This is a speech of President Wu Shicun at the 7th U.S-China Track II Dialogue on Maritime Affairs and International Law, which was held on July 26-27, 2018 in Cape Cod, United States. This conference is co-organized by NISCSS, the U.S. National Committee on United States-China Relations and the Institute for China-America Studies.  

Good morning everyone,

 

I was given the topic “China’s two oceans strategy and the OBOR”, but after consideration, I think “China’s Sea Power Nation Strategy, SCS and the OBOR” is a more appropriate topic for today’s discussion. It is my personal understanding that the “two oceans” refer to the Pacific Ocean and the Indian Ocean. It can also mean China’s near-seas—the East and South China sea and the Yellow sea, and the far-seas—the water channels beyond the aforementioned waters.

 

In fact, China does not officially have such a “two oceans strategy”. Instead, we have the Sea-power Nation Strategy (海洋强国战略) proposed in 2012. On Nov 8th, 2012, the strategy of “building China into a maritime nation” was put forward at the 18th Party Congress of the Communist Party of China. The concept implies that China should and will enhance its comprehensive power in respect to the development, utilization, protection and management of the ocean. The connotation is that China should and will increase its ability of exploitation of ocean resources, promote ocean economy, protect ocean ecological environment, and safeguard our maritime rights, in order to build into a sea power nation.

 

Militarily speaking, the Pacific Ocean carries more weight for China’s security interest. The Diaoyu island issue between China and Japan, maritime delimitation in the Yellow Sea between China and Korea, Taiwan issue, and of course the most contentious South China Sea issue. Economically speaking, both the Pacific Ocean and Indian Ocean are important Sea Lane of Communications (SLOC) for China, for commerce and energy supply, since almost 80% of China’s oil imports pass through these two SLOCs.

 

Today I will first talk about the South China Sea and then the One Belt One Road (OBOR) and the Indo-Pacific region.

 

About current status of the SCS situation and future development, I would like to mention 4 points:

First of all, China-U.S. military confrontation in recent years heated up the SCS situation, and it will be the dominate factor of future development. There is a growing deficit of China-U.S. military mutual trust, and strategic suspicion between both countries increased; the U.S. policy on China is dominated by the Hawks. Compared with other issues such as the North Korea’s nuclear program, Taiwan and trade, the United States is at a passive position with few options on the issue of the South China Sea. Foreseeably, China-U.S. military competition in the South China Sea will intensify. The United States will primarily take the following measures: increase the frequency and scope of the freedom of navigation operations (FONOPs), invite its allies to participate in FONOPs, further disrupt China-Philippines and China-Vietnam relations, encourage claimants to take unilateral actions, play up the militarization of the South China Sea, resort to Taiwan on the issue of the South China Sea (e.g. use Taiping Island as a military base), increase military cooperation with countries near the South China Sea and the use of military bases in these countries, and reaffirm the validity of the arbitral award, among others.

 

Look into the future, the FONOPs, close-in reconnaissance, intelligence gathering, military exercises, port visits and other forms of military activities in the surrounding regions will become key forms of U.S. military presence in this region. Strategic blockades by the U.S. and Japan towards the Western Pacific region and by the U.S., Japan, India and Australia towards the Indian Ocean against China will remain key geopolitical challenges to China towards the directions of both the Pacific and Indian oceans. (To be more specific, security challenges towards the Western Pacific region and economic challenges towards the Indian Ocean, as German Foreign Minister called for the U.S. and Europe to enhance cooperation to counter China’s Belt and Road Initiative). China and the U.S. will compete on a long-term basis over the sea powers in the Western Pacific region and the dominance of regional order (a report of the Rand Corporation identified Japan as a decisive factor for the outcome of the China-U.S. competition).

