The ruling by the Permanent Court of Arbitration at the Hague was much stronger than expected. Almost all points under contention were ruled in favour of the Philippines. This surely will have some consequences not just for the way China conducts itself in the region but also for China’s soft power which, for all its money, has been and still will be a crucial part of the country’s efforts to forge more ties in the world.
Two key points of the ruling:
1. There is no legal basis for China’s historic claims within the Nine-dash line.
2. The Philippines reserves its traditional rights on the Scarborough Island, and any Chinese land reclamations and blocking of fishing and oil-exploration activities violate Philippino sovereignty.
Here is a really great summary on the verdict:
The immediate response by China has been to reject the verdict, as expected, and indeed it is doubtful as to whether the ruling could fundamentally undermine what China has been doing or claiming within the so-called nine-dash line. Some have even argued China has followed a tradition of “Great Powers” ignoring international ruling on maritime disputes. But the South China Sea involves keen interest of multiple parties, including the U.S. and a third of global trade passes through this area. So now there are legitimate grounds on which to scrutinise any action that China takes in this body of water going forward.
What China will do next depends on whether hardliners or moderates in Zhongnanhai gain the upper hand. Hardliners would probably see in continued militarisation of the South China Sea an apposite response. Moderates, on the other hand, are concerned that would push regional neighbours further into America’s embrace.
Many analysts are turning towards the view that in denting China’s long-held ambition of becoming a maritime power, the Hague ruling would have emboldened the hawks. Indeed, it is hard to find any representation of moderate sentiments in the Standing Committee of the Politburo, and by now it can be said with confidence that Xi has monopolised power crystallised consensus around his China Dream platform.
Taylor Fravel’s breakdown on why China wants South China Sea so badly sums it up nicely:
Here are a few things that analysts here and there have predicted China might do in response should hard-liners come to dominate the agenda:
1. Declare Air Defense Identification Zone. China did that in the East China Sea and most countries simply ignored it by dispatching jets into the zone. But with landing strips and various other airforce facilities based in the South China Sea, its ability to enforce ADIZ in the South China Sea should be taken more seriously.
2. Withdraw from UNCLOS. (maybe even set up its own international tribunal?)
3. Continued industrial-scale land reclamation and continued
deployment tolerance of the activities of the militia, the so-called Little Blue Men on Scarborough Shoal, around which the Philippines reserves traditional rights to undertake fishing activities, the ruling has declared.
Another immediate flashpoint is Mischief Reef, part of the Spratley’s island scatter, which the ruling had declared legally belongs to the Philippines. Yet, Chinese landing strips and air facilities the size of football fields are already in place there.
There is optimism that bilateral negotiations are still viable between China and the Philippines, which wisely chose not to crow about the ruling. The new Philippine president Duterte is expected to be different from President Aquino who has actively and publicly strengthened ties with the US. Duterte’s priorities are state-led infrastructure projects and economic reforms, and any foreign policy decision will be made in consideration of this (despite the fact that he claimed he will water-ski to Scarborough and plant a national flag). That means existing ties with U.S. will not likely shrivel. But given the ruling, the Philippines is in good position to extract economic concessions in some form of investments or trade deals.
With ASEAN and the EU too spineless to stand up against flagrant defiance of international law, what will affect how China acts in the long-run is U.S. policy, which so far has preferred to respond to China’s salami-slicing strategy of incremental gains. As many have pointed out, the onus is on the U.S. to prove its commitment to regional allies. But so far, pronouncements on Asia-Pacific by the more likely candidate hasn’t been so reassuring, though it isn’t a guarantee of things to come. Those in favour of action by US, has called for active naming-and-shaming, though that might backfire given America’s own track record of observing international rulings: Nicaragua); resumption of freedom-of-navigation operation, public condemnation of the militia. While governments figure out what they want to do, for now, the losers of this ruling are KFC and Apple in China.