As the sun rises over Ho Chi Minh City, the streets are already alive with activity. In a vast, bustling factory, hundreds of workers skillfully piece together electronics, garments, and machinery that will soon be shipped around the world. This scene is strikingly similar to what one might have witnessed in Shenzhen during the early 1990s, when China’s economic engine was just revving up. Today, with a population surpassing 100 million, Vietnam, the world’s fifteenth most populous country, is drawing comparisons to China. However, a more precise analogy might be the “next Guangdong,” a regional powerhouse with immense potential. As 2024 unfolds, the distinctions and similarities between China and Vietnam become ever more pronounced, revealing the unique trajectories of these two nations.

Vietnam has steadily grown its economy, becoming a manufacturing hub that attracts foreign investments due to its strategic Southeast Asian location and a vast coastline. According to Fred Burke, managing partner at Baker McKenzie in Vietnam, “Vietnam’s strategic approach to economic reform and integration into global supply chains is creating a new economic dynamo in Southeast Asia. The country’s young workforce and pro-business policies are key factors driving its growth.” In contrast, China’s economic might, characterized by its vast GDP, industrial output, and technological advancements, continues to dominate globally. Demographically, Vietnam benefits from a younger population, while China grapples with an aging population affecting its labor force and economic dynamics.

Both countries are integral to global supply chains, with Vietnam emerging as a key manufacturing base for textiles, electronics, and footwear, whereas China remains the world’s factory with extensive infrastructure and a diverse industrial base. Politically, China’s centralized governance and state-led economic model contrast with Vietnam’s socialist-oriented market economy, driven by political stability and openness to reforms. Geopolitically, China’s assertiveness in the South China Sea and its Belt and Road Initiative significantly influences regional dynamics, while Vietnam carefully balances economic ties with China and fosters strategic partnerships with other nations. We’ll deeply analyze the contrast between the two nations. Let’s get into the details of it.

Economic Growth & Manufacturing

China

China’s economic ascent is unparalleled, transforming it into the “factory of the world.” Despite the decreasing share of exports in its GDP, China remains the largest trading nation globally. While its export share of GDP has decreased to around 20%, China’s manufacturing has shifted towards high-tech industries such as electric vehicles, renewable energy, and telecommunications. Services have also grown in importance, contributing a larger share to the GDP. China is not only the world’s biggest exporter but also its second-largest importer, with a booming consumer market. It holds the largest foreign exchange reserves, amounting to $3.1 trillion. With the largest labor force globally, China is a key player in global trade, leading in several high-tech and industrial sectors.

China’s innovative capacity is also noteworthy; it was ranked the 11th most innovative nation globally in 2022 and leads in various metrics related to patent filings and research output. It is also the second-largest holder of financial assets worldwide. China has a labor force of 791 million people and has lifted hundreds of millions out of poverty, creating a significant middle class. This demographic shift has fueled domestic consumption and innovation, making China a leader in sectors like fintech and AI. However, rising labor costs, which have increased to an average of $6.50 per hour, push manufacturers to seek more cost-effective locations like Vietnam.

Vietnam

Vietnam’s economic growth has positioned it as one of Southeast Asia’s leading manufacturing hubs. Its strategic location, cost-effectiveness, and favorable business environment have attracted significant foreign investment. Labor costs in Vietnam are notably lower than in China, at approximately $2.99 per hour, making it an appealing destination for manufacturing. Key industries include textiles, electronics, machinery, and footwear.

The World Bank projects that Vietnam’s economy will continue to grow, reaching 5.5% in 2024 and 6.0% by 2025, driven by its robust manufacturing sector and improved infrastructure. Vietnam’s labor force of over 57 million people, combined with a young and tech-savvy population, enhances its attractiveness to global investors.

Vietnam’s rise in manufacturing is further bolstered by its participation in various free trade agreements, including the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the EU-Vietnam Free Trade Agreement (EVFTA). These agreements have reduced tariffs and increased market access, making Vietnam a vital part of global supply chains.

In the realm of electronics, Vietnam has become a significant player. Major global companies like Samsung, Intel, and LG have established large manufacturing facilities in the country. Samsung alone accounts for nearly one-quarter of Vietnam’s total exports, highlighting the country’s critical role in the global electronics market. This growth is supported by a young and increasingly skilled workforce, with a median age of 32 and a literacy rate of over 95%.

The textile and garment industry is another cornerstone of Vietnam’s manufacturing sector. Vietnam is the world’s third-largest exporter of textiles and garments, with the United States being its largest market. The industry employs around 2.5 million people, contributing significantly to the country’s GDP. Competitive labor costs, coupled with improvements in production quality and compliance with international standards, have made Vietnam a preferred destination for apparel manufacturing.

Vietnam’s government has also prioritized the development of industrial zones and clusters to attract foreign direct investment (FDI). These zones offer various incentives, including tax breaks and streamlined administrative procedures, to create a conducive environment for manufacturing. The government’s focus on infrastructure development, such as expanding ports, highways, and industrial parks, further enhances Vietnam’s appeal to global manufacturers.

