage at a relatively low cost. 

Otherwise, the islands will suck up cruise missiles that might effectively be used on more juicy targets.
The islands of the SCS have some military relevance, but are more important as a political claim to waterways and undersea resources. 

Militarily, they represent a thin crust on China’s A2/AD system. 

Under certain conditions this crust could disrupt U.S. freedom of action, but it won’t be hard for the United States’ Air Force and Navy to punch through.

Chinese Aggressions

Pompeo promises intervention if Philippines is attacked by China
By Regine Cabato and Shibani Mahtani

Philippines Foreign Secretary Teodoro Locsin, left, shakes hands with visiting Secretary of State Mike Pompeo after their joint news conference in Manila on March 1. 

MANILA — Secretary of State Mike Pompeo said Friday that any attack on Philippine aircraft or ships in the South China Sea will trigger a response from the United States under a mutual defense treaty between the two countries, a firm assurance to its longtime ally amid rising Chinese militarization in the contested waters.
“China’s island building and military activities in the South China Sea threaten [Philippine] sovereignty, security and therefore economic livelihood, as well as that of the United States,” said Pompeo, speaking at a joint news conference in Manila, where he landed last night after the conclusion of the Hanoi summit between President Trump and North Korean leader Kim Jong Un.
“As the South China Sea is part of the Pacific, any armed attack on Philippine forces, aircraft or public vessels in the South China Sea will trigger mutual defense obligations under Article 4 of our mutual defense treaty,” Pompeo added.
The article spells out that the Philippines and the United States would come to each other’s defense if either is attacked, as such an attack on either party would “be dangerous to its own peace and safety.”
Pompeo’s comments seek to reassure the Southeast Asian country at a time when China is increasingly building military outposts on artificial islands it has claimed for its own in the contested waters. 

China claims it has "historic" rights to the South China Sea, a crucial waterway where one-third of global trade flows, but its claims overlap with that of several nations in the region, including Vietnam and the Philippines.
Pompeo’s visit also comes at a time when the long-standing alliance between the Philippines and the United States is being questioned by some skeptics inside the administration of Rodrigo Duterte, who has been courting investment from and closer ties with China. 

Last November, Xi Jinping visited Manila, the first Chinese leader to make a state visit there in over a decade.
Pompeo, who is making his first trip to Manila as secretary of state, met with Duterte as well as Philippine Foreign Secretary Teddy Locsin.
A pro-China camp in the administration “is using the argument that China is a geographical reality, whereas America is a geopolitical anomaly,” said Richard Heydarian, a Manila-based defense and security analyst. 

“People asking: Do we really need America? That’s so Cold War.”
Philippine Defense Secretary Delfin Lorenzana has called for a review of the 1951 Mutual Defense Treaty between Washington and Manila, the agreement that guarantees a U.S. military response if the Philippines is to be attacked. 

The Philippine defense establishment has long argued that the language of the document is too vague, especially as China gets more aggressive in the waters off the Philippine archipelago.
A report earlier this month from the Asia Maritime Transparency Initiative (AMTI), run by the Center for Strategic and International Studies, found that China had sent a large fleet of almost 100 ships to stop construction work by the Philippines on an island in the Spratly chain.
After Pompeo’s assurances that the South China Sea is covered in the mutual defense agreement, the “impetus will be on Manila to decide whether that’s good enough,” said Greg Poling, director of the AMTI.
Speaking at their joint news conference Friday, Locsin said the review of the mutual defense treaty was something that “requires further thought,” indicating that he believed Pompeo’s comments were a sufficient guarantee.
“We are very assured, we’re very confident, that the United States has — in the words of Trump to our president: We have your back,” he said.
Speaking to reporters as he flew from Manila and Hanoi, Pompeo said he was “absolutely” concerned about Chinese influence in the Philippines and more broadly across the region. 

In his Friday statement, he warned his counterparts about Chinese state-backed companies — who have promised billions of dollars in big-ticket infrastructure and investment in the Philippines under Duterte.
“American companies . . . operate with the highest standards of transparency, and adherence to the rule of law,” said Pompeo. 

“The same cannot be said for Chinese state-run or state-backed enterprises.”

Chinese expansionism

Vietnam Dares What Philippines Didn't
By Panos Mourdoukoutas

In the South China Sea disputes, Vietnam dares to do what the Philippines didn’t: challenge China’s mission to turn the vast waterway into its own sea.
That’s according to a recent Reuters report, which claims that Vietnam is pushing for a pact that will outlaw many of China’s ongoing activities in the South China Sea. 

Like the building of artificial islands, blockades and offensive weaponry such as missile deployments; and the Air Defence Identification Zone—a conduct code China initiated back in 2013.
This isn’t the first time Hanoi is challenging China’s claims in the South China Sea. 

Back in July of 2017, Vietnam granted Indian oil firm ONGC Videsh a two-year extension to explore oil block 128, according to another Reuters report.
And that’s something Beijing loudly opposed.
In recent years, China has considered the South China Sea its own. 

All of it, including the artificial islands Beijing has been building in disputed waters, and the economic resources that are hidden below the vast sea area. 

And it is determined to use its old and new naval powers to make sure that no other country reaches for these resources without its permission.
Philippines President Rodrigo Duterte understands Beijing’s determination very well. 

Back in April of 2018 he reversed his earlier decision to raise the Philippine flag in disputed islands, following Beijing’s “friendly” advice.
A year before that incident, the Philippines and its close ally, the U.S., won an international arbitration ruling that China has no historic title over the waters of the South China Sea. 

Yet Duterte didn’t dare enforce it. 

Instead, he sided with Beijing on the dispute, and sought a “divorce” from the U.S.
Duterte’s flip-flops saved peace in the South China Sea by changing the rules of the game for China and the US, at least according to his own wisdom.
That doesn’t seem to be the case with Vietnam– which also claims parts of the waterway.
And it has a strong ally on its side: the US, which has been trying to enforce the freedom of navigation in the South China Sea, and save peace, too!
So far, financial markets in the region do not seem that concerned, at least for now. 

Instead, they have been focusing on the economic fundamentals rather than the geopolitics of the region; and on the rising interest rates in the US.

China, Vietnam, and Philippines Shares

But things may change in the future, as an escalation of South China Sea disputes could add to investor anxieties fueled by the US-China trade war.

In South China Sea, a display of U.S. Navy strength — and a message to Beijing

By Shibani Mahtani

A U.S. Navy plane is seen at the hanger below the deck of the U.S.S. Ronald Reagan, where dozens of fight jets, helicopters and other aircraft are stored and maintained. 

