“Vietnam under Increasing Pressure from China in the South China Sea” by Ian Storey

2018/67, 25 May 2018

Ever since Philippine President Rodrigo Duterte took office in 2016, and implemented a series of policies designed to reduce friction with Beijing in the Spratly Islands in return for Chinese investment, Vietnam has become the frontline state among the Southeast Asian claimants in the South China Sea. It is a lonely position to be in, and over the past several months Beijing has ramped up the pressure on Hanoi, apparently in an attempt to coerce Vietnam into compromising its maritime claims in favour of China’s interests.

While China’s military activities in the South China Sea are not aimed at any single country, Vietnam has borne the brunt of Chinese muscle flexing.

Over the past two years, China has beefed up its military presence on the Paracels, a group of islands which it seized from Vietnam in 1974 but over which Hanoi still claims sovereignty. China has undertaken extensive reclamation work in the Paracels, and deployed anti-ship and surface-to-air missiles as well as fighter jets to the disputed archipelago. In April, China’s navy conducted a massive military exercise near Hainan Island, which lies close to northern Vietnam. On 18 May, China released footage of an H-6K long-range strategic bomber landing on Woody Island in the Paracels, a first for the Chinese air force.

China’s military deployments in the Paracels foreshadowed its recent activities in the Spratlys. In May it was reported that China had installed anti-ship cruise missiles and surface-to-air missiles on three of its artificial islands in the Spratlys—Mischief, Fiery and Subi reefs, collectively known as the Big Three because they host long air fields and related military infrastructure. Vietnam protested the move as a “serious violation” of its sovereignty and called on China to remove the missiles (the reaction from the Philippines was muted, almost disinterested). Experts agree that it is only a question of time before China starts to rotate fighter jets through the Big Three, bringing further military pressure to bear on Vietnam.

Equally alarming for Hanoi has been China’s attempts to curtail Vietnam’s commercial activities in the South China Sea. In July 2017 and March 2018, pressure from China—allegedly including the threat to use force—forced state-owned energy company PetroVietnam to order Spanish oil firm Repsol to halt drilling activities in two offshore fields that lie within Vietnam’s 200 nautical mile exclusive economic zone (EEZ) but also inside China’s nine-dash line, within which Beijing claims “historic rights” to all natural resources including hydrocarbons. The most recent suspension prompted PetroVietnam to warn that tensions in the South China Sea were undermining its efforts to attract foreign investment in Vietnam’s offshore energy industry which makes a significant contribution to the country’s economic development.

In another worrying development for Vietnam, on 17 May Reuters suggested that Russian energy giant Rosneft was concerned that its drilling operations in an area off the Vietnamese coast—which also falls within Vietnam’s EEZ and China’s U-shaped line—could be negatively affected. If the reports are correct, and China has told Vietnam to order Rosneft to stop drilling, it not only risks exacerbating Sino-Vietnamese tensions but would also be a blow to the burgeoning Sino-Russian strategic partnership. So far, Beijing and Moscow have tacitly agreed not to challenge each other’s interests, but as Russia becomes increasingly dependent on China economically, the Kremlin may be forced to scale-back its lucrative energy projects with Vietnam in the South China Sea. In response to the Reuters story, China’s foreign ministry warned that “no country, organization, company or individual can, without the permission of the Chinese government, carry out oil and gas exploration and exploitation activities in waters under Chinese jurisdiction”.

Vietnam’s fishing industry is also feeling the pain. On 20 May, China reported that 10 Vietnamese fishing vessels had been expelled from disputed waters near the Paracels during the first ever joint operation between the Chinese navy and coast guard.

Diplomatically, all appears calm between Vietnam and China. During a visit to Hanoi in early April by Chinese Foreign Minister Wang Yi, both sides reiterated their commitment to effectively manage their differences in the South China Sea and increase cooperation, including the joint development of resources. The Philippines and China are already in the advanced stages of talks on joint exploration and development of energy resources in areas that overlap between the Philippines’ EEZ and China’s nine-dash line. Beijing will be hoping that Hanoi will follow Manila’s example and bow to the inevitable. Whether Vietnam succumbs to China’s pressure and recalibrates its policy in the South China Sea remains to be seen.

Dr Ian Storey is Senior Fellow at the ISEAS-Yusof Ishak Institute.

The facts and views expressed are solely that of the author/authors and do not necessarily reflect that of ISEAS-Yusof Ishak Institute.  No part of this publication may be reproduced in any form without permission.