Thayer Consultancy Background Brief:

ABN # 65 648 097 123

South China Sea: Vanguard
Bank Sequel
Carlyle A. Thayer
August 17, 2019

We have received reports that the Chinese geological survey ship Haiyang Dizhi 8 has
returned to Vanguard Bank in the South China Sea.
We urgently request your response to the following questions:
Q1- Do you have any updated information about the situation? How many Chinese
ships are there? What are they doing now?
ANSWER: As of 16 August, it appears there are at least seven China Coast Guard ships
(Nos. 3308, 5303, 31302, 33111, 37111, 45111, and 46111) in Vietnam’s Exclusive
Economic Zone (EEZ) in the general area of Vanguard Bank. According to tracking data
the Haiyang Dizhi 8 appears to have resumed seismic surveying.
China Coast Guard Ship No. 46111 has taken up station near block 06/01 where
Russia’s Rosneft Vietnam is conducting oil exploration.
The figures for the number of Chinese ships are likely to fluctuate on a daily basis. The
tracking data is only available for ships that turn on their Automatic Identification
System (AIS) transponders. Ships over 300 gross tons are required to operate their AIS
transponders. Chinese ships are known to turn their transponders off for tactical
reasons
Chinese fishing boats and maritime militia craft are not captured by this means.
Q2- What is the message that Beijing wants to send?
ANSWER: China is reasserting its claim to sovereign jurisdiction over the waters and
marine resources of the South China Sea within its nine-dash line, including waters in
Vietnam’s legitimate Exclusive Economic Zone (EEZ) and continental shelf. China’s
actions since 2017 signal it has moved to a more aggressive stage of challenging all
Vietnam’s oil exploration activities in the waters around Vanguard Bank, including
those that involve foreign companies such as Repsol of Spain and Russia’s Rosneft
Vietnam B.V.
China’s objective was revealed when it submitted a proposal included in the Single
Draft South China Sea Code of Conduct Negotiating Text adopted by ASEAN members
and China in August 2018. China’s proposal on cooperation on the marine economy
states that cooperation is to be carried out by the littoral states “and shall not be
conducted in cooperation with companies from countries outside the region.”
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Q3- Is Beijing preparing to escalate tensions in the South China Sea despite the many
challenges it is facing domestically and internationally?
ANSWER: China’s leaders are now meeting for their summer retreat at Beidaihe for a
two-week retreat that should end shortly. No doubt that civil unrest in Hong Kong and
the tariff war with the United States are top of the agenda. These two issues have
become linked due to President Donald Trump’s political intervention.
In addition, Chinese leaders must also discuss current tensions in the South China Sea
involving Vietnam, the Philippines and Malaysia. While each of these three cases differ
in detail, the common thread is China’s assertion of its sovereign rights in the EEZs of
all three countries. Both Vietnam and the Philippines have pushed back with political
and diplomatic protests. President Duterte is due to visit China shortly to discuss this
issue with President Xi Jinping.
China will not move to dramatically escalate tensions so much as to apply continual
pressure on Hanoi, Manila and Kuala Lumpur to demonstrate that there is little these
three countries can do to resist Chinese intrusions. China seeks to demonstrate that
no country can rely on the United States or the international community to come to
their assistance. China aims to make Vietnam, the Philippines and Malaysia compliant
states that will agree to joint development of marine resources and a South China Sea
Code of Conduct on China’s terms.
Q4- It is said that Vietnam’s energy sector was the real target of the Haiyang Dizhi 8
mission. What is your take?
ANSWER: China’s view of its sovereign rights over all the maritime resources in the
waters or seabed within its nine-dash line means that Beijing views any action by
Vietnam to develop these resources unilaterally is theft of resources belonging to the
Chinese people. In July 2017 and March 2018 China applied political and diplomatic
pressure on Vietnam to cease its commercial oil exploration activities in Vanguard
Bank. China reportedly threatened the use of force. Beijing views Rosneft Vietnam’s
resumption of oil exploration in block 06/01 in a similar manner.
The seismic surveys conducted by Haiyang Dizhi 8 were conducted in oil blocks that
China National Offshore Oil Company issued in 2012 in response to Vietnam’s
adoption of its Law of the Sea. In sum, China aims to control hydrocarbon exploration
and exploitation in Vietnam’s Exclusive Economic Zone and continental shelf that fall
within it nine-dash line.
Q5- What will be the next development?
ANSWER: China is likely to pursue a two-track approach. It will put Vietnam under
pressure by harassing the oil exploration activities by Rosneft Vietnam in block 06/01.
And China will press Vietnam to open discussions about joint development. If China is
not satisfied with progress, it could stage provocations in other oil blocks such as
ExxonMobil’s Blue Whale that is adjacent to the nine-dash line.
Q6- How can Vietnam deal with this? Is continuing diplomatic protests the best way
for Hanoi?
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ANSWER: Vietnam must continue to lodge diplomatic and political protests with
China’s Embassy in Hanoi and China’s Ministry of Foreign Affairs in Beijing as well as
through other channels (party-to-party, military-to-military).
Vietnam must continue to lobby the international community for expressions of
support and raise this issue at all meetings of relevant multilateral institutions.
As ASEAN Chair in 2020, Vietnam will be in a stronger position to lobby other ASEAN
states to defend international law. Vietnam could also make it clear in private that it
will not agree to a Code of Conduct that does not protect its national interests.
In sum, political and diplomatic action are necessary but not sufficient if China refuses
to change its policies. Vietnam should consider taking legal action. A prerequisite
under international law that Vietnam will have to meet is to demonstrate that despite
its good faith Vietnam’s political and diplomatic efforts failed to make progress.
Q7- Will the U.S. raise its voice more strongly this time? What can the U.S. do to
counter China’s behavior?
ANSWER: The United States has already made some strong comments criticizing China
directly for bullying and coercion. Yet when the U.S. met with Japan and Australia at
the Trilateral Security Dialogue in Bangkok, and when the U.S. and Australia held their
annual ministerial consultations in Sydney immediately after, China’s activities were
condemned but China was not directly mentioned by name.
The United States is attempting to form a network of allies and strategic partners to
push back against China, especially for its aggressiveness in the South China Sea. At
the moment the United States is unlikely to act unilaterally to defend Vietnam against
China in the South China Sea because Vietnam is neither an ally nor a strategic partner.
Vietnamese diplomats in Washington and visiting delegations from Vietnam to the
United States should meet with members of the Senate Foreign Relations Committee
to brief them on Chinese activities at Vanguard Bank and to lobby them to pass the
South China Sea and East China Sea Sanctions Act of 2019. Vietnam should urge fellow
members of ASEAN to do the same.
The United States will respond if China attempts to interfere in the operations of U.S.
military forces in the South China Sea.

Media Identification: Carl Thayer is emeritus professor at The University of

New South Wales, Canberra or Carl Thayer is emeritus professor at The University of
New South Wales at the Australian Defence Force Academy, Canberra.
Suggested citation: Carlyle A. Thayer, “South China Sea: Vanguard Bank Sequel,”
Thayer Consultancy Background Brief, August 17, 2019. All background briefs are
posted on Scribd.com (search for Thayer). To remove yourself from the mailing list
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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.