ABOARD THE USS RONALD REAGAN — As fighter jets roared off the flight deck and darted above the South China Sea, visitors onboard the carrier USS Ronald Reagan raised their phones for the inevitable selfies.
Among those clicking souvenir images was a lieutenant general from the Chinese People’s Liberation Army, who was part of a VIP guest list as the carrier moved through contested waters.
The carrier — which docked last week in Hong Kong in a good-faith gesture from Beijing — also offered a snapshot into challenges for the Pentagon in the Asia-Pacific region as China builds up its own naval prowess and ramps up efforts to solidify territorial demands.
The United States seeks to keep its place as the dominant naval power across East Asia, where Washington and its allies believe Beijing is trying to reorder international rules and military alliances in place since World War II.
But Washington also has to contend with China’s fast-growing military reach. 

That includes investments to its navy and missile systems to directly counter American military might.
Few places display Beijing’s ambitions more clearly than in the South China Sea.

China has built a number of artificial structures and begun to militarize them. 

Western military analysts say China is able to position missiles that could destroy American aircraft carriers and other warships.
China claims it has historic rights to these waters, a crucial waterway where one third of global trade flows.
The United States and its allies, meanwhile, view the South China Sea as a vital international maritime corridor. 

Nations bordering the sea, including the Philippines, look to the U.S. Navy to help defend their access.
The United States has historical alliances in the Pacific that offer some advantage. 

But the Belt and Road Initiative — a grand plan of investment and construction across Asia and beyond — is widely seen as a way to chip away at the U.S. bonds in the region by trading economic favors for influence.
Trade issues are expected to dominate planned talks later this week between President Trump and Chinese dictator Xi Jinping on the sidelines of a summit of Group of 20 industrialized nations in Buenos Aires this week.
But military concerns, including China’s expansion into the South China Sea, have raised alarm in Washington. 

Speaking at a regional summit in Singapore this month, Vice President Pence said these seas do not “belong to any one nation” and reaffirmed American military commitment to the region — but analysts say this is getting harder to do as China builds up its own arsenal.
“There’s a need for the U.S. to recognize that China’s growing diversity and range of missiles is going to complicate anything we seek to do in any contingency, be it in the South China Sea, or with Taiwan or North Korea,” said Derek Grossman, a senior defense analyst who specializes in the Indo-Pacific region at the Rand Corp.
A recent Rand study found the Chinese navy during the past two decades caught up to the United States by modernizing “extraordinarily quickly by any reasonable historical standard.”
“In basically every category, China has narrowed the gap [with the United States] significantly,” Grossman added.
A bipartisan committee created by Congress also concluded in a report that the United States has lost its military edge and could lose in a potential war with Russia or China.
In a speech Nov. 17, Adm. Phil Davidson, commander of the U.S. Indo-Pacific Command, identified China as the greatest challenge to the “long-term stability” of the region. 

He referred to Beijing’s infrastructure building across Asia as “insidious” debt-trap diplomacy and accused China of intimidating countries in the region by militarizing these seas.
China, he added, has built a “Great Wall of SAMs” — surface-to-air missiles — that has the “potential to exert national control over international waters and airspace.”
These have been built on artificial islands China constructed in the South China Sea, where the Philippines, Vietnam and others also have claims of sovereignty, backed by international law.
China has rejected a 2016 ruling by an international court that invalidates its claims to the sea. 

At the same time, Beijing has long objected to this heavy American military presence in these waters.
As the USS Reagan and another aircraft carrier were conducting drills off the coast of the Philippines last week, a spokeswoman for the Chinese Foreign Ministry said pointedly that military actions under the “pretext freedom of navigation” undermine the sovereignty of countries around the South China Sea.
Aside from land missiles, China is developing its own aircraft carriers — a move directly aimed at competing with the United States, which has 11.
But it has a long way to go.
The one Chinese aircraft carrier in service, the Liaoning, is under maintenance.
A second is conducting trials, and a third is in the pipeline.
“We have been operating aircraft carriers for an awful long time; we’re pretty good at it,” Rear Adm. Karl O. Thomas, commander of the Reagan strike group, said in an interview.
“It will take [the Chinese] some time to get there,” he added.
Collin Koh, an expert on Chinese maritime strategy at Singapore’s Nanyang Technological University, said the Chinese navy continues to face difficulty in recruiting pilots.
“The U.S. Navy carrier has been a result of decades of experience; it is a gap that China can’t necessarily bridge within a short span of time and hone it to a level comparable to the U.S.,” he said.
The Chinese navy, he adds, has had no combat experience for three decades, and technology such as its anti-ship ballistic missiles has not been tested.
The Chinese lieutenant general invited on board, Tan Benhong, the commander of the PLA garrison in Hong Kong, had an amicable exchange with his counterparts.
“We had a great meeting with them when they came onboard,” said Thomas.
“We have the opportunity to show our contemporaries how we operate our aircraft carrier.”
But just last month, a Chinese warship came within 45 yards of a U.S. destroyer as it sailed past the Chinese-claimed Spratly Islands in the South China Sea, almost causing a collision.

China Will Lose The South China Sea Game

By Panos Mourdoukoutas 

China wants to control the entire South China Sea. 

Every inch of it. 

That’s why will lose all of it, one day.
In the South China Sea game, China is one player playing against all the rest: The Philippines, Brunei, Malaysia and Vietnam. 

China is also playing against the navies of US, Japan, France, the UK, and Australia. 

These navies seek to enforce the freedom of navigation in the vast trade waterway. 

Close to $5 trillion in merchandise moves through every year.
Why is China playing against everyone else? 

For a couple of reasons. 

One of them is that the waterway is very important to its vision -- becoming the next global economic leader.
It’s the beginning of China’s maritime silk road.
“Insofar as China is concerned, its maritime silk road begins from the South China Sea,” says Vijay Eswaran, Malaysian entrepreneur and Chairman of QI Group of Companies.

“It sees itself playing a more significant role in maritime trade in the future.”
Another reason is that China sees the South China Sea as its own property. 

“China viewed the South China Sea (SCS) as its own,“ adds Vijay. 

All of it, and the resources that are hidden beneath, which China wants to exploit. 

That’s why it is building artificial islands.
And that feeds Chinese nationalism, needed to support and reinforce the political status quo.
What about the overlapping claims from neighboring countries? 

 “China does not see any of the other overlapping claims from the neighboring countries to the South China Sea as a threat,” adds Vijay.
And it uses intimidation to make sure that this won’t happen. 

When China lost a United Nations-linked tribunal international arbitration to the Philippines on the South China Sea disputes a year and a half ago, Beijing took a couple of steps to make sure that Duterte wouldn't do anything with it.
The first step was to threaten Duterte with war should he dare to enforce the ruling. 

The second step was to promise a generous investment to help the Philippines deal with its many problems.
And it worked. Duterte quickly flip-flopped, and forgot all about the ruling, as was written in previous pieces here.
More recently, China applied “Duterte's model” to intimidate Vietnam. 

Last July Vietnam announced that it will stop its oil exploration efforts, following a stark warning by Beijing that it will attack Vietnamese oil and gas bases.
Still, there are multiple navies that are prepared to challenge China’s ambitious mission. 

“It is the potential Western influence, i.e. the US, France and the UK and their navies, that are having more of an impact on Chinese policy in the region.“
Is China prepared to fend off this challenge? 