Political Systems

China

China’s political system is dominated by the Chinese Communist Party (CCP), one of the largest political parties globally with over 85 million members. The CCP exercises centralized control over all aspects of governance, including the military, media, and civil society. The Politburo and its Standing Committee, China’s top decision-making bodies, dictate policies and oversee their implementation across the country. Despite market-oriented reforms since the late 1970s, the state retains control over key industries and exercises significant influence over private enterprises.

China operates under a socialist market economy, characterized by strong state intervention. This system has enabled rapid economic growth and modernization but has also led to concerns about human rights abuses and the concentration of power. David Shambaugh, a professor of political science and international affairs at George Washington University, reflects on this dual-edged sword: “China’s centralized political system has been both a blessing and a curse. It allows for swift implementation of policies but also stifles political freedom and can lead to significant social unrest if not managed carefully.”

The CCP’s centralized governance ensures political stability and policy continuity, critical factors in China’s economic success. Despite its effectiveness in policy implementation, concerns persist about political freedoms and social cohesion under such a tightly controlled regime.

Vietnam

The Communist Party of Vietnam (CPV) is the sole political party in the Socialist Republic of Vietnam. Founded by Hồ Chí Minh in 1930, the CPV has maintained unitary rule and central authority over the military, administration, and media. The CPV follows democratic centralism, with the National Congress electing the Central Committee, which in turn elects the Politburo and the Secretariat.

Vietnam has undergone significant economic reforms since the 1980s under the Đổi Mới policy, transitioning from a centrally planned economy to a socialist-oriented market economy. These reforms have encouraged foreign investment, trade, and private enterprise, propelling Vietnam into one of the fastest-growing economies globally.

Vietnam’s unique blend of socialist governance and market reforms has created a stable and conducive environment for economic growth, attracting significant foreign investment while maintaining political stability

Foreign Relations

China

China’s expansive claims in the South China Sea have caused tensions with neighboring countries, including Vietnam. The region is believed to hold vast reserves of oil and natural gas, leading to competing claims over islands and maritime areas. China’s assertive actions, including building military outposts and expanding islands, have drawn international criticism and increased regional instability. The United States supports freedom of navigation and has called for a legally binding code of conduct to resolve disputes peacefully.

China’s Belt and Road Initiative (BRI) is a massive infrastructure project aimed at enhancing global connectivity. The BRI has expanded China’s political and economic influence, though it has also faced criticism and concerns about debt sustainability among participating countries. The initiative aims to build a vast network of infrastructure, including roads, railways, and ports, linking Asia, Africa, and Europe. Despite its ambitious goals, the BRI has been viewed with suspicion by some nations, fearing it as a tool for Chinese geopolitical expansion.

Vietnam

Vietnam has skillfully navigated its foreign relations, balancing ties with major powers like China and the United States. Despite deep economic links with China, Vietnam has sought to diversify its partnerships to avoid over-reliance on any single nation. The recent upgrade of US-Vietnam relations to a “comprehensive strategic partnership” reflects Vietnam’s strategic balancing act. Vietnam’s approach involves hedging, assurance, and deterrence to manage relations with great powers.

Vietnam’s military upgrades and strong national defense posture underscore its commitment to safeguarding its sovereignty, particularly in the contested South China Sea. The country also maintains active diplomatic ties with middle powers like Japan, South Korea, and India, enhancing its strategic options. ASEAN remains central to Vietnam’s foreign policy, providing a platform for regional stability and cooperation.

Trade & Investment

China

China’s transformation into a global trading titan is one of the most remarkable economic stories of recent times. From the 1970s, China’s reforms opened its economy to the world, culminating in its entry into the World Trade Organization (WTO) in 2001. This integration into the global economy propelled China to become the world’s largest exporter. However, China’s export dominance is facing challenges due to rising labor costs and shifting global trade dynamics.

China’s economic model is evolving, with a growing focus on domestic demand and high-tech industries. Economist Nicholas Lardy of the Peterson Institute for International Economics notes, “China’s export-led growth is transitioning towards a more balanced approach, emphasizing domestic consumption and high-tech industries. This shift is necessary for sustaining long-term economic growth amid rising global competition.” While China remains a major player in global trade, its export-driven growth model is maturing. Increasing labor costs and competition from other manufacturing hubs like Vietnam are eroding China’s competitive edge. Additionally, geopolitical tensions and a shift towards deglobalization may impact China’s future trade prospects.

Vietnam

Vietnam’s integration into the global economy has been facilitated by a vast network of free trade agreements (FTAs). The country is part of 16 bilateral and multilateral FTAs, which have deepened its economic ties with the world. Vietnam’s total trade value reached $683 billion in the previous year, reflecting its robust trade activities.

Vietnam’s trade and investment landscape has benefited from favorable conditions, including lower labor costs, strategic location, and a business-friendly environment. The country has attracted significant foreign investment, particularly in manufacturing and export-oriented industries. Vietnam’s economic outlook remains positive, with continued growth expected in the coming years.

Challenges & Opportunities

China

China, frequently hailed as an economic giant, is at a turning point in its development. The Chinese economy has grown significantly over the last few decades but now faces several difficult obstacles. These include declining growth, rising debt, changing demographics, environmental concerns, international trade conflicts, and technological rivalry.

