China: Deals and Twelve-Mile Warnings

Published on October 20, 2015

China’s President Xi Jinping arrived in London today at the invitation of HRH Queen Elizabeth II on a four day state visit that will be filled with pomp, circumstance, and lucrative business deals.

*** But in parallel to the apparent thaw in relations between Beijing and London, political and military tensions between Beijing and Washington are steadily escalating over the Obama Administration’s stated plans to send warships or fighter jets within 12 nautical miles – the international territorial line – of China’s newly claimed artificial islands in the South China Seas. ***

*** US officials have not officially committed or announced a date for those military exercises, but officials including Defense Secretary Ashton Carter have flagged a likely intention to proceed with them in the coming weeks, if not days as a protest and legal challenge to China’s controversial claims, expansion, and planned construction of bases on the previously submerged shoals. ***

*** Before leaving for London, Xi presided over a State Security Commission meeting to discuss this US challenge. Chinese security officials warn that while they remain committed to managing the disputes over the islands through high level discussions and visits, the People’s Liberation Army (PLA) will launch countermeasures if the US were to infringe on China’s disputed 12 nautical mile territorial line around the islands, escalating to the US level of “provocation and infringement” on what they reiterate is a “Core Interest” and Chinese territorial sovereignty. ***

*** The Chinese security officials are especially sensitive to any US military activity deliberately timed to coincide with Xi’s visit to London, which would be seen as a severe level of provocation. And from what we understand, Beijing is prepared to send warships or flights to confront any US forces within the 12 mile limit and, if the US were to send a larger military force, to take even stronger retaliatory action, including intercepting or locking onto US targets. ***

To London, Full of Promise

In the meantime, however, all is well as President Xi is feted and met by the highest levels of state hospitality during his first state visit to Britain from October 19 to 23.

Xi and first lady Peng Liyuan are scheduled to stay at Buckingham Palace, where they will attend a luncheon and state banquet hosted by Queen Elizabeth, and to hold private talks with Prime Minister David Cameron at both No. 10 Downing Street as well as at the countryside residence of Buckinghamshire. Xi is then scheduled to follow that with a speech before UK lawmakers in the House of Commons, and with a speech then to the financial markets and City of London.

To ensure the visit is a success, the two sides have reached agreements on 53 line items and according to Chinese sources are expected to sign on to more than $20 billion worth of deals (Cameron has claimed them worth 30 billion pounds, or $46 billion). That will include the controversial agreement by China to invest in Hinkley Point C, a 16 billion pound nuclear power project in southwest England that Beijing hopes will pave the way not just for China’s investment in Britain’s nuclear industry, but also serve as a nuclear foothold into other EU countries as well.

In addition, the two sides will encourage Beijing’s participation in Britain’s High Speed 2 (HS2) railway project. When all is said and done, Chinese officials predict China’s companies will invest over $80 billion over the next five years in Britain. To reiterate the growing importance of ties with the UK, they note how China already invested nearly $12 billion of foreign direct investment in Britain in 2013, more than the investment in Germany and France combined.

On the financial side, the People’s Bank of China will issue a Renminbi-denominated central bank note in London, and the two sides will also extend and expand the RMB/Sterling swap line.

Xi will furthermore ask Britain for its part in helping promote the export of high tech EU products to China, push for an early signing of the China-EU trade agreement, and start looking into feasibility plans for a China-EU free trade area.

Storm Clouds Looming

The positive backdrop of Xi’s London trip is, however, clouded by the very real prospect of mounting political and military tensions between Washington and Beijing over the submerged shoals in the South China Seas.

Chinese security officials are making it clear in no uncertain terms that Beijing will consider any incursion of US warships or jets within 12 nautical miles of China’s artificial islands as a severe provocation, especially if it were to come during or on the heels of Xi’s high profile trip to London.

Indeed, before leaving for London, Xi personally presided over a State Security Commission meeting on Friday that is said to have included a four point plan for dealing with a potential confrontation with the US in the South China Seas.

The first point was to take US threats to sail close to the islands seriously and as a deliberate attempt to destabilize the region.

Second was to work with regional partners, including at the China-ASEAN Defense Ministers’ Informal Meeting just concluded in Beijing on October 15-16, on crisis control measures and to assure that China will not seek to use force to settle any South China Sea dispute in an attempt to drive a wedge between the US and its regional allies, especially Japan, Australia, the Philippines, and Vietnam.

The third point was a pledge that China will adopt countermeasures against the US if it does proceed with military “provocations” seen to infringe on China’s sovereignty.

And finally, the fourth point was a reiteration that the South China Sea is a “Core Interest” for China, and of the readiness of the PLA to launch countermeasures if needed, “according to the level of US provocation.” The response will depend on factors including whether the US sends just one ship or a single flight as a symbolic gesture, or several, as a more aggressive show of force.

Walking on Eggshells

At issue are a chain of reefs, rocks and other natural features around the Spratly Islands (known as the Nansha Islands in Chinese) China has built up and around and to which it is now claiming territorial and fishing rights.

Before the Obama-Xi summit in late September, Secretary of State John Kerry tried to broker a deal with the six nations laying claims on the South China Sea – China, Vietnam, Taiwan, Malaysia, Brunei and the Philippines – to desist from any further land development. China’s Foreign Minister Wang Yi rejected the plan, but announced that Beijing has already stopped its process of land reclamation, and, during the heads of state summit, Xi is also believed to have made a pledge to President Obama not to “militarize” the islands.

But China continues to build a runway on one of the new islands, and its claims to have stopped reclamation is clearly contradicted by satellite imagery, say US officials. So in early October, reports started to surface the US Navy was preparing to challenge China’s claims to those territorial waters through the exercise of “Freedom of Navigation Operations” (FONOPS) within the 12 nautical mile territorial waters claimed around those newly formed islands.

The legal basis being cited for that is the 1981 United Nations Convention of the Law of the Sea that allows freedom of navigation and free flow of trade in international waters – a treaty which ironically China has signed but the US has not, despite years of pressure from Navy and Coast Guard leaders to do so.

If the islands were considered real, China would have legitimate claim to a 12 nautical mile perimeter, but the US especially rejects the boundaries under international law for having been drawn around submerged islands that have been artificially built up.

Even if the islands were legitimate, a circular in the Navy Times makes the case the US could still steam through the waters under the “right of innocent passage.” It just would not be able to shoot off guns, provoke, or conduct activities including fishing. But the US is not ceding that point.

The Obama Administration is clearly looking to challenge China’s claims, but the situation is extremely delicate, and officials indicate the Navy may seek to limit the provocation in certain ways.

For example, Navy sources indicate the steam through could be carried out by a small presence, for example the destroyer Lassen, without pulling in any LCS (Littoral Combat Ships), such as the Fort Worth, which is also steaming in the region. And they point out that the US has carried out six Freedom of Navigation operations in the South China Seas already since 2011, including three around the Spratly Islands.

But at issue is that the US Navy has not conducted any FONOPs within the 12 mile limit of the newly constructed shoals China has been building on since 2012. And that would be a new challenge.

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