 

Second, Japan and Australia will become new uncertainties that influence the development of the South China Sea situation. Japan’s intention to intervene in the affairs of the South China sea as an important way to seek its military power status, promote the revision of the pacifist constitution, impede China’s development and disrupt China-ASEAN relations can be evidenced in various facts, such as its Maritime Self-Defense Force’s entry into the South China Sea, bilateral cooperation with some South China Sea claimants with strong military elements, and its encouragement of the publication of joint declarations on the South China Sea on various occasions. Australia’s interventions in the South China Sea’s affairs are mainly manifested in its high-profile diplomatic and political statements. (For instance, the Australian Prime Minister demanded China to “comply with rules-based international order” in his speech at the Shangri-La Dialogue in 2017. During the ASEAN Foreign Ministers’ Meetings in 2016 and 2017, Australia, the U.S. and Japan released a joint declaration of foreign ministers, which claimed the arbitral award to the Philippines on the South China Sea as “valid”, requested the involved countries to “implement the arbitral award”, and opposed the “militarization of islands and reefs” in the South China Sea. Meanwhile, the “Indo-Pacific Strategy” rolled out by the U.S. against China is not only supported by Japan but enthusiastically welcomed by Australia. )

 

Third, Vietnam is another country in this region that creates destructive uncertainty in the South China Sea, and is also a “proxy” of the U.S. and Japan in intervening in the South China Sea affairs.

 

Forth, the duality of the Philippine policy on the South China Sea and the unilateral actions of some countries in the disputed areas have a negative impact on the development of the South China Sea situation that cannot be underestimated.

Last but not the least, COC consultations will trigger the unilateral actions of other claimants and renewed discussions on the arbitral award.

 

About China’s One Belt One Road Initiative and the Indo-Pacific region, I have the following thoughts:

 

This years marks the fifth anniversary of the launch of the Belt and Road (B&R) Initiative, and progresses have been secured throughout these years in B&R construction (including the Indo-Pacific Region). Firstly, strategic policy synergies of B&R countries and regional economic integration are being optimized. Secondly, an array of major BRI cooperative projects are launched, which has energetically enhanced the economic bonds between China and countries in the Indo-Pacific Region, and boosted the economic and social development of the Indo-Pacific countries (along the B&R).

 

Despite the achievement, we shall also be fully aware of the challenges confronting BRI in the Indo-Pacific Region: insufficient social, political and economic risks assessments for some of the BRI projects, trade imbalance between China and some Indo-Pacific countries (along B&R), hidden influence of the “Indo-Pacific Strategy” proposed by the United States, as well as the hype-up of so-called “debt trap” to defame BRI projects (accusing China of heavily indebting target countries through its investment and leveraging its creditor status to promote its own political agenda ).

 

In my view, the most important factor behind the progress of BRI in Indo-pacific region is the perceptions of major powers in this region on and their political willingness to participate in BRI. Although since the launch of BRI, more and more BRI countries are benefiting from this initiative, major Indo-Pacific countries represented by the United States, Japan, Australia and India are still suspicious about it, only to different extents and from different perspectives.

 

According to the United States, BRI serves as China’s long-term geopolitical strategy of shaping regional orders, which aims to challenge the US hegemony. It is for this reason that the US puts forward its “Indo-Pacific Strategy”, saves no effort in working for four-party dialogues with Japan, Austria and India, urges the four of them to co-invest in infrastructure, goes all out to hype up the strategic intentions of BRI, and attempts to contain BRI in economy, politics and military. From the renaming of the U.S. Pacific Command as the U.S. Indo-Pacific Command, to the continued renting of Diego Garcia, the American military base in the Indian Ocean, and to the upgrading of the Malabar joint military exercise by America, Japan and India, a series of its recent acts as such show that the U.S. “Indo-Pacific Strategy” is not just an initiative for economic cooperation, rather, through this strategy, the US now is focusing on military security, enhancing its military containment towards China, thus elevating the risks of future military frictions between China and the U.S. in the Indo-Pacific Region.

