China, Vietnam: comrades until it comes to oil & gas

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A Chinese natural gas drilling platform in the Shenhu area of the South China Sea, southeast of Zhuhai, Guangdong province, China, July 9, 2017. Picture: Reuters/Stringer

While territorial tensions are common in the South China Sea, China has never in recent years explicitly threatened to attack Vietnam for its energy prospecting activities in the disputed maritime area.

According to a July 24 BBC report, China threatened to use armed force if Vietnam did not stop its exploration of block 136-03, where Spanish oil company Repsol was jointly exploring for oil with a Vietnamese state-owned energy firm. Hanoi has since asked Repsol to leave the area.

Carlyle Thayer, emeritus professor at the Australian Defense Force Academy and a renowned Vietnam expert, has since said he has been told several times that actual threats were an overstatement, though China had asked Vietnam to stop drilling and it complied.

The kerfuffle was not raised in the state-controlled Vietnamese press, as there as a likely gag order on reporting on the BBC story. Vietnam’s Ministry of Foreign Affairs has not responded to requests for clarification on the