Scott Kennedy, a senior advisor and trustee chair in Chinese business and economics at the Center for Strategic and International Studies (CSIS), comments on these challenges, stating, “China faces significant economic challenges, from rising debt to demographic shifts. However, its focus on innovation and strategic investments in technology and renewable energy could pave the way for sustained growth in the coming decades.”

China’s formerly spectacular GDP growth rates have slowed, with the IMF projecting a mere 4.5% growth in 2024, down from previous double-digit rates. One reason for this slowdown is the diminishing returns on extensive infrastructure investments. Rapid housing development, for example, has fulfilled demand ahead of income levels, limiting further growth potential. The growing debt load is another pressing issue. China’s total debt, including household, corporate, and government debt, has surged to over 280% of GDP. This raises concerns about financial stability and the potential for economic crises if not managed properly.

Changing demographics pose a unique challenge as China’s population ages and the workforce shrinks, putting pressure on government finances, healthcare systems, and pension plans. Environmental issues, such as air and water pollution, soil erosion, and sustainability, also demand significant investment and policy reform.

International trade tensions, especially with the US, complicate China’s economic landscape. The ongoing trade disputes have disrupted supply chains and created uncertainty in global markets. Additionally, China’s technological advancements, while impressive, face challenges in intellectual property rights, cybersecurity, and regulatory barriers, limiting its aspirations for global technological leadership. Despite these challenges, China’s commitment to innovation, renewable energy, and strategic planning offers opportunities for continued growth and development.

Vietnam

Vietnam presents numerous prospects but also faces significant challenges. Conducting business in Vietnam can be hindered by bureaucratic delays, corruption, legal and regulatory inconsistencies, and infrastructure issues. Ruchir Sharma, former head of emerging markets and chief global strategist at Morgan Stanley, observes, “Vietnam’s economic potential is immense, but to fully realize this potential, it must address infrastructure gaps, regulatory inconsistencies, and labor market challenges. By doing so, Vietnam can continue its impressive growth trajectory and solidify its position in the global economy.”

Although Vietnam has lowered duties on many goods per its WTO obligations, high tariffs remain on certain categories. Reducing these tariffs could enhance export growth, especially in sectors like agriculture, processed foods, and nutritional supplements. Vietnam’s role in developing secure, diversified supply chains is crucial. As global companies seek to reduce reliance on China, Vietnam’s favorable business environment, free trade agreements, young and tech-savvy workforce, and strategic location make it an attractive manufacturing hub. However, challenges such as underdeveloped infrastructure, high startup costs, unexpected tax assessments, complex land acquisition processes, and labor shortages can pose obstacles to foreign investment.

End Note

As China and Vietnam navigate their unique paths in the global economy, the future holds both promise and challenge. China’s strategic investments in technology and renewable energy, alongside its evolving economic model, suggest potential avenues for sustained growth amid global uncertainties. Meanwhile, Vietnam’s dynamic manufacturing sector, bolstered by its young workforce and strategic partnerships, positions it as a pivotal player in Southeast Asia’s economic landscape. The road ahead will likely see both countries continuing to adapt to shifting global dynamics, balancing economic expansion with environmental sustainability and geopolitical stability. How each nation navigates these complexities will not only shape their own futures but also influence broader regional and global economic trends.

In 2012, the United Nations recognized Benham Rise, located off the east coast of the Philippines, as part of the country’s extended continental shelf. This recognition was uncontested by China. Fast forward to today, the Philippines has submitted a new claim to the United Nations for an extended continental shelf (ECS) in the South China Sea—a region marked by increasingly hostile maritime conflicts with China. Marshall Louis Alferez, the foreign ministry’s assistant secretary for maritime and ocean affairs, emphasized the importance of securing the Philippines’ future by asserting their exclusive right to explore and exploit natural resources within their ECS entitlement. China’s expansive claims in the South China Sea overlap with territories claimed by the Philippines, Brunei, Malaysia, Taiwan, and Vietnam. Despite a 2016 ruling by the Permanent Court of Arbitration that invalidated China’s claims, Beijing continues to dispute this decision. The recent UN submission by the Philippines aims to delineate the outer limits of its continental shelf, extending up to 350 nautical miles.

Let’s get into the detail of it.

Rising Tensions between China and Philippines in the South China Sea 

Rising maritime tensions between China and the Philippines have highlighted the hazards of armed conflict in the South China Sea. The region is embroiled in complex sovereignty disputes involving multiple countries with competing claims over various features and maritime entitlements. However, recent incidents between Beijing and Manila have raised the most significant concerns. The Philippines maintains nine outposts in the Spratly Islands, a contentious cluster of land and sea features at the heart of the South China Sea. One such outpost, Second Thomas Shoal, has become a perilous flashpoint. Here, Chinese vessels continually attempt to obstruct Manila’s efforts to resupply the BRP Sierra Madre, a rusting ship deliberately grounded by a former Philippine government in 1999 to assert sovereignty over the atoll. Although China also claims the shoal, it began interfering with these resupply missions in 2014. Relations have reached unprecedented turbulence over the past several months, with Chinese ships repeatedly assaulting Philippine supply vessels and deploying water cannons, injuring sailors.