It’s hard to say.
What isn’t hard to say is that countries that play a game against all end up losing.
That’s what happened in neighboring Japan in the past, and it could happen to China in the future.
Meanwhile, investors in the financial markets of the region should closely watch any developments that will bring China closer to an open confrontation with America and its allies.

Chinese Aggressions

Using satellites to count buildings in South China Sea

By Greg Torode

HONG KONG -- Shrouded in Chinese military secrecy and hidden from the eyes of journalists, Beijing’s build-up of man-made islands on reefs deep in the maritime heart of Southeast Asia is a vexing story to report.
Reuters deputy head of graphics Simon Scarr, based in Singapore, had previously dealt with private sector satellite imagery providers but always felt more could be done within the highly competitive field.
Late last year in a conversation with Earthrise Media, an independent group helping journalists obtain and analyze satellite data, Scarr wondered if it would be possible to count buildings on China’s seven man-made islands in the Spratly archipelago of the hotly contested South China Sea.
During a six-week period, Earthrise digitally scrutinized hundreds of images dating back to 2014 when China started rapidly building up those islands. 

Reuters journalists checked the data with a range of military and academic contacts.
On a spread sheet of figures confirming extensive construction across the South China Sea, one number stood out – Subi reef was home to nearly 400 buildings, more than expected and nearly double the number on similar islands.
“It was great data to have, and it really helped us build-up the webpage, with imagery and information from other sources, too,” Scarr said.
The Subi information helped journalists in Hong Kong, Beijing and Sydney research the story that would anchor the package on the islands.
For multimedia package on the data, click tmsnrt.rs/2szwA0a
It also provided insight into Chinese intentions for military bases on islands that Beijing once described as mostly civilian. 

The buildings on Subi, along with extensive facilities on Fiery Cross and Mischief reefs, appeared to match military bases inside China and could house up to 2,400 personnel.

Chinese structures are pictured in Subi Reef at disputed South China Sea, April 21, 2017. 
Subi is the largest of China’s seven man-made outposts in the Spratlys. 

The so-called “Big Three” of Subi, Mischief and Fiery Cross reefs all share similar infrastructure – including emplacements for missiles, 3km runways, extensive storage facilities and a range of installations that can track satellites, foreign military activity and communications.
Determined to use the package to test their innovations, a Reuters RTV team headed to the Hong Kong coast to shoot footage that would be overlaid with animation to illustrate the development.
“This was one of the most elaborate things we’ve done,” said senior producer Ryan Brooks.

The Global Pariah

Canada Blocks Chinese Takeover on Security Concerns

By Alexandra Stevenson

Prime Minister Justin Trudeau and the Canadian government have blocked the sale of a construction company to a Chinese interest.
HONG KONG — Canada has blocked a $1 billion takeover of a construction company by a state-controlled Chinese company over national security concerns, a rare move by a government that until now has largely welcomed such deals despite growing skepticism over Chinese money elsewhere.
The government of Prime Minister Justin Trudeau said late on Wednesday that it stopped the deal for the Aecon Group, a construction company that helped to build the landmark CN Tower in Toronto, following a review that began earlier this year.
The deal became politically charged after members of Canada’s opposition party raised concerns about Aecon’s access to government contracts — particularly in the nuclear power industry — and the Chinese company’s ties to the Chinese state.
“As is always the case, we listened to the advice of our national security agencies throughout the multistep national security review process under the Investment Canada Act,” Navdeep Bains, the Canadian minister of innovation, said in a statement.
A spokeswoman for Aecon said the company was “aware of the government’s decision and will be issuing a response in due course.”
Chinese companies are increasingly facing hurdles as they go overseas to spread their wealth and acquire technology. 

Governments from Germany to the United States and Canada are pushing back, citing national security concerns.
These companies have faced the greatest test in the United States, where a series of deals have been blocked by the Committee on Foreign Investment in the United States, a federal body that reviews proposals by foreign-owned entities to buy American companies.
The Trump and Obama administrations have expressed concerns over Chinese investments in American companies in areas where China has made clear it wants to be a dominant player, like artificial intelligence. 

Washington officials have stymied a series of Chinese deals, including the acquisition of Lattice Semiconductor by a China-backed investors in September.
The overseas unit of the China Communications Construction Company, a publicly listed company in which the Chinese government is a majority owner, made a bid for Aecon in October in a deal that Aecon said would help it to expand overseas.
But by February of this year, the government said it wanted to review the deal by CCCI, the overseas arm of CCCC, under the Canada’s National Security Review of Investments Act. 

In Canada, any deal involving a state-owned company worth more than 398 million Canadian dollars, or about $310 million, can be subject to a review if the government believes it could be “injurious to national security.”
On Wednesday, the government said it blocked the deal that based on its findings “in order to protect national security,” without elaborating.
“Our government is open to international investment that creates jobs and increases prosperity, but not at the expense of national security,” Mr. Bains said.
The Canadian government did not give details about its decision, but one of the biggest hurdles facing the deal, according to analysts, was Aecon’s contract for Canada’s Candu nuclear reactors, which generate electric power.
Earlier this year, Canada’s Conservative Party called for a review of the deal and raised concerns about Aecon’s contracts with both the military and the nuclear industry. 

Members of Parliament also cited bribery allegations against one of CCCC’s units in Bangladesh. 

In January, the finance minister of Bangladesh said it was blacklisting China Harbour Engineering Company, a subsidiary of CCCC, after allegations arose that it tried to bribe an official.
CCCC is controlled by the Chinese state.
The giant engineering and construction firm has generated controversy in other countries, too. 

CCCC has been involved in China’s program to build artificial islands in the South China Sea, something that has become a growing source of tension between China and Western countries.
The World Bank also banned CCCC from making bids for projects for eight years until 2017 following a bid-rigging scandal in the Philippines.

Mortal Threat

China Can Beat the U.S. Without a Fight
By COURTNEY KUBE

HONOLULU — While much of the world is focused on the ballistic missile and nuclear threat from North Korea, the U.S. military in the Pacific region is also concentrating on a more lethal foe: China.
"PRC is the most pressing threat in the Pacific," one U.S. military official in the region said, using the acronym for the People's Republic of China. 

While North Korea is a near-term issue, "it's a fight we could win," the official said — but he worries about a fight with China.
Among the U.S. concerns: China's controversial island-building, theft of technology, currency manipulation, cyberattacks, and both military and non-military aggression.
The U.S. military officials in the region warn that China's ultimate goal is to become dominant by slowly making changes to the international order. 

China will use the laws it likes, ignore the ones it doesn't and eventually other nations will have to adapt, thereby re-setting the rules in China's favor.
"China is on a path to win without a fight," one official said.
The Chinese have changed the rules, for example, with their new man-made islands. 

In recent years China has transformed reefs, rocks and sandbars in the South China Sea into forward-based military installations, sparking a territorial dispute and diplomatic conflict. 

