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Thayer Consultancy Background Briefing:

ABN # 65 648 097 123

South China Sea: China
Reaffirms ‘My Way or No Way’
Carlyle A. Thayer
July 30, 2019

On the eve of the annual ASEAN Ministerial Meeting and other ASEAN-related
meetings, we request your assessment of the following issues:
Q1. Philippines vs. China. Recently, Chinese maritime militia ships have gathered
around Thitu Island in April, and a Filipino fishing boat was rammed through by a
Chinese boat in June. Remarks by President Duterte on these issues seem to be meek
or soft, but the Philippines’ Department of National defense is steadily ramping up its
infrastructure on Thitu, even for potential tourism. Is the Philippines making a policy
shift despite the president’s rhetoric?
ANSWER: Philippines policy towards the South China Sea is a continual work in
progress subject to the whims of President Duterte. The Philippines has occupied Pag-
asa (Thithu) island since at least 1971. The island hosts a civilian population of several
hundred and a small military garrison of around fifty personnel. Pag-asa is a town for
administrative purposes; its facilities include a town hall, a school, a health clinic, a
water plant, a communications tower, quarters for the military and an unsurfaced
runway. Over the years plans have been announced to allocate funding to repair the
deteriorating infrastructure including the runway. This has been a start stop process.
It is unlikely that any major policy change is imminent. It is clear there has been a push
from within the Department of National Defense and the military to repair the runway
and upgrade military facilities.
The concentration of Chinese fishing boats and maritime militia appears a preemptive
move to prevent Filipino fishermen from fishing in waters where the Chinese are
fishing during this year’s fishing season.
Q2. We expect the first reading of Code of Conduct (COC) to end in the near future
and the second to start soon. We assume China wants to exclude foreign companies
from the exploitation of maritime resources. Can that be a possible goal, given the
circumstances near Vanguard Bank?
ANSWER: The first (of three) readings has just taken place. The original Single Draft
Negotiating Text was revised to eliminate some of the overlap and duplication of
proposals made by nine countries (Laos and Myanmar did not contribute). In the
original Single Draft Negotiating Text China’s proposal on cooperation on the marine
economy stated that cooperation is to be carried out by China and the littoral states

“and shall not be conducted in cooperation with companies from countries outside
the region.”
The current standoff at Vanguard Bank confirms two points about China’s policy. First,
China still claims sovereignty over the islands and adjacent waters within its nine-dash
line map of the South China Sea despite the ruling by the Arbitral Tribunal three years
ago. Second, China opposes all oil exploration within its nine-dash line by foreign
companies and claimant states. Vanguard Bank falls within China’s nine dash line.
In July 2017 and March 2018 China put heavy pressure on Vietnam (reportedly
including the threat of force) to cease oil exploration in two blocks in Vanguard Bank.
Vietnam ceased operations in one and suspended the other. The current seismic
survey is being carried out in blocks announced by the China National Offshore Oil
Company in 2012. A China Coast Guard vessel has harassed service ships in a nearby
block awarded to Russia’s Rosneft Vietnam BC.
In other words, China’s current behavior confirms that China will oppose all oil
exploration within its nine-dash line unless it is conducted with China.

Media Identification: The University of New South Wales, Canberra or The University
of New South Wales at the Australian Defence Force Academy, Canberra.
Suggested citation: Carlyle A. Thayer, “South China Sea: China Reaffirms ‘My Way or
No Way’,” Thayer Consultancy Background Brief, July 30, 2019. All background briefs
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Thayer Consultancy provides political analysis of current regional security issues and
other research support to selected clients. Thayer Consultancy was officially
registered as a small business in Australia in 2002.