The South China Sea has thus become a hotspot for potential conflict, with Washington and Beijing at odds. This tension prompted then-President Benigno Aquino to challenge China’s territorial claims under the United Nations Convention on the Law of the Sea (UNCLOS). On July 12, 2016, the arbitral tribunal ruled in favor of Manila, invalidating China’s claim to waters within its “nine-dash line,” which roughly encompasses the entire South China Sea. However, Beijing dismissed the ruling and undermined efforts to resolve the dispute legally by constructing and fortifying artificial islands in the Spratlys while the case was pending. This move significantly altered the status quo, enabling Beijing to establish permanent garrisons in the area.

A brief lull in the maritime dispute occurred after Rodrigo Duterte succeeded Aquino in 2016. Duterte adopted a pragmatic approach towards Beijing, downplaying the tribunal’s ruling and seeking economic benefits from China. Despite his efforts, tensions at sea persisted, with regular standoffs between the Philippine coast guard and Chinese vessels. Filipino fishermen struggled to access their traditional fishing grounds, and Manila could not exploit the valuable oil and gas reserves within its exclusive economic zone, as recognized under international law. In March 2021, the situation escalated when Chinese ships amassed on Whitsun Reef, an uninhabited feature in the sea, prompting senior Philippine officials to publicly criticize China’s actions for the first time in years. By the end of Duterte’s presidency, the Philippines had renewed ties with the United States and filed numerous diplomatic protests against China.

Ferdinand Marcos Jr., who succeeded Duterte in 2022, initially sought to maintain friendly relations with Beijing. However, this relationship soured within months. Despite China being the Philippines’ largest trading partner, Marcos Jr.’s meetings with President Xi Jinping failed to yield significant new investments or curb China’s aggressive “grey zone” tactics in the South China Sea. These setbacks led Marcos Jr. to strengthen ties with Washington, with the Biden administration repeatedly affirming that the Mutual Defense Treaty would be invoked in the event of an armed attack on Philippine warships, aircraft, or government vessels.

West has traditionally advocated for the peaceful resolution of South China Sea disputes, emphasizing adherence to international law while avoiding taking sides. However, China’s assertiveness and expanding military capabilities have prompted a shift in European perspectives. The EU and several member states have developed “Indo-Pacific” strategies to enhance cooperation with regional countries. Brussels has also increased diplomatic support for the Philippines, issuing supportive statements following maritime altercations. In 2021, the EU appointed a special envoy for the Indo-Pacific, and European Commission President Ursula von der Leyen visited Manila in July 2023, the first visit by a Commission President, to express the EU’s readiness to enhance maritime security cooperation.

Background on the ECS Claim

The process of filing a claim before the United Nations Commission on the Limits of the Continental Shelf (CLCS) involves several critical steps. Initially, a coastal state conducts comprehensive scientific and technical studies to delineate the outer limits of its continental shelf beyond 200 nautical miles from its baselines. These studies rely on geological, geomorphological, and geophysical data. Upon completion of these studies, the state prepares a detailed submission, which includes charts and coordinates, for review by the CLCS. The commission then examines the data, may request additional information, and, if the submission meets the United Nations Convention on the Law of the Sea (UNCLOS) requirements, provides recommendations. These recommendations form the basis for the coastal state’s establishment of the outer limits of its continental shelf, which are final and binding.

As the world’s coastal states divide up the ocean floor, the CLCS’s work becomes increasingly vital. The “Commission on the Limits of the Continental Shelf: Law and Legitimacy” examines the Commission from two perspectives: a legal examination of its decision-making process and a study of its normative legitimacy. The CLCS exists to facilitate the implementation of UNCLOS in establishing the outer limits of the continental shelf beyond 200 nautical miles from the baselines from which the breadth of the territorial sea is measured. Under UNCLOS, a coastal state must set the outer boundaries of its continental shelf where it exceeds 200 nautical miles, based on the Commission’s advice. The Commission offers recommendations to coastal states on creating such limits. However, its recommendations and actions do not affect the delimitation of boundaries between states with opposite or adjacent coasts.

Territorial and maritime sovereignty

There are two major points of contention: territorial sovereignty and maritime sovereignty. Territorial sovereignty conflicts concern claims of lawful possession of the territory itself, often relying on historical presence to determine rightful control. Maritime boundary conflicts pertain to the territorial delimitations permitted by the 1982 United Nations Convention on the Law of the Sea.

UNCLOS established a 12-nautical-mile territorial sovereignty limit from a country’s coastline and a 200-nautical-mile exclusive economic zone (EEZ) that covers seabed resources within that sphere from the shoreline. This is significant because the country with authority over the islands also controls the natural resources in the surrounding area. In the South China Sea (SCS) and East China Sea (ECS) territorial disputes, there have been no fundamental resolutions of territorial sovereignty or marine boundary delimitations acceptable to all parties involved. Competing sovereignty claims stem from fundamentally different views on historical ownership rights, making convergence and reconciliation difficult to achieve.