The islands are hundreds of miles from the Chinese mainland in international waters.
The Chinese have declared an air defense identification zone (ADIZ) around the islands. 

If the Chinese enforce the zone and the international community begins to adhere to it, the islands will become accepted as Chinese territory. 

"We ignore the problem too long and we can't tackle it anymore," said an official.

“China is on a path to win without a fight.”
One of the largest islands is Fiery Cross, complete with three expansive airfields, hangars for multiple fighter squadrons and several gun emplacements. 

While the Chinese military has not staged any aircraft or weapons there, the infrastructure is ready.
Man-made islands like Fiery Cross and Woody Island offer the Chinese a platform close enough to attack all U.S. operational bases in the region, as well as a number of close allies, the officials explained.
China "holds at risk a lot of operational bases," one of the officials said, which erodes the U.S. military advantage in the region.
Chinese dredging vessels are purportedly seen in the waters around Fiery Cross Reef in the disputed Spratly Islands in the South China Sea in this still image from video taken by a P-8A Poseidon surveillance aircraft provided by the United States Navy on May 21, 2015. 

Another of China's strategies is to use its military forces without actually employing any hostile action, a strategy known as hybrid warfare. 

For example, civilian fishing boats are being assigned to serve under military commanders. 

The Chinese Navy uses them to harass or hit other nation's vessels who may not realize they are dealing with another nation's military.
The Chinese have also expanded their fleet of long-range aviation assets, like the H6K bomber, in an attempt to project more power and influence in the region, the officials said. 

They frequently fly these bombers over international waters within 1,000 miles of Guam, putting the U.S. territory in range of their air-launch cruise missiles. 

"They are practicing attacks on Guam," one official said, calling the exercises "messaging" to the U.S.
Like the threat from North Korea, part of the concern from China lies in the potential for miscalculation or even misunderstanding. 

Last year Japanese military aircraft flew roughly 900 sorties in response to Chinese aircraft in the region. 

Scrambling jets every single day puts a strain on a close U.S. ally and raises tensions. 

"It's a potential flashpoint," a U.S. military official in the region said, warning that these interactions "could bubble into conflict."
Two U.S. Air Force F-22 Raptor stealth jet fighters fly near Andersen Air Force Base in Guam in this handout photo dated August 4, 2010. 

The U.S. military already has a number of forward deployed bases in the region, but in the case of conflict with China, the officials said, the U.S. would quickly establish about a dozen small, temporary Contingency Operating Bases (COBs) in remote locations. 

These outposts would be located further from the conflict to keep some assets out of range of enemy attacks. 

The military would rapidly prepare the sites to defend U.S. assets against hundreds of incoming rounds, using systems like THAAD and Patriot batteries.
The U.S. military recently practiced for this situation, rapidly deploying Air Force F-22s from a base in Alaska and setting them up at a location in the region. 

The exercise addressed the logistical issues of moving quickly to a potentially harsh new environment.
Chairman of the Joint Chiefs of Staff Gen. Joe Dunford returned from a six-day trip to the Pacific late Monday night. 

He agreed that while North Korea is the immediate threat to the U.S., China is the enduring threat.
Joint Chiefs Chairman Gen. Joseph Dunford, speaks to reporters about the Niger operation during a briefing at the Pentagon on Oct. 23, 2017. 

"China's path of capability development," said Dunford, "and their efforts I think to address our power projection capability, our ability to deploy when and where necessary to advance our interests, is very much the long-term challenge in the region."
The official said the U.S. military spends a lot of time making sure they don't forget about the long-term existential problem.
"We are ready" for North Korea, the official said. But the peer-level fight with China "is the real challenge."

Chinese Aggressions

US destroyer sails near artificial Chinese island in South China Sea
By Lucas Tomlinson

USS John S. McCain

With all eyes on North Korea, and President Trump promising "fire and fury" for Pyongyang over its nuclear and missile programs, the U.S. Navy quietly dispatched a warship to sail by one of China's artificial islands in the South China Sea on Thursday, a Navy official confirmed to Fox News.
USS John S. McCain, a guided-missile destroyer, sailed within 12 nautical miles from Mischief Reef, one of three man-made islands that contain a runway and military fortifications constructed during the past few years.
It's the third time the Pentagon has conducted a "freedom of navigation" challenging China's claims in the region since President Trump took office. 

Fox News first reported the previous incident in July.
A US Navy P-8 reconnaissance plane flew nearby to monitor Thursday's operation, according to a separate defense official. 

It did not take part in the operation
USS Dewey, another guided-missile destroyer, sailed by Mischief Reef in May.
12 nautical miles from shore marks the territorial boundary for all nations. 

Since the U.S. and international community reject China's claim to the island and the surrounding sea, the passage of a U.S. destroyer close by the island amounts to a protest of sort, known as a "freedom of navigation" operation in Pentagon argot.
China has built seven artificial islands in the region in the past few years.
Reuters first reported the Thursday operation.
The warship is named after Sen. John McCain's father and grandfather, both U.S. Navy admirals. The senator visited the warship in Vietnam back in June.
The official said this latest freedom of navigation operation was planned in the past few weeks. 

They have been occurring roughly each month since May.
China has long protested these operations.
President Trump has been calling on China to do more to rein in North Korea's nuclear and ballistic missile programs, but with little success.
The Trump administration did manage to get China and Russia's support for a unanimous 15-0 UN Security Council resolution last weekend which aimed to take a billion dollars in exports away from the rogue communist regime.

Sina Delenda Est

Australia, Japan And U.S.: The South China Sea Isn't China's Own Sea
By Panos Mourdoukoutas

Australia, Japan and the U.S. have a clear and loud message for China: The South China Sea isn't China's own sea. 

It's an international sea. 

That’s why the Association of South East Asian Nations (ASEAN) and Beijing must establish a set of rules that were "legally binding, meaningful, effective, and consistent with international law."
The message, which came at a recent gathering of the foreign ministers of the three countries in Manila, echoes a similar message America and its naval allies, France, Japan and Britain sent to Beijing six months ago stating that the South China Sea should be open to all military vessels.
That’s according to a recent Chinatopix.com report. 

"Japan and the United States are worried by China's efforts to exercise unilateral control over the South China Sea, a concern shared by France, which controls several Pacific islands, including New Caledonia and French Polynesia."
Financial markets in the region do not seem that concerned, at least for now, focusing on the economic fundamentals rather than the geopolitics of the region.
Meanwhile, Philippines President Rodrigo Duterte called himself a “humble” friend of America in Southeast Asia, suggesting that he is getting ready for another in a series of flip-flops in the South China Sea dispute.
China considers the waterway its own sea, and is building artificial islands, defying international tribunal rulings, though Rodrigo Duterte isn't prepared to stop Beijing -- Philippines is the country that won an international tribunal ruling against China.
Nonetheless, the ruling fueled a wave of blunt messages and naval demonstrations between China on the one side and America’ and its close ally, Japan, on the other. 

