High stakes for Australia in limiting China's South China Sea incursions

Rising tensions in the South China Sea are not simply driven by disputes over reefs, hydrocarbon resources and fisheries. China is seeking to exercise greater control over the waters and airspace in ways that pose threats to all nations that have interests in preserving freedom of navigation, international law and norms, unimpeded lawful commerce, and peace and stability in the South China Sea. Risk-averse strategies to deter destabilising Chinese actions are not having much effect. Australia should join the US to implement a cost imposition strategy aimed at changing China's risk/benefit calculus and thus its behaviour.

China's South China Sea gambit is fundamentally different from the challenge posed by its establishment of the Asia Infrastructure Investment Bank. The AIIB presents a potential threat to global economic governance but it does not endanger peace and stability or violate international law. Actions taken by China in the South China Sea are destabilising and in some cases are in breach of the United Nations Law of the Sea Convention.

Relying on its coast guard and white-hulled paramilitary force so as to avoid provoking a US military response, in recent years China has interfered with energy exploration activities conducted in waters near Vietnam and the Philippines, used water cannons to stop Philippine boats from fishing in disputed waters, disrupted supply operations by the Philippines to its marines deployed on Second Thomas Shoal in the Spratly archipelago, and unilaterally deployed a massive Chinese oil rig in Vietnam's 200-nautical-mile exclusive economic zone.

Last month a Chinese Navy frigate shined lights at a Philippine Air Force Fokker plane on a maritime patrol mission near Subi Reef, one of the seven features where China is conducting land reclamation in the Spratlys. Since Subi Reef originally was a submerged land feature, it is not entitled to territorial air space or a maritime zone. China's action was therefore both dangerous and illegal.

Although land reclamation is not illegal, China's rapid-paced island building, which has created more than 800 hectares in a little over a year has alarmed China's neighbours. While insisting that its artificial islands are mainly for civilian purposes, China's foreign ministry spokesman acknowledged that they are also intended to serve "necessary military defense requirements". The militarisation of the outposts is likely to prompt other regional governments to respond by strengthening their military capabilities on islands they occupy, which will inevitably heighten tensions further and may increase the risk of accident or conflict.

International criticism has done nothing to temper Chinese behaviour. Beijing has long been dissatisfied with its position in the South China Sea and now that it has ample capabilities, it is apparently seeking to change the status quo.

The Philippines has taken China to court in an effort to prove that its extensive "nine-dash line" of demarcation claim is illegal. If the arbitral tribunal decides this summer that it has jurisdiction and subsequently rules in Manila's favour, China's presence on low-tide elevations within the Philippines' exclusive economic zone, including on Mischief and Subi reefs, is likely to be judged unlawful. A ruling by the tribunal is binding, but China has said it will ignore it. There is no enforcement mechanism that can ensure China obeys the order.

China's coercive actions and its building spree in the South China Sea are undermining regional security. To date, responses by the international community have failed to deter Chinese coercion against its neighbours. In order to uphold the status quo, it is necessary for the US and its allies, including Australia, to impose greater costs on China. To do this effectively, there will have to be an acceptance of greater risk.

Chinese leaders appear to believe they can coerce their neighbours without paying a significant price. As long as they employ white-hulled ships, they think they can continue to pursue "salami-slicing" strategy that uses small, incremental actions, none of which by itself is a casus belli (an act or event that provokes or is used to justify war) to alter the status quo in China's favour. Beijing sees the Obama administration as prioritising conflict avoidance as part of a new type of military-to-military relationship between major powers.

In a new development, the US is reportedly considering conducting freedom-of-navigation transits through waters and airspace of China's artificial islands that were originally submerged reefs and are not entitled to any lawful air or maritime zone. These military moves would be aimed at signalling Beijing that its challenges to international law will not be tolerated.

Another step that could be taken is to respond to future Chinese coercive actions by using naval forces. The use of "gray hulls" in "gray zones" would send a message to China that it cannot coerce its neighbours with impunity.

Risk-averse strategies aren't working to deter Chinese destabilising behaviour. An effective counter-coercion strategy must involve assuming greater risk, while minimising the dangers of escalation.

Approximately 60 per cent of Australia's trade sails through the waters of the South China Sea, but its interests are not confined to unhindered commerce. More importantly, Australia has a great deal at stake in the preservation of a rules-based order and in ensuring that as China emerges as a great power that it follows a common set of rules and laws. Collaborating with the US and other nations to promote peaceful management and resolution of the South China Sea disputes should be high on Australia's agenda.

Bonnie S. Glaser is a nonresident fellow at the Lowy Institute for International Policy.