The potentially rich natural resources in the claimed EEZs are central to the territorial disputes. Regarding maritime delimitation, scholars like Mark J. Valencia and Unryu Suganuma have noted that joint resource development can help build cooperative frameworks between the claimants, potentially leading to a more institutionalized method of energy resource distribution in the long run. Advancing resource cooperation in areas where China does not have administrative control over some disputed islands (such as the Spratly Islands and Senkaku Diaoyu Islands) can be a practical way to progress without acknowledging the other party’s sovereignty claims. Deng Xiaoping considered the “shelving” policy of collaboration as realistic for mutual economic gains while not jeopardizing China’s sovereignty claims. In the Senkaku Diaoyu conflict, there has been some progress in bilateral resource development, including a fisheries deal in 1997 and an agreement to develop the Shirakaba Chunxiao oil field in 2008. Long-term cooperative development activities are likely to be the most realistic and beneficial for creating trust and promoting positive-sum gains. Southeast Asian countries will likely choose regional security cooperation from powers like the United States and Japan in the foreseeable future. Establishing trust and providing comfort in bilateral interactions, both verbally and in action, will be critical in breaking the “suspicion begetting suspicion” and “fear begetting fear” cycles. Formalizing collaborative development frameworks will be essential for the SCS and ECS islands due to their geopolitical significance and will be a crucial determinant of future cooperation.

Securing maritime entitlements and resources through this process is highly significant for coastal states. It allows to exercise sovereign rights over the natural resources of the seabed and subsoil, including valuable hydrocarbons, minerals, and biological resources. Establishing clear maritime boundaries also helps prevent conflicts with neighboring states and ensures that the coastal state can manage and exploit its marine resources sustainably. Furthermore, it strengthens the state’s legal and political standing in asserting its maritime claims, contributing to regional stability and fostering economic development.

Article 76 of UNCLOS provides the legal basis for coastal states to establish the outer limits of their continental shelf beyond 200 nautical miles from their baselines. According to this article, a coastal state can extend its continental shelf if it meets specific geological criteria, including the natural prolongation of its land territory to the outer edge of the continental margin or a distance of up to 350 nautical miles from the baselines or 100 nautical miles from the 2,500 meter isobath, whichever is greater. Coastal states must submit scientific and technical data to the Commission on the Limits of the Continental Shelf (CLCS) for validation.

The 2016 Arbitral Award, issued by the Permanent Court of Arbitration under UNCLOS, affirmed the Philippines’ maritime entitlements in the South China Sea. The tribunal ruled that China’s claims based on the “nine-dash line” had no legal basis under UNCLOS and clarified the entitlements of the Philippines within its EEZ and continental shelf. This award strengthens the Philippines’ legal standing and supports its claims for an extended continental shelf under UNCLOS provisions.

China Rejects Philippines’ Attempt to Extend Continental Shelf in South China Sea

China has rejected the Philippines’ request to seek UN approval for extending its continental shelf in the South China Sea, aiming to secure “exclusive” rights to exploit underwater resources. “The Philippines unilaterally submitted a case regarding the delimitation of the outer continental shelf in the South China Sea, infringing upon China’s sovereign rights and jurisdiction,” said China’s Foreign Ministry spokesman Lin Jian.

Beijing claims a vast ocean territory under its “nine-dash line,” which extends hundreds of miles south and east from Hainan Province. However, the Permanent Court of Arbitration in The Hague ruled in 2016 that this claim has no legal basis under international law. Despite this ruling, China has rejected the verdict and has been in talks with the Association of Southeast Asian Nations (ASEAN) since 2002 to establish a code of conduct in the contested sea.

The Philippines submitted a request to the UN Commission on the Limits of the Continental Shelf (CLCS) to determine the extent of its underwater continental shelf in the West Palawan Region facing the South China Sea. “The seabed and subsoil extending from our archipelago up to the maximum extent allowed by UNCLOS hold significant potential resources that will benefit our nation and people for generations to come,” said Philippine Foreign Assistant Secretary Marshall Louis Alferez. The 1982 United Nations Convention on the Law of the Sea (UNCLOS) grants a coastal state exclusive rights to utilize natural resources on the continental shelf. Beijing strongly opposes the Philippines’ move, urging the panel not to investigate Manila’s submission as it covers disputed maritime space.

China’s Foreign Ministry spokesperson Lin Jian stated that the commission should not evaluate or qualify the Philippines’ proposal if it includes the delimitation of disputed waters, following CLCS’s norms of procedure. Lin indicated that Beijing is still gathering information, but views Manila’s “unilateral submission” as a violation of China’s sovereign rights. Maritime affairs experts agree, predicting that Manila’s petition is unlikely to succeed and that Beijing will perceive the move as a legal challenge exacerbating South China Sea tensions. “It seems unlikely that CLCS will be able to validate any such claim. the Commission has, as a rule, avoided making any delimitation decisions when there are outstanding jurisdictional or sovereignty disputes,” said Isaac Kardon, senior fellow for China studies at the Carnegie Endowment for International Peace. Beijing would see the claim as “another legal and political challenge from Manila,” similar to the 2016 arbitration, and as an attempt to undermine China’s broad claims through a UN institutional approach, he added.