Last August, for instance, China told Japan to stay away from its “own” South China Sea, as three China Coast Guard vessels entered Japanese waters around the disputed Senkaku Islands in the East China Sea, according to the Japan Coast Guard.
And there’s China’s warning to Japan a month earlier, when Beijing told Japan “not to send Self-Defense Forces to join U.S. operations that test the freedom of navigation in the disputed South China Sea,” according to a Japan Times editorial.
While it is still unclear whether America and its allies will manage to tame China’s South China Sea ambitions, investors should keep a close eye on the ongoing disputes in the region, as accidents can and do happen, taking financial markets for a wild ride.

Chinese Aggressions

USS Stethem Conducts Freedom of Navigation Operation Past Triton Island in South China Sea
By Sam LaGrone

USS Stethem (DDG-63) operating in the Pacific on March 22, 2017. US Navy Photo
A U.S. destroyer came within 12 nautical miles of a Chinese holding in the South China Sea, a U.S. defense official told USNI News on Sunday morning.
USS Stethem (DDG-63) passed by Triton Island in the Paracel Island chain on Sunday to test claims by not only Bejing but also Vietnam, the official confirmed to USNI News.
Since the Trump administration has begun testing excessive maritime claims in the South China Sea, Pentagon officials have repeatedly said they would not confirm reports of freedom of navigation operations outside of the yearly report that outlines the operations.
“U.S. forces operate in the Indo-Asia-Pacific region on a daily basis, including in the South China Sea. All operations are conducted in accordance with international law and demonstrate that the United States will fly, sail, and operate wherever international law allows. That is true in the South China Sea as in other places around the globe,” U.S. Pacific Fleet spokesman Lt. Cmdr. Matt Knight said in a statement to USNI News on Sunday.
“We conduct routine and regular FONOPs, as we have done in the past and will continue to do in the future. Summaries of these operations are released publicly in the annual DoD Freedom of Navigation Report, and not sooner.”
The passage was first reported Sunday morning by Fox News. 

Fox reported a Chinese warship shadowed Stethem during the transit.
While Pentagon officials are reticent to confirm details, it is likely Stethem conducted an innocent passage past Triton and tested Chinese requirement for prior notification before entering "territorial waters" and Beijing’s expansive claims around the Paracel Island chain.
“China claims illegal straight baselines that encircle the entire island group,” James Kraska, a professor of international law, oceans law and policy at the U.S. Naval War College’s Stockton Center for the Study of International Law told USNI News last year.
In October, USS Decatur (DDG-73) conducted a freedom of navigation operation that tested just the baseline. 

Vietnam also has claims to the territory which China has occupied since the 1970s.
In early 2016, USS Curtis Wilbur (DDG-54) came within 12 nautical miles of Triton Island in the Paracels — without prior notification.

CSIS Asia Maritime Transparency Initiative/DigitalGlobe Photo
“This operation challenged attempts by China to restrict navigation rights and freedoms around the features they claim by policies that require prior permission or notification of transit within territorial seas. The excessive claims regarding Triton Island are inconsistent with international law as reflected in the Law of the Sea Convention,” the Pentagon said at the time.
Stethem’s transit follows a May operation in which USS Dewey (DDG-105) passed within six nautical miles of the Chinese installation on Mischief Reef in the boldest statement the U.S. has made to date in challenging China’s claims to its artificial islands.
Without prior notification, Dewey came within six nautical miles of Mischief Reef and conducted a man-overboard drill as part of the test of Chinese claims.
While China’s militarization of its chain of artificial islands in the Spratly Islands chain closer to the Philippines have drawn the most international concern, Beijing has also been installing military equipment in its Paracel Island chain closer to Vietnam.
USNI News understands in May the Office of the Secretary of Defense presented the National Security Council a schedule for future regional FON ops to create a menu of options for the NSC to choose from when U.S. assets are in the region.

The following is the July 2, 2017 complete statement from U.S. Pacific Fleet to USNI News.
U.S. forces operate in the Indo-Asia-Pacific region on a daily basis, including in the South China Sea. 

All operations are conducted in accordance with international law and demonstrate that the United States will fly, sail, and operate wherever international law allows. 

That is true in the South China Sea as in other places around the globe.
We have a comprehensive Freedom of Navigation Operations (FONOP) program under which U.S. Forces challenge excessive maritime claims across the globe to demonstrate our commitment to uphold the rights, freedoms, and uses of the sea and airspace guaranteed to all nations under international law.
FONOPs are not about any one country, nor are they about making political statements. 

In fiscal year (FY) 2016, we conducted FONOPs challenging excessive maritime claims of 22 different coastal States, including claims of allies and partners.
We conduct routine and regular FONOPs, as we have done in the past and will continue to do in the future. 

Summaries of these operations are released publicly in the annual DoD Freedom of Navigation Report, and not sooner.

China Cancels Military Meeting With Vietnam Over Territorial Dispute

By MIKE IVES

One of the Paracel Islands in the South China Sea. A Chinese delegation unexpectedly cut short a trip to Vietnam after tempers flared during a closed-door discussion on disputed territories in the region.

HONG KONG — State-run newspapers in Vietnam and China reported in recent days that senior military officials from the two countries would hold a fence-mending gathering along a border where their militaries fought a brief but bloody war in 1979.
But Tuesday, the scheduled start of the gathering, came and went without any of the coverage in the state news media that readers in the two countries had expected. 

The Chinese Defense Ministry later said in a terse statement that it had canceled the event “for reasons related to working arrangements.”
Analysts, citing government sources, said that the Chinese delegation had unexpectedly cut short a trip to Vietnam after tempers flared during a closed-door discussion on disputed territories in the South China Sea.
The cancellation is highly unusual for the two Communist neighbors, and it comes as Beijing continues to build artificial islands in the South China Sea, where the Chinese seek to expand their military influence at a time of uncertainty over Trump’s policies in the region.

“This was not what the Vietnamese expected from a polite guest,” said Alexander L. Vuving, a Vietnam specialist at the Daniel K. Inouye Asia-Pacific Center for Security Studies in Hawaii.

“You can say both sides miscalculated,” he added. 

But another interpretation is that both countries are “very committed to showing the other their own resolve” on matters of territorial sovereignty.
The dispute happened during a visit to Hanoi this week by Gen. Fan Changlong of China. 

It was unclear what precisely roiled his meeting with Vietnamese officials, much less whether the general’s actions had been planned.
Analysts said he appeared to have been angry over Vietnam’s recent efforts to promote strategic cooperation with the United States and Japan. 

Prime Minister Nguyen Xuan Phuc recently visited those two countries in quick succession, and the Vietnamese and Japanese coast guards conducted joint drills in the South China Sea last week focused on preventing illegal fishing.
Another reason, analysts said, could be Vietnam’s apparent refusal to abandon oil and gas exploration in areas of the South China Sea that both it and Beijing claim.
Mr. Vuving said a specific source of the dispute may have been the so-called Blue Whale project, a gas-drilling venture in the South China Sea by Vietnam’s state oil company, PetroVietnam, and Exxon Mobil. 

