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Background Briefing: South China Sea Code of Conduct: Chinas Foreign Minister Visits Southeast Asia Carlyle A. Thayer May 5, 2013

[client name deleted] China's new Foreign Minister Wang Li has agreed to start talks with ASEAN on the legally binding Code of Conduct (CoC) and setting up an Eminent Persons Group (EPG) to complement government-to-government talks. Wang, on his maiden trip to the region as China's top diplomat, reached agreement on these points with his Indonesian counterpart, Marty Natalegawa, on Thursday. We request your assessment of the following: Q1. Do you see any grounds for optimism that China will seriously enter into discussions with ASEAN on the CoC soon? Will Chinas positions change? ANSWER: China committed itself to discussion a Code of Conduct for the South China Sea when it agreed to the Declaration on Conduct of Parties in 2002 and again in mid-2011 when it agreed to the Guidelines to Implement the DOC. China raised COC discussion with ASEAN officials at the 19 th ASEAN-China Senior Officials Consultations. As a result of Foreign Minister Wang Lis visit to Southeast Asia agreement was reached to hold a meeting at Director-General level of the Working Group on the DOC that would discuss the COC in August. China will definitely meet with its ASEAN counterparts to discuss the COC but this does not mean that agreement will be reached any time soon. Nonetheless, agreement to meet to discuss the COC between China and ASEAN marks an important development. China has not agreed to multilateral discussions in the past. Minister Wang also revived a proposal for an Eminent Persons Group (EPG). Chinas original proposal called for an equal number of representatives, ten for ASEAN and ten for China. It remains to be seen what the composition of the new EPG will be and what relationship it will have with official discussions. The EPG could get bogged down on all sorts of technical issues and derail the COC process. Q2. Indonesia, the biggest economy in Southeast Asia, was the second country visited by Wang after Thailand in this first foreign trip since his appointment in March. His next stops were Singapore and Brunei Darussalam. What is the purpose of his trip? Some skeptics say it is part of the Chinese divide-and-conquer strategy. What is your assessment of this view? ANSWER: It was notable that Minister Wang omitted Vietnam and the Philippines from his present trip. Minister Wang is obviously trying to detect differences within

2 ASEAN and to exert subtle pressure to isolate the Philippines if not Vietnam. Minister Wangs visit to Thailand was to ensure that Thailand, as ASEANs country coordinator for China, continues to take Chinese preferences into account. The Yingluck Government is always trying to curry favour with Beijing by playing a neutral role in China -ASEAN relations. Chinas approach may be gleaned from an unofficial commentary written by Ruan Zongze, Deputy Director of the China Institute of International Studies, in the China Daily (May 4). Ruan wrote, Indonesia and Brunei are different from the Philippines and Vietnam, because they want the disputes to be settled through negotiations. Thailand and Singapore dont want the disputes t o affect the overall China-ASEAN friendly and cooperative relations. Ruan then offered this punch line, China is not afraid to talk about code of conduct but first it has to be determined which country (or countries) is violating the spirit of the Declaration on the Conduct of Parties in the South China Sea. Otherwise, no code of conduct will seem credible. In sum, when ASEAN officials meet with their Chinese counterparts, they can expect China to make a link between progress on the COC and a change of behavious by some countries who China claims are stirring up trouble in the South China Sea and drawing in external powers (read the United States). Q3. Some say the measures announced signaled China's strategic courtship of Indonesia, which Beijing sees as an effective peace-broker in the region as it is not one of the claimants. Is it important for China to preserve this 'friendly elephant' image for political and economic gains? If, so why? If not, why not? ANSWER: China has definitely signaled out Indonesia for special attention not least because Indonesia has taken the initiative to push forward the COC process within ASEAN. It should be recalled the Foreign Minister Marty Natalegawa first announced that China and ASEAN had agreed to hold a meeting to discuss the COC. At that time no further details were announced. Then Foreign Minster Marty became critical of Chinas behaviour. Minister Wangs visit was to assuage Indonesia . Wang succeeded because Indonesia has now agreed to his proposal to create an Eminent Persons Group to run in parallel with official discussions. China aims to play on Indonesias predilection for consensus building in the hopes of pressuring the Philippines to tone down its rhetoric and drop its legal claim to the United Nations. Q4. Wang has reiterated that China is a staunch force in maintaining peace and stability in the South China Sea. Is what China has done of late in line with this reiteration? ANSWER: We should judge China not only by its words but by its deeds. It is a positive first step for China to meet with ASEAN officials as a group to initiate discussions on a COC. Chinese propaganda, however, has gone into over drive to argue that the Philippines has illegally occupied Chinese territory and has been disrupting China-ASEAN relations. In reality China has put itself above international law. It refuses to clarify the meaning of its nine-dash line. China asserts indisputable sovereignty over the South China Sea but will not let independent third parties judge the merits of Chinas

3 claim. China has effectively occupied Scarborough Shoals by maintaining three surveillance vessels there and blocking the mouth of the shoal with a cable. China just announced restrictions preventing Filipino fishermen from fishing in their own Exclusive Economic Zone. Finally, China has stepped up both military and paramilitary patrols and exercises in the South China Sea. In summary, China talks the talk while usin g gunboat diplomacy to pressure Southeast Asian states. Q5. Any further comments you want to make? ANSWER: Between now and August ASEAN senior officials must conclude their discussions on an agreed ASEAN Code of Conduct. Not only must there be unanimous agreement on this document but agreement to present a united front to China. The Eminent Persons Group should only be formed once China has responded to ASEAN COC and substantive progress made. The EPG should only be asked for its suggestions when sticking points arise. Suggested citation: Carlyle A. Thayer, South China Sea Code of Conduct: Chinas Foreign Minister Visits Southeast Asia , Thayer Consultancy Background Brief, May 5, 2013. Thayer Consultancy Background Briefs are archived at Scribd.com