China’s Foreign Ministry said it is still gathering information regarding Manila’s “unilateral submission” of an enlarged continental shelf. Mainland China claims nearly the entire South China Sea, which includes territory claimed by the Philippines, Brunei, Malaysia, Taiwan, and Vietnam. While the specifics of Manila’s submission had not yet been made public, its continental shelf claims might overlap with those of other coastal governments in the South China Sea, potentially leading other claimant states to use similar techniques. “The Philippines’ submission could set a precedent for other claimant states, who may file similar ECS (extended continental shelf) submissions to assert their rights,” said Ding Duo, associate research fellow at Hainan’s National Institute for South China Sea Studies. He noted that claimant countries might file their applications alone or together, adding that either scenario would complicate the South China Sea conflicts.

“This will make the dispute even more complex and harder to resolve, and introduces a new point of contention for how Beijing and Manila should properly manage and handle their differences in the South China Sea,” Ding told the press.

Maritime observers believed that Beijing would respond to Manila with harsh operational and diplomatic actions. “China might also increase the intensity of their interdictions at Second Thomas Shoal or escalate elsewhere in the South China Sea against Philippine interests,” Carnegie’s Kardon said, adding that China might choose to publish baselines around the Spratlys to challenge the Philippines’ claims. Baselines are essential in determining marine boundaries and exerting control over resources since they serve as the starting point for measuring a country’s territorial sea, EEZ, and continental shelf.

The Philippines Dilemma: How to manage tensions in the SCS?

The Philippines is a significant actor in the South China Sea territorial disputes, which are intensifying as China asserts itself and claimant governments compete for resources. Rather than using international law to counter China’s claims, President Rodrigo Duterte has taken a pragmatic approach, avoiding confrontation in hopes of reaping economic benefits. However, five years later, it appears this strategy has not fully paid off. The simmering maritime dispute between Manila and Beijing has become more entangled with geopolitical competition between China and the United States and its allies. Given the increased potential for escalating events at sea, Manila should advocate for a substantive and effective Code of Conduct between China and the Association of Southeast Asian Nations (ASEAN) to control maritime tensions while maintaining diplomatic channels with Beijing to avoid misunderstandings. Additionally, promoting regional collaboration, such as in fisheries management, would be beneficial.

Duterte, eager to reduce ties with the United States and extend his strategic options, has minimized the question of territorial sovereignty in the South China Sea during his administration, focusing instead on economic gains from China. In line with this strategy, he downplayed Manila’s victory in a 2016 arbitration under the United Nations Convention on the Law of the Sea (UNCLOS), which rejected Beijing’s wide claims of sovereignty and “historic rights” over the sea. Since then, Manila has maintained a flexible policy, often viewed as erratic by local and international observers, with the goal of strengthening connections with Beijing to promote economic growth. By advancing cautiously, the Philippines wanted to prevent the maritime issue from jeopardizing its bilateral relationship. However, five years into Duterte’s administration, problems persist.

Chinese ships patrol the Philippine exclusive economic zone without interruption, and Filipino vessels are frequently unable to reach traditional fishing grounds near Scarborough Shoal due to Chinese harassment. Many Filipinos are growing suspicious of rapprochement with China if it means giving up claims to contested sea features. Since late 2019, Manila has shown less willingness to ignore Beijing’s aggression in the South China Sea, submitting diplomatic protest notes to China in reaction to purported territorial transgressions.

More importantly, Duterte reversed his abrupt February 2020 revocation of the Visiting Forces Agreement (VFA) with the United States, which permits the US to deploy military personnel in the Philippines and undertake joint exercises with Manila. In June 2020, Duterte suspended the cancellation. The United States then began referring to China’s claims in the South China Sea as “illegal,” reaffirmed its alliance with the Philippines, and stated that the Mutual Defense Treaty covers attacks on Philippine forces or vessels in the Sea. A confrontation in March 2021 over Whitsun Reef in the disputed Spratly Islands, involving hundreds of Chinese ships, further inflamed anti-China sentiment in the Philippines and strained relations. On July 30, 2021, Duterte formally reinstated the Visiting Forces Agreement.

Balancing a treaty relationship with the United States with periodic conflicts with neighbors, including a rising great power like China, is particularly challenging. Manila is allied with Washington through a longstanding relationship, but geographical and economic realities necessitate a compromise with Beijing. Simultaneously, Internal conflicts within the bureaucratic establishment and military, along with the interaction of elite interests and public opinion, often lead to apparent inconsistencies in government policy. To manage tensions and reduce the risk of maritime incidents escalating into conflict, the Philippines should bolster risk management measures and advocate for regional security cooperation.