The companies signed an agreement during a January trip to Hanoi by John Kerry, the secretary of the state at the time.
The drilling site, which is expected to produce gas for power generation by 2023, is close to the disputed Paracel Islands and near the “nine dash line” that shows expansive territorial claims on Chinese maps. 

Mr. Vuving said that China probably resents that Vietnam has formed a partnership with an American oil company, particularly one whose previous chief executive, Rex W. Tillerson, is Trump’s secretary of state.
The project appears to set a “very damaging precedent for China’s strategy in the South China Sea,” Mr. Vuving said.
The Chinese and Vietnamese Foreign Ministries did not respond to requests for comment on Wednesday, and an Exxon Mobil spokeswoman in Singapore could not be reached for comment.
Other analysts said that the source of tension may have been Vietnam’s recent decision to resume oil exploration in another disputed part of the South China Sea.
Carl Thayer, a longtime analyst of the Vietnamese military and emeritus professor at the University of New South Wales, said that if General Fan had indeed asked Vietnam to cease oil exploration in that area, Vietnam would have considered the request “inflammatory”; it would have implied Chinese territorial control in the Exclusive Economic Zone off the Vietnamese coast.
“Vietnam’s leaders would have refused this request and responded by reasserting Vietnam’s sovereignty,” Mr. Thayer said in an email to reporters and diplomats.
There were unconfirmed reports on Wednesday that China had recently deployed 40 vessels and several military transport aircraft to the area. 

Vietnam accused Chinese ships of cutting the cables of one of its seismic survey vessels there in 2011.
Though China is Vietnam’s largest trading partner and a longtime ideological ally, the neighbors have long been at odds over competing claims to rocks, islands and offshore oil and gas blocks in the South China Sea, which Vietnam calls the East Sea.
Tensions came to a head in 2014, when a state-run Chinese company towed an oil rig near the Paracel Islands and within about 120 nautical miles of Vietnam. 

No one was killed at sea, but a maritime standoff led to anti-China riots near foreign-invested factories in central and southern Vietnam, bringing relations between the countries to their lowest point in years.
A few days before General Fan’s Hanoi visit, Mr. Vuving said, China moved the same oil rig to a position in the South China Sea that is near the midway point between the Chinese and Vietnamese coasts, apparently seeking to pressure Vietnam to cease oil and gas exploration in disputed waters. 

Data from myship.com, a website affiliated with the Chinese Transport Ministry, showed that the rig has been about 70 nautical miles south of China and 120 nautical miles northeast of Vietnam over the past week.
The first fence-mending gathering, called the Vietnam-China Border Defense Friendship Exchange Program, took place in 2014 and was intended to promote bilateral trust. 

The meeting this week was expected to include a drill on fighting cross-border crime.
Xu Liping, a researcher at the Chinese Academy of Social Sciences in Beijing who specializes in Vietnam and Southeast Asia, said that the countries were expected to disagree over territorial claims in the South China Sea. 

But they have established frameworks to defuse disagreements through government channels as well as through the two countries’ Communist parties, he added.
In the end, the two countries “will come out and resolve this problem since both want stability,” Mr. Xu said.
Le Hong Hiep, a research fellow at the Iseas Yusof Ishak Institute in Singapore, agreed with that conclusion, but warned that new tensions could emerge in the short term. 

China appears increasingly eager to stop Vietnam from growing too close to Japan and the United States, he said.
“As Vietnam tries to achieve its economic growth targets, it is planning to exploit more oil from the South China Sea,” Mr. Hiep wrote in an email. 

“As such, the chance for confrontation at sea may also increase.”

Chinese Aggressions

Obstacles at Bay, Beijing Steps up Control Over Disputed South China Sea
By Ralph Jennings

A Chinese soldier waves farewell to Russian fleets as the Chinese-Russian joint naval drill concludes in Zhanjiang, Guangdong Province, China.
TAIPEI — Beijing has reached a new peak in its bid to control the widely disputed South China Sea after pacifying rivals, keeping Washington away and building out artificial islands that are ready for military hardware.
China will be able to keep three fighter-jet regiments on the same number of islets that it has constructed in the sea, according to a June 6 Pentagon report. 

China’s estimated 3,200 acres (1,294 hectares) of reclaimed land in the 3.5 million-square-kilometer sea will be used largely for military installations, a think tank forecast in March.

Joint military exercises with Russia
In another sign of tighter maritime control, Beijing’s official Xinhua News Agency said Sunday that a Chinese destroyer, frigate, supply ship and helicopter had joined Russian vessels for phase one of “complex” and “lengthy” joint military exercises that are starting in the South China Sea. 

Russia has the world’s second most powerful armed forces and China the third.
“I think there is an unspoken understanding that there’s no way China can be stopped,” said Collin Koh, maritime security research fellow at Nanyang Technological University in Singapore. 

“I think it’s a fact that China is the dominant player there other than the U.S.”

"Nine-dash line" control
China’s rise in the sea, which is claimed by five other governments, follows a year of unfettered diplomacy with those countries and a decade of landfilling some of the sea’s 500 tiny land forms to support infrastructure construction.
China will eventually decide what happens within its “nine-dash line” claim that covers more than 90 percent of the sea, said Gregory Poling, director of the Asia Maritime Transparency Initiative of American think tank Center for Strategic and International Studies. 

Beijing cites historic usage as a basis for the claim.
Brunei, Malaysia, Vietnam and the Philippines all call parts of the sea their own, overlapping the nine-dash line. 

They all value the sea for its fisheries, fossil fuel reserves and marine shipping lanes.

Total Chinese control
“I think the goal here is to extend a Chinese umbrella over the entire nine-dash line, which means effectively establishing administration over all of this area that China claims, including all these waters and air space they claim historic rights over,” Poling said.
“So that means if you’re a Southeast Asian fishermen or coast guard vessel or an oil and gas exploration vessel, you don’t operate unless the Chinese let you operate," he said.

Chinese diplomacy
The Communist leadership stepped up one-on-one dialogue with the militarily weaker Southeast Asian countries after a world arbitration court ruled in July against the legal basis for the Chinese claim. 

Beijing offers aid in exchange for muting any protest against China’s maritime military expansion, analysts say.
China offered the Philippines $24 billion in aid and investment last year. 

It has pumped Vietnam’s service sector with tourists while discussing maritime cooperation. 

Malaysia counts China as its top investor and trading partner.

US stepping back from South China Sea
Southeast Asian countries such as Vietnam and the Philippines once looked to the United States for resistance against China. 

