by Margaux Schreurs, an analyst at Global Risk Insights
With tensions increasing on both sides, maritime border disputes are directly affecting life and economic production in both China and Vietnam. However, the disagreements also point to China’s growing assertiveness and shifting geopolitical power.
Territorial disputes between Vietnam, the Philippines, China, Brunei and Malaysia over resource rich islands and regions have escalated over the past months. The latest incident involves a clash between China and Vietnam near the Paracel Islands, reportedly leading to a Chinese ship causing the sinking of a Vietnamese boat within disputed waters.
Reports cite that Vietnam’s coast guard ship was encircled by 40 Chinese vessels close to a Chinese oil rig and was eventually rammed by one. However, the Chinese media has blamed Vietnam for ignoring warnings and disrupting work at the Chinese oil rig. Following the Vietnamese crew’s abandonment of the ship, the Chinese ships made absolutely no efforts to rescue the Vietnamese crew.
These incidents add to years of animosity between the two nations, with their governments’ problems definitely flowing over into the business sector, and even being noticed by average citizens as tensions flow into the public sphere and turn into riots.
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As a result of the Vietnamese boat sinking, Vietnamese citizens took to the streets in protest. Anti-China riots in Vietnam have already harmed the Vietnamese economy, as Chinese businesses, and those perceived to be Chinese, have been scrutinized. Reports demonstrate that rioters’ actions have also lead to the suspension of production for many factories that have no connection to China whatsoever.
As a consequence of the protests, 20 people have died, and there have been more than 100 hospitalizations and millions of dollars worth of damages. On top of that, both Vietnam and China have evacuated their citizens. Earlier in May, following attacks that killed two and injured more than 100 Chinese citizens, Chinese ships extracted thousands of Chinese citizens from Vietnam.
But China is Vietnam’s biggest source of imports – and events are threatening this economic dependence. Chinese investment in Vietnam has reached more than $2.3 billion in 2013, a definite increase from 2012 data. By the end of 2013, China accounted for almost 7 percent of total foreign investment in Vietnam. Continuing tension, or even the continued allowance of public anti-Chinese sentiment in Vietnam, has the potential to harm economic ties between the two nations.
The US has warned China that they will not remain passive if China threatens peace in the region. Although Vietnam does not have any formal military arrangements with the US, at an Asia-Pacific security forum in Singapore, US Secretary of Defense Chuck Hagel warned China to stop “destabilizing” the region. Although the US has stated that it had no position on China’s claims to territory, it has claimed to “firmly oppose any nation’s use of intimidation, coercion, or the threat of force to assert these claims”.
Statements from the US at the conference in Singapore have surprised Chinese officials with how direct they are. However, China’s president, Xi Jinping, has allegedly stated that China would not initiate any aggressive action.
Regardless of leaders’ promises, the discord between the nations has caused trouble for all countries involved in the expanding South China Sea disputes. The protests have demonstrated the actual effects of tension between governments on normal citizens living abroad, and have made the entire region uneasy.
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On a day-to-day, personal level, the tension between nations is definitely being felt by those living in the region. Chinese visas are reportedly unable to be obtained from the Philippines or from Vietnam. This implicates tourism in the region and creates problems for multinational corporations and those investing in either country. The same goes for visas for Vietnam and the Philippines from China, which are getting more and more difficult to obtain.
Furthermore, there are predictions that these tensions will lead to an ever-increasing shift towards China protecting its own territorial integrity. As economic inequality and social instability become a more common and pressing concern, the Chinese Communist Party has to base its legitimacy on other factors that demonstrate its control and dominance. This threatens the stability of the region, and with it, the entire economic transformation of East and Southeast Asia.
The tensions serve as an indication of the future global power system, with a China that is growing stronger. As China becomes more dominant and assertive, other, smaller Asian nations are going to have to find a way to deal with this shift in geopolitical power.