Conclusion

The South China Sea disputes are complex, involving multiple countries and a range of economic, strategic, and security considerations, with phases of escalation and quiet. Recent tensions are increasingly tied to US-China strategic competition, complicating Manila’s foreign policy. Following Duterte’s 2016 election victory, the Philippines pivoted towards China, but opinions are mixed on whether this approach has served national interests, especially given Duterte’s ad hoc methods. If the next president adopts a less pro-China stance, more incidents at sea are likely post-Duterte. However, as the Whitsun Reef incident showed, Manila can manage Beijing with cooperation and deterrence. Manila’s long-term strength may lie in separating disputes from broader China relations and standing firm when necessary. The key concern is whether the Philippines can navigate between China and the US without choosing sides in a conflict. While Manila is currently hedging effectively, rising regional tensions may make this balance unsustainable. (MEHRAAN BHAI YEH CROP KR DAIN HIGHLIGHTED WALA )The deep waters of the South China Sea are expected to remain contentious, but finalizing a Code of Conduct and enhancing regional collaboration could help prevent future escalations. Success in extending its continental shelf at the International Court of Justice depends on strong scientific data, legal arguments, and cooperative dialogue with neighbouring states, adhering to international standards and fostering a collaborative spirit.

In an increasingly interconnected global landscape, regional conflicts reverberate far beyond their immediate theaters. The ongoing Russia-Ukraine conflict has drawn significant attention and resources from Western powers, particularly the United States. Simultaneously, the Middle East simmers with volatility, with actors such as Israel, Hamas, Hezbollah, and the Houthis edging closer to war. In this turbulence, China sees opportunities to assert its dominance in the South China Sea (SCS), potentially destabilizing Southeast Asia and testing U.S. security commitments in the region.

The Middle Eastern Powder Keg

The Middle East, a region historically marked by geopolitical strife, finds itself at a critical crossroads. Since the surprise attack by Hamas on Israel on October 7, the Israeli-Palestinian conflict has escalated dramatically. The situation is further complicated by the threat posed by Hezbollah in Lebanon, backed by Iran, to Israel’s northern settlements.

Meanwhile, the Houthis in Yemen, also backed by Iran, have disrupted maritime traffic in the Red Sea, adding another layer of complexity to the already volatile situation. With the prospect of war seeming imminent, Israel hopes for a swift victory through a blitzkrieg, but U.S. officials foresee a protracted conflict that could bog down the region and threaten long-term peace.

In light of these escalating tensions, the U.S. has offered significant assurances to Israel. Senior U.S. officials have reassured their Israeli counterparts that if a full-scale war breaks out on Israel’s northern border with Hezbollah, the Biden administration is fully prepared to back its ally. This assurance comes amidst increasing cross-border attacks between Israel and the Iran-backed Hezbollah, heightening fears of another full-fledged conflict in the Middle East.

However, U.S. officials have serious concerns that in the event of a full-blown war between Israel and Hezbollah, the Iran-backed militant group could overwhelm Israel’s air defenses in the north, including the Iron Dome system.

In recent meetings, U.S. and Israeli officials discussed potential “off-ramps” to de-escalate tensions along the Blue Line separating Lebanon and Israel.

The potential conflict in the Middle East also impacts U.S. strategic plans. While the U.S. has been attempting to pivot towards Asia, escalating tensions in the Middle East could hinder these efforts. The U.S. has been reshuffling its warship deployment in the region to maintain dominance, but a wider war in the Middle East could force the U.S. to focus more on this region, potentially affecting its strategic commitments elsewhere.

Russia-Ukraine Conflict: A Preoccupation for the West

The conflict in Ukraine grinds on, marked by intense fighting as Ukrainian forces launch offensives to regain lost territory. Despite a recent peace summit in Switzerland, the path towards resolution remains daunting. The summit yielded a “Joint Communiqué on a Peace Framework,” supported by a majority of attendees, pledging concrete steps on critical issues like nuclear threats, food security, and prisoner exchanges. However, Russia’s absence cast a long shadow, with its spokesman Dmitry Peskov dismissing the talks as irrelevant.

These developments highlight the conflict’s protracted nature and the difficulty of finding a solution without all parties at the table. The United States and its NATO allies have committed billions of dollars in aid and military support to Ukraine. As of mid-2024, the U.S. has provided over $40 billion in military assistance. This substantial investment indicates a preoccupation that might detract from the U.S.’s ability to respond robustly to crises elsewhere, particularly in the Middle East and the Indo-Pacific region.

The South China Sea: A Brewing Storm

As the U.S. grapples with simultaneous conflicts in Ukraine and potentially the Middle East, China perceives a strategic window to advance its interests in the South China Sea. The sea is a crucial maritime route, vital for international trade and regional economies, particularly those of Southeast Asian nations like Vietnam, the Philippines, and Malaysia. China’s aggressive territorial claims and militarization of artificial islands have long been sources of regional tension.

Recently, China has ramped up its activities, including constructing military bases on disputed islands and increasing naval patrols. The U.S. has responded with freedom of navigation operations (FONOPs) to assert the principle of international waters. However, with the U.S. potentially distracted, China might escalate its activities, pushing the boundaries of its influence and testing the resolve of Southeast Asian nations and their security alliances.

Implications for Southeast Asian Nations

The potential for increased Chinese assertiveness in the South China Sea (SCS) poses significant risks for Southeast Asia. Economically, the region heavily relies on the stability of maritime routes for trade. Over $3.37 trillion worth of international trade passes through the SCS annually. Any disruption, such as those potentially caused by China’s growing assertiveness, could have cascading effects on global supply chains, impacting economies already strained by the pandemic.