Now Donald Trump wants China’s help on stopping North Korea’s missile and nuclear programs.
“There seems to be no intention within the U.S. government in trying to craft up some form of a South China Sea strategy,” Koh said.
Southeast Asian nations aren’t pushing for one either, said Sean King, senior vice president of New York political consultancy Park Strategies.
“There’s been no coordination among the non-Chinese claimants and the only one among them that remotely has its act together on this issue, Vietnam, surely felt abandoned after America ditched the TPP, thus questioning how truly committed we are to the region,” King said.
Trump exited the TPP, or Trans Pacific Partnership, in January, calling the 12-member trade deal bad for the United States.

Signs that US will show more interest
But U.S. officials have hinted this month they will eventually take a harder line on China's maritime expansion.
In May, the U.S. Navy sent a ship on a “freedom of navigation” operation in the South China Sea despite Beijing’s objections.
“China's claim in the South China Sea needs to be handled peacefully and through negotiations, not by island-building and placing weaponry on the resulting dry land,” Defense Secretary Jim Mattis told an Asian defense conference earlier this month as quoted by the U.S. Department of Defense website.
Southeast Asian maritime claimants are keeping options open to ask Japan, India and other countries for help as needed in keeping China away, Koh said.
But today’s “cautious” Sino-U.S. cooperation, plus the specter of a more aggressive U.S. military role in the sea, should stop China from getting aggressive toward other claimants, said Andrew Yang, secretary-general with the Chinese Council of Advanced Policy Studies think tank in Taiwan.

Chinese Aggressions

Rex Tillerson warns of potential conflict with China
by Joel Gehrke

Secretary of State Rex Tillerson told lawmakers Wednesday that he has warned Chinese counterparts that their current foreign policy will "bring us into conflict" in the Pacific.
"We have told them, ‘you are creating instability throughout the Pacific region that will bring us into conflict; please don't do that,'" Tillerson said Wednesday during a House Appropriations subcommittee hearing.
China has been building artificial islands in the South China Sea, replete with military equipment, as part of an aggressive move to assert control over some of the busiest shipping lanes in the world. 

Tillerson cited that behavior as one of the most pressing issues in the U.S.-China relationship, which he acknowledged is reaching "an inflection point" that could lead to war if managed incorrectly.
"We are at an inflection point in the U.S.-China relationship," he told lawmakers. 

"They see it; we see it. Our conversations are around how are we going to maintain stability and a relationship of no conflict between China and the United States for the next 50 years."
Tillerson offered that assessment in response to a question about how the United States could avoid falling into a foreign policy dynamic known as the Thucydides Trap. 

The term refers to the possibility of conflict between an incumbent power and a rising power; it derives from he name of the historian who chronicled the war between ancient Athens and Sparta.
"We cannot constrain their economic growth," Tillerson said. 

"We have to accommodate their economic growth. But as their economic growth then translates into spheres of influence that then begin to threaten our national security, this begins to disrupt these conditions that have allowed us to live without conflict for the last 50 years."
Some Democrat and Republican lawmakers worry that China is gaining influence over traditional allies, including in the Pacific. 

That trend was exacerbated by Trump's decision to withdraw from the Trans-Pacific Partnership, a trade agreement involving 11 Pacific Rim countries.
"[Pacific allies] were counting on TPP and they saw that as a strong message from America," Rep. Ted Yoho, R-Fla., who chairs a House Foreign Affairs subcommittee on the Asia-Pacific, told the Washington Examiner. 

"But it wasn't going to pass. The Democrats weren't going to support it, the majority of them. I wasn't going to support it, being a Republican. And they use that to say, well, we've got to go to China."
In the Phillippines, Rodrigo Duterte has talked openly about a "separation" from the United States and a realignment with China. 

And South Korea's newly-elected president suspended the deployment of a U.S. missile defense system intended to protect against North Korea's nuclear weapons and ballistic missile program. 

China opposes the deployment of that missile defense system, fearing the radar could make diminish the effectiveness of their own nuclear weapons; the communist regime used a series of retaliatory economic measures to punish South Korea for allowing part of the system to be deployed.
"Our policy is, as important as trade is, and as important as China's huge economy is, we cannot allow China to use that as a weapon," Tillerson said. 

"We cannot allow them to weaponize trade. And they are doing that today, and our message to them is, 'you will not buy your way out of these other difficult issues, like North Korea, the South China Sea, with your trade."

Five Shades of Chinese Gray-Zone Strategy

Washington should be wary about a Beijing that has taken incremental steps toward small-stick diplomacy.
By James Holmes and Toshi Yoshihara

Deterring aggression in the “gray zone” is hard.

The keeper of an existing order—an order such as freedom of the sea—finds itself conflicted. 

That’s because gray-zone aggressors deliberately refuse to breach the threshold between uneasy peace and armed conflict, justifying a martial response. 

Instead they demolish the status quo little by little and replace it with something new.
Piecemeal assaults compel the status quo’s defenders to consider unappealing options. 

They can act first and bear the blame for the outbreak of war, for taking excessive risk, for provoking the revisionist power or for destabilizing the peace. 

Or, unwilling to incur such costs, they resign themselves to inaction or half-measures.
Predisposed to put off difficult decisions, politicians can waffle, and surrender the initiative. 