 

Japan, unlike US, has somewhat shifted its attitude towards BRI from negative to relatively positive. Thanks to its “short-term need” of trimming China-Japan ties and the objective of boosting economic growth, Japan has shown more interest in and willingness for cooperation with BRI. In May 2017, a high-level delegation from Japan attended the B&R International Cooperation Summit held in Beijing; last July, Japanese Prime Minister Shinzo Abe expressed Japan’s willingness to embrace BRI at the G20 summit. In May 2018 when Premier Li Keqiang visited Japan, the two countries signed the Memorandum on China-Japan Cooperation on the Third Party Market, showing that the two countries are willing to work together on the third party market. On June 28th, the launch of the Japan-China-Europe sea-rail intermodal transportation line demonstrated BRI’s potential as the new significant platform for China and Japan to achieve bilateral and multilateral cooperation. One thing, however, shall not be neglected is that guided by its long-term objective of strategic competition with China, Japan will always remain suspicious about the strategic intention of BRI; meanwhile, it poses positively for the “Indo-Pacific Strategy”, which might indicate its continued pursuit of a counterbalance tact towards BRI in the long run. In this light, Japan is likely to seek only “limited cooperation” with China under the BRI framework.

 

Australia’s attitudes towards BRI are quite mixed. The industrial and commercial circles of Australia, as beholding the tremendous business opportunities coming along with BRI, wish to jump on board and demonstrate their respective strengths; however, the government is sharply divided on this point: the department of trade welcomes BRI as it values the opportunities for Australian enterprises, while the Foreign Ministry and the Military Department question the strategic motive behind BRI. Hence, the official posture towards BRI has yet to be made and such ambivalence might continue.

 

India maintains a relatively low willingness to participate in BRI. In the Fifth China-India Strategic Economic Dialogue held in April 2018, Rajiv Kumar, Vice Chairman of National Institution for Transforming India said that the China-Pakistan Economic Corridor, the flagship BRI project, goes across the Kashmir region occupied by Pakistan, which puts at stake the very interest of sovereignty of India. On top of that, India does not want to see a China expanding its regional influence via BRI, especially in South Asia dominated by India. To compete with BRI, India proposed its own plans for regional cooperation: the“Spice Route”and “Monsoon Plan”.

 

As a matter of fact, the diplomatic principle of“strategic independence”long pursued by India has placed India at an elastic distance from both the BRI and the“Indo-Pacific Strategy”. Recently, the“2+2”meeting between foreign ministers and defense ministers of the U.S. and India originally set at July 6 was announced to be postponed again, because India goes against the will of the U.S. in that it does stop oil import from Iran, and adopts countermeasures to the tariff raise by the US, and in particular, because Modi’s elaboration on the “Indo-Pacific Strategy” during the “IISS Shangri-la Meeting” failed to pander to the anticipation of the U.S.. (i.e. “India deem the Indo-Pacific region not as a strategy, nor a block made up of limited members attempting to dominate. We never see it targeting against any country. The geographical definition does not hold in itself”). Therefore, India’s “strategic independence”, as well as its perception and  prioritization of its objectives in economic development and military security would directly influence India in making strategic decisions concerning BRI and the Indo-Pacific Strategy.

 

Under the context of the escalating trade war between China and the U.S. and profound adjustment of China-U.S. relations, uncertainties would undoubtedly increase in BRI developments as the U.S. strategic suspicion goes further up about the cooperative projects of infrastructure such as port construction between China and the BRI countries. In the future, whether China, the U.S., India, Japan and Australia could enhance dialogues and control divergences under the existing framework of dialogue (e.g. ASEAN Forum) will exert far-reaching influence on the cooperation in the Indo-Pacific Region.

 

Finally, I want to talk about the prospects for the "Indo-Pacific strategy."

 

First of all, in the group of four, India is the key to the implementation of the Indo-Pacific strategy. The United States, Japan and Australia are allies with aligned strategic interests in containing China. India, seeking independence in foreign policy, will not completely follow the other three countries in antagonizing China. Judging from the speech of Prime Minister Modi at the Shangri-La Dialogue, India does not want to make the India-Pacific strategy an exclusive military bloc targeted at a third-party. However, it is possible for India to accept and support the India-Pacific strategy to a certain extent for the following reasons. On the one hand, the Indo-Pacific strategy can be integrated with India's "Look East Policy"; on the other hand, the Indo-Pacific strategy caters to India's recent grudge against China's expanding military presence in the Indian Ocean. Also, this strategy can counteract the influence of the Belt and Road Initiative, which is in keeping with India’s strategic suspicion of BRI.

 

Thank you!