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Vietnam Confronts China: Energy Exploration and EEZs

Vietnam Confronts China: Energy Exploration and EEZs

The plethora of territorial disputes in the South China Sea, chiefly between China and either the Philippines, Vietnam, Indonesia, Malaysia, or Brunei have become a staple feature of the region's news. The sweeping nature of Chinese claims over the region, as demonstrated by the PRC's Nine-Dashed-Line, see Beijing as by far the most prolific participant in these disputes. Tensions reached new heights between Vietnam and China two months ago following China's decision to place an oil rig some 240 kilometers from the Vietnamese coast. The $1 billion HYSY 981 rig is owned and operated by China National Petroleum Corporation (CNPC) and China Oilfield Services Ltd. Hanoi claims the oil rig infringes its sovereignty as it is located with its 200 nautical mile exclusive economic zone (EEZ).

Beijing counters that the oil rig is operating within undisputed waters, with CNPC spokesperson Hong Lei stating that “China strongly opposes Vietnam's irrational disruptions and has taken necessary security measures to ensure the operation.” Such statements are in response to repeated Vietnamese Coast Guard attempts to make their presence felt by sailing near the oil rig and calling on the Chinese to leave the area. In response, Chinese vessels have repeatedly chased off the Vietnamese ships. Specifically, in recent weeks the oil rig has been joined by Chinese maritime surveillance aircraft as well some seventy Chinese vessels, as well as approximately forty Vietnamese ships in the area.The interactions between Vietnamese and Chinese vessels near the rig reflects the growing tensions between Hanoi and Beijing following May's anti-Chinese riots in Vietnam.

Further tension has also resulted from the collision of a Vietnamese and Chinese vessel in July and the arrest of six Vietnamese fishermen by China on charges of illegal fishing. This downturn in Sino-Vietnamese relations is in stark contrast to last year in which leaders of both countries pledged to work together to solve regional issues.Specifically during the 2013 Shangri-La Dialogue, Prime Minister Nguyen Tan Dung stressed the importance of bilateral cooperation between Beijing and Hanoi. During the summit PM Dung cautioned Chinese representatives via the use of a popular Vietnamese phrase, stating that “if trust is lost, all is lost.” The placement of HYSY 981 in Vietnamese waters, without the permission of Hanoi, is widely seen as not only a breach of said trust, but an illegal action. Vietnam and other nations have characterized China's actions as an infringement of the United Nations Convention on the Law of the Sea (UNCLOS) as well as the Declaration of Conduct of Parties in the South China Sea

Following several months of rising tensions, on July 16th CNPC moved HYSY 981 back into Chinese waters. This move was greeted as a victory by Hanoi and caused widespread criticism on the Chinese microblogging service Weibo; with netizens arguing that China had lost face by backing down to Vietnam and implicitly to the United States which is seen as the chief regional agitator behind the region's various territorial disputes involving China. It is important to note that aside from Vietnam's and China's competing territorial claims, the controversy surrounding HYSY 981 contains several other factors,: the economic realities of South China Sea oil exploration, and differences in domestic vs. international Chinese press coverage.

While it is important to acknowledge Beijing's geo-political manoeuvrings in the South China Sea for what they are, the actions of China are not wholly designed to browbeat its neighbors. It is true that Beijing has been rather ham-fisted in its dealings with Vietnam, poignantly highlighted by the fact that China sent an additional four oil rigs to the South China Sea two months after the HYSY 981 crisis erupted. What is important to note however is that while the state run companies such as CNPC often serve as tools of the central government to pursue political policies, they still have to respond to market realities. While it may be in Beijing's interest to push the boundary issue with Vietnam irrespective of the concerns of petroleum exploration, the presence of oil in the region forces China's state run companies to also operate in the area.

Consequently, it becomes hard to determine whether it is the government pushing the oil companies into the area purely to pursue Beijing's foreign policy agenda, or a logical market focused reaction to the presence of resources. Additionally, at this time, China's focus is moving from its eastern to southern oil and gas fields, as the former are reaching the end of their viable lifetimes. Currently, Chinese companies are over-focused in the east, with 60% of China National Offshore Oil Company (CNOOC) domestic production originating from the aging Bohai field. Consequently, China's move to the south is “no surprise” according to JP Morgan's head of Asia Oil and Gas Research, Scott Darling.

It is important to be aware of the economic and geological elements influencing the decisions of CNPC, CNOOC and others. Otherwise, when viewed in isolation the move of the oil rig into Vietnam's waters by China appears (not an unreasonable nor invalid conclusion) to be a singular and highly aggressive move. A reading of recent events painting China as antagonistic is supported by the stubborn language often employed by the Chinese when discussing regional issues, as seen by the aforementioned words of Hong Lei.

Moreover some argue that the move is an explicit tweaking of Hanoi's nerves. This motive was posited by Zhuang Guoto, director of the Center for Southeast Asian Studies at Xiamen University, who in a piece in Global Times suggests that the increase of rigs in the area could be designed so as to “jab a sensitive nerve for Vietnam.” This is an interesting statement because Global Times is a tabloid owned by People's Daily which itself is the official newspaper of the Chinese government. Consequently the fact that such a bold statement - particularly one which contradicts China's foreign policy rhetoric regarding peaceful coexistence – made its way through the official censors, is quite interesting.

Global Times is known for its populist approach to journalism and is described by Christina Larson as “China's Fox News” in her eponymous article at www.foreignpolicy.com. Further complicating the matter, compare the aforementioned statement to the Chinese foreign ministry's response to concerns over Beijing's increased oil rig activity. The ministry spokesperson sought to reassure other nations in the region, stating “please don't worry, there won't be any problem.”

This contradictory nature of these statements is further highlighted by the manner in which the withdrawal of HYSY 981 was reported by the Chinese media. While there may be implicit nods to tensions over the oil rig in Beijing's response to the issue, especially when it interacts with ASEAN and the United States, domestically it was a different story. Despite the withdrawal of HYSY 981 occurring one month ahead of schedule, Chinese media outlets Xinhua and China Daily reported that the rig had finished its operations according to schedule.

Furthermore state news outlets reported that the date of the rig's withdrawal was not related Vietnamese pressure. Consequently, both China hawks and Sinophiles in the West can point to official statements in support of their views regarding Beijing's South China Sea intentions. Global Times is a Chinese language tabloid (although an English language online portal exists) directed at the domestic market, while the foreign ministry press releases are obviously for international consumption. All nations tweak their media coverage to appeal to domestic and international audiences, yet Beijing gets itself in hot water far more frequently because, it does not (yet) have the finesse of other powers such as the United States; which do a far better job at ensuring continuity on major policy points across media.

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