Security-wise, Southeast Asian nations find themselves in an increasingly precarious position. The Philippines, a key U.S. ally, has experienced direct confrontations with Chinese vessels in its own Exclusive Economic Zone (EEZ). In response to Chinese incursions, the Philippines has condemned China’s actions and asserted that such aggressive maneuvers will not prevent it from carrying out rotation and resupply missions to its troops in the West Philippine Sea. Philippine Former Foreign Secretary Teodoro Locsin Jr. called for stronger U.S. involvement back in 2021, stating, “We need the Americans. We need their presence in the South China Sea.” Today, the call for American presence in the South China Sea resonates even more powerfully, reflecting the escalating tension and the urgent need for stability in the region.

Moreover, China’s recent military exercises simulating an invasion of Taiwan have raised concerns about its intentions and the potential for escalation in the region. These exercises, which included mock missile strikes, have put Taiwan and other regional powers on high alert, highlighting the broader security implications of Chinese military assertiveness.

Similarly, Vietnam has fortified its own claims and sought closer security ties with the U.S. and other regional powers.  Its newly elected President To Lam is keen on gradually expanding security and defense relationships with the United States. The aim is to enhance collaboration in fields like cybersecurity, counter-terrorism, and combating transnational crimes. This move is a part of Vietnam’s strategic approach to maintain balanced relationships with the world’s major powers.

The web of alliances and rivalries in Southeast Asia means that any significant disruption in the South China Sea could lead to broader regional instability, with profound implications for both regional and global security.

U.S. Security Commitments: A Test of Resolve

The U.S. has long maintained a security presence in the Indo-Pacific, highlighted by its alliances with Japan, South Korea, and the Philippines, and its strategic partnerships with nations like Singapore and Vietnam. However, the strain of managing conflicts on multiple fronts—Ukraine, potentially the Middle East, and then in the South China Sea—could test American resolve and capability.

The U.S. Indo-Pacific Strategy, however, emphasizes a “free and open Indo-Pacific,” with commitments to deter aggression and maintain regional stability. Yet, a perceived or actual reduction in U.S. military presence and engagement in Southeast Asia could embolden China, altering the regional balance of power. Admiral John C. Aquilino, commander of the U.S. Indo-Pacific Command, has stressed the importance of maintaining U.S. presence, stating, “The security environment is becoming more complex, and we must be prepared to respond to threats in multiple theaters” .

The viewpoint of the U.S. public towards foreign interventions is a crucial factor. Recent polls indicate a growing reluctance among Americans towards military involvement abroad. If this sentiment continues to intensify, it could influence U.S. strategic considerations. The impact of this domestic pressure on the U.S.’s determination to uphold its security commitments in the Indo-Pacific and the Arab world remains to be seen.

 China’s Strategic Calculus

China is likely to perceive the U.S.’s preoccupation with other global conflicts as an opportune moment to consolidate its position in the SCS. Beijing has historically sought to avoid direct military confrontation with the U.S., opting instead for incremental gains through strategic maneuvers. Should the U.S. appear overstretched, China might intensify its activities in the SCS, including more aggressive patrolling, establishing further military outposts, and pressuring Southeast Asian nations diplomatically and economically.

Yan Xuetong, a prominent Chinese scholar of international relations, asserts that China’s strategy aims to secure regional dominance and protect maritime interests. He advocates for enhancing “comprehensive national power” through a balanced approach: strengthening control over the SCS while avoiding direct conflict with the U.S. This strategy combines military readiness with diplomatic engagement to manage tensions without provoking a full-scale confrontation.

Diplomatic engagement plays a crucial role in China’s strategy. Beijing seeks to divide and weaken the unified stance of ASEAN countries by offering economic incentives to some while isolating more vocal opponents like Vietnam and the Philippines. China’s Belt and Road Initiative (BRI) exemplifies this, as Beijing leverages economic investments to expand its influence across Southeast Asia. Nations such as Cambodia and Laos, heavily reliant on Chinese investments, might find it challenging to oppose Chinese ambitions in the SCS. Chinese Foreign Ministry spokesperson Zhao Lijian has reiterated China’s stance, asserting, “China has indisputable sovereignty over the South China Sea islands and their adjacent waters”.

China’s diplomatic efforts are complemented by its participation in regional forums and international organizations, where it aims to shape the narrative and build support for its claims. This multifaceted approach allows China to advance its strategic objectives while managing the risks of direct confrontation. As the U.S. navigates conflicts in Ukraine and the Middle East, China’s opportunity to consolidate SCS claims heightens, reshaping Southeast Asia’s geopolitical dynamics.

End Note

The web of global geopolitics suggests that a wider conflict in the Middle East would have profound implications beyond its immediate vicinity, potentially destabilizing Southeast Asia and altering the strategic dynamics of the South China Sea. For Southeast Asian nations, the challenge lies in understanding this complex landscape, balancing their security needs with economic realities. For the U.S., maintaining its security commitments in the Indo-Pacific while addressing crises elsewhere will be a formidable test of its global leadership and strategic resilience. As the world watches developments in the Middle East, the stakes for Southeast Asia and the broader Indo-Pacific region cannot be overstated.