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Conflict in the East and South China Seas: A Wikistrat Simulation


U.S. Secretary of Defense Chuck Hagel at the ASEAN Defense Ministers Meeting Plus in Brunei Aug. 29, 2013. Image: Sgt. Aaron Hostutler U.S. Marine Corps

U.S. Secretary of Defense Chuck Hagel at the ASEAN Defense Ministers Meeting Plus in Brunei Aug. 29, 2013. Image: Sgt. Aaron Hostutler U.S. Marine Corps

Last week saw yet another meeting of the Association of Southeast Asian Nations (ASEAN) which was hosted by Myanmar President Thein Sein on Nov. 12 and 13. ASEAN nations had initially hoped for further progress on territorial issues related to the East and South China Seas, yet once again came away with little agreement from Beijing, other than a promise by Chinese Premier Li Keqiang of $20 billion in loans and Beijing’s willingness to sign “friendship treaties” with ASEAN nations. Beijing also pledged RMB3 billion ($489 million) toward the fight on poverty, as well as other initiatives to boost infrastructure and economic development, in an effort to curry favor with those nations with which it has territorial disputes.

Over the last few years, the East and South China Seas have seen increasing conflict largely due to a more assertive and powerful China, which claims over 90 percent of the disputed waters. The territory of the East and South China Seas are hotly disputed by several countries with overlapping claims, including Japan, Russia, Malaysia, Brunei, Vietnam and the Philippines, complicating efforts to settle claims or delineate territory. Some of the waters are home to vast fishing resources and untapped oil and gas reserves.

As the world’s largest superpower and defender of the existing international order, the U.S. is wary of an increasingly assertive and powerful Chinese military, and fearful that Beijing could spark confrontations in such hot spots as the Senkaku/Diaoyu Islands, the Spratlys, and the Scarborough Shoal.

The fears of Washington are not unfounded – in the last decade China has significantly upgraded the capabilities of its People’s Liberation Army Navy (PLAN) and the People’s Liberation Army Air Force (PLAAF), through the development of new systems domestically and also by buying advanced weaponry from other nations. In response to Beijing’s aggressive actions over the last few years, many of the nations with claims to these waters have also sought to rapidly modernize their navies and surveillance aircraft.  China’s development of anti-access/area denial (A2/AD) systems are so advanced now that many question the ability of the U.S. Navy to respond in a crisis.

With tensions mounting this year, Wikistrat, a crowdsourced consultancy, asked more than seventy Wikistrat analysts in June 2014 to run a crowdsourced simulation, which was just released earlier this month. The Wikistrat simulation identified four key factors driving instability in the East and South China Seas: 1.) the increase and interaction of regional nationalism; 2.) the aptitude of negotiators and the course of international diplomacy; 3.) the desire to control offshore resources; and 4.) the ongoing regional arms buildup.

Examining these four factors, analysts predicted four separate scenarios (or “Master Narratives”) for stability and instability in the contested waters of the East and South China Seas.

Beijing Takes Charge

Starting with the worst-case scenario, entitled “Beijing Takes Charge,” Wikistrat’s analysts envisioned an assertive and nationalistic China causing the region to escalate into instability and conflict as an isolationist U.S. steps back from its “pivot to Asia” and allows for coalitions of emerging regional nationalist states to contain China on their own. Given the weakness of the ASEAN coalitions and their limited capability to defend themselves, along with spiraling nationalism, China is given a relatively free hand to expand its influence and territory through military, political, and diplomatic means.

The Great Powers Step Back

In this mixed-case Master Narrative, both the U.S. and China step back, allowing regional dynamics to evolve without superpower influence. The worst case scenario is avoided, although tensions still remain among competing nations, especially given the potential for Japanese nationalism to fester. Several regional states choose to upgrade their militaries to guard against a future Chinese threat.

The Eagle and the Dragon Contest the East and South China Seas

In this “Present Situation” Master Narrative, both China and the U.S. continue their efforts at controlling the dynamics of the region, leading to the highest prospect for conflict among all the narratives put forth by Wikistrat’s analysts. Rising nationalism, an arms buildup in the region, and a mad scramble for natural resources in the disputed waters is expected under this scenario to further draw in Washington and evoke a reciprocal response from Beijing.

America’s Liberal International Order Endures

In this final narrative, representing a best-case scenario, China stays true to its “peaceful rise” narrative while permitting the U.S. to play a comprehensive role in structuring a regional order. China remains distracted by domestic considerations (including trouble in Xinjiang), and recognizes its need to better manage international law and its role in international institutions. Advances in military capability generally play a limited role under this scenario, and resources are pursued without conflict.

While the above scenarios were debated heavily among the analysts, the simulation did provide for some common “strategic takeaways”:

  • Chinese military and economic power will continue to grow.
  • Beijing can make the East and South China Seas much more dangerous by continuing to pursue militarily and diplomatically assertive means of change.
  • The arms buildup in the region may cause problems for all players.
  • The currency of naval power in the East and South China Seas has become the submarine.
  • Japanese power remains a critical wildcard with respect to the development of regional power dynamics.
  • The practice of diplomacy and “soft power” can still help nations achieve their security goals.
  • Uncertainty about intention and commitment means that accidents might trigger major conflicts.
  • All East Asian governments will struggle to manage populist nationalism.

As the largest trading partner in the region, China has long exerted enormous influence over the economic and political agendas of governments throughout the East and South China Sea region. With the rapid rise in Chinese GDP over the last ten years, the growing economic clout of China has many countries in the region increasingly worried over the extent their economies are influenced by the economic and militaristic rise in China. Wikistrat’s simulation gives us a good starting point to examine the dynamics of the conflict, determine which scenario(s) we deem most likely, and to decide how the region and its policymakers best confront some of the problems outlined under “strategic takeaways.” Certainly, one such area where ASEAN policymakers could start with would be toning down growing nationalism, where recent events in Vietnam and the Philippines have caused a revival of this phenomena. How ASEAN countries manage to contain growing nationalism, while representing the interests of their people, could be one of the great challenges in the years to come should Beijing continue on its present trajectory of creating tensions in the East and South China Seas.



Gary Sands

Gary Sands is a Senior Analyst at Wikistrat, a crowdsourced consultancy, and a Director at Highway West Capital Advisors, a venture capital, project finance and political risk advisory. He has contributed a number of op-eds for Forbes, U.S. News and World Report, Newsweek, Washington Times, The Diplomat, The National Interest, International Policy Digest, Asia Times, EurasiaNet, Eurasia Review, Indo-Pacific Review, the South China Morning Post, and the Global Times. He was previously employed in lending and advisory roles at Shell Capital, ABB Structured Finance, and the U.S. Overseas Private Investment Corporation. He earned his Masters of Business Administration in International Business from the George Washington University in Washington, D.C. and a Bachelor of Science in Finance at the University of Connecticut in Storrs, Connecticut. He spent six years in Shanghai from 2006-2012, four years in Rio de Janeiro, and is currently based in Ho Chi Minh City, Vietnam. Twitter@ForeignDevil666