Or they can escalate, and see their nation branded a bully.
An unpalatable choice.
Gray-zone strategies are designed precisely to impose such quandaries on custodians of an existing order.
The stepwise approach is reminiscent of the late Thomas Schelling’s parable of the rebellious child who whittles down his parents’ willpower at the seashore.
“Tell a child not to go in the water,” maintains Schelling, “and he’ll sit on the bank and submerge his bare feet; he is not yet ‘in’ the water. Acquiesce, and he’ll stand up; no more of him is in the water than before. Think it over, and he’ll start wading, not going any deeper; take a moment to decide whether this is different and he’ll go a little deeper, arguing that since he goes back and forth it all averages out. Pretty soon we are calling to him not to swim out of sight, wondering whatever happened to all our discipline.”
Over the past couple of decades, likewise, Beijing has devised a variety of stratagems to flummox those who defy its claims to sovereignty over islands, sea and sky. 
China started out with light-gray, largely inoffensive gray-zone tactics twenty-five years ago, but they darkened into coercion over time as its ambitions and power mounted.
First, the Chinese Communist Party (CCP) leadership codified its claim to offshore territory in domestic law in 1992, proclaiming that China held jurisdiction over disputed land features in the East and South China seas along with the surrounding waters.
Western governments and press outlets deemed this development barely newsworthy, in large measure because Beijing made little effort to enforce the law.
Though light in tincture, however, this Law on the Territorial Sea and Contiguous Zone comprised an extravagant statement of purpose toward China’s near seas.
This largely forgotten edict prepared the way for additional assertions of legal authority while justifying more muscular gray-zone strategies.
In 2009, for instance, the CCP leadership delivered a map of the South China Sea to the United Nations bearing a “nine-dash line” that delineated its claim to “indisputable” or “irrefutable” sovereignty over some 80–90 percent of that waterway.
It later flouted a 2016 ruling from the Permanent Court of Arbitration that gutted its legal case for sovereignty. 
Beijing has little fealty to commitments it has freely undertaken—commitments such as the UN Convention on the Law of the Sea—when operating in the gray zone.
China also projected its claims skyward.
In 2013 the leadership declared an air-defense identification zone over the East China Sea, encompassing Japanese- and Korean-administered islands. 
It asserted the power to regulate air traffic moving up and down the Asian seaboard, parallel to the coast, rather than traffic bound for China.
Controlling airspace—not defending China against inbound aircraft—represented its true aim. 
Yet here, too, Beijing has only halfheartedly sought to enforce its air-defense zone—most recently by challenging a U.S. Air Force bomber bound for South Korea.
Its skyward strategy remains light gray in execution, if not in principle.
Second, China’s “smile diplomacy” ranked as the lightest of light-gray ventures.
Commencing in the early 2000s, Beijing fashioned a diplomatic narrative drawing on the charisma of China’s ancient mariner, Zheng He.
The Ming Dynasty admiral commanded a series of “treasure voyages” six centuries ago, reinvigorating China’s tribute system in Southeast and South Asia without indulging in territorial conquest.
Modern-day officialdom took pains to reassure fellow Asians that China would follow Zheng He’s pattern.
It would make itself a potent yet beneficent sea power.
It could be trusted not to abuse lesser neighbors.
In short, smile diplomacy constituted an effort to brand China as a uniquely trustworthy great power—and mute resistance to its maritime rise.
Until the late 2000s, when China turned more assertive, regional audiences were by and large receptive to this soothing message.
Third, gray-zone tactics tended in a darker, more coercive direction after Beijing unveiled the nine-dash line in 2009. 
Zheng He found himself summarily jettisoned in favor of what we dubbed “small-stick diplomacy.”
Rather than flourish the big stick of naval power, that is, CCP leaders unlimbered the small stick of maritime law enforcement coupled with militiamen embedded within the fishing fleet.
Small-stick diplomacy represented a masterful gray-zone strategy. 
The small stick was big enough to cow Asian neighbors whose navies barely rated as coast guards, but it was too small to goad the United States into sending its navy to defend allies and friends.
Routine harassment of Asian coastal states projected the image that China’s coast guard and maritime enforcement services were simply policing waters that had belonged to China since "remote antiquity". It was an effort to quash lawbreakers trespassing on Chinese territory.
Small-stick diplomacy, in short, comprised a gray-zone strategy vis-à-vis the U.S. Navy but exhibited a dark, coercive hue toward Asian claimants.
And that dualism suited Beijing just fine.
Fourth, China attempted a variant of small-stick diplomacy in the East China Sea but found the setting far less permissive. 
Since 2010 or thereabouts, China’s coast guard has conducted regular patrols in the waters around the Senkaku Islands.
Its purpose: to challenge Japan’s administrative control of the islands and adjoining seas.
For its part, Tokyo has staged a standing coast-guard presence in the archipelago’s territorial sea, buttressing its own control. 
The result is a curious form of joint Sino-Japanese administration of waters around the islets.
Both sides police what they regard as their own.
While the Obama administration and Trump administration have reaffirmed that the U.S.-Japan Security Treaty applies to the Senkaku Islands, obliging Washington, DC to help defend them against attack, China’s East China Sea strategy displays the same kind of dualism as in the South China Sea. It’s coercive toward Japan yet stops short of triggering U.S. countermeasures. 
This tactic was enough to alter the status quo in China’s favor but not enough to trigger escalatory action-reaction cycles with Japan. 
And it keeps in play Tokyo’s insecurities about America’s commitment to Japan’s defense, granting China leverage over the alliance. 
In all likelihood this state of affairs will persist so long as Beijing refrains from trying to wrest the islets from Japan—so long, that is, as China keeps its strategy gray.
And fifth, CCP chieftains have discovered that building artificial islands—or fortifying existing ones—constitutes an effective gray-zone strategy. 
Its island-building enterprise has taken several forms over the years.
In 1994, for example, China occupied Mischief Reef, deep within the Philippine exclusive economic zone.
It commenced constructing structures at the reef soon afterward, converted it into a military outpost in 1998, and expanded it sufficiently to host an airstrip and defensive armaments by 2016.
If gradualism suited its purposes at Mischief Reef, China has exercised even more forbearance at Scarborough Shoal, another feature within the Philippines’ exclusive economic zone.
Its occupation of Scarborough Shoal in 2012 marked the final transition from smile diplomacy to small-stick diplomacy.
China’s seagoing law-enforcement services shooed away Philippine mariners from this traditional fishing ground, imposing control over access to the shoal.
Engineers, however, have yet to begin reclaiming seafloor around it to erect another armed redoubt.
Why such restraint?
Geography may have dissuaded Beijing from acting.
Unlike the other contested features, Scarborough Shoal perches near the principal Philippine island of Luzon.
China’s leadership may fear drawing in the U.S. military, which is obligated to defend the Philippines under a longstanding mutual-defense pact, if it constructs a fortified outpost so close to an American ally. 
Politics is at work as well.
Elected in 2016, furthermore, Rodrigo Duterte has signaled his willingness to loosen the alliance with America while cozying up to China. 
That being the case, refraining from provocative acts probably appears prudent to CCP leaders. 
Why alienate a new ally?
And lastly, China went big, and fast, elsewhere in the Spratly and Paracel archipelagoes.
Starting in 2013, civil engineers manufactured island bases from rocks and atolls scattered across the South China Sea.
Xi Jinping pledged not to “militarize” the artificial islands, freezing any serious response from the Obama administration, only to proceed with construction of airfields and other infrastructure. 
The result: a fait accompli.
It’s one thing to deter an aggressor from seizing ground, quite another to evict an aggressor from ground it has already seized. 
Island-building tactics of all three varieties have left China in possession of territory—and it’s hard to see how such gains can be reversed short of open warfare. 
Beijing has, in essence, forced the region and the United States to live with a new and largely irreversible strategic reality.
This typology of gray-zone tactics suggests that China is bringing to bear all elements of national power on the maritime disputes in the East and South China Seas.
Beijing has employed legal, diplomatic, maritime and material elements of statecraft to chip away at the U.S.-led liberal international order. 
Even its construction prowess, honed over decades of massive infrastructure-building, has been on dazzling display in the heart of the South China Sea—contributing to strategic success.
For custodians of the current order, consequently, it is not enough to think exclusively about the marine dimensions of strategy.
To balk China’s gray-zone stratagems, Washington and its allies must take a page from Beijing and adopt a holistic, grand-strategic posture that applies patient, vigilant countervailing pressure on many fronts simultaneously. 
In short, the defenders of the status quo must think in shades of gray and must accustom themselves to acting in the twilight between peace and war.
To do any less would concede to China the initiative—and the future shape of the regional order.
Thomas Schelling would nod knowingly at the challenges before Washington and its partners.
Unlike his milquetoast parents, let’s muster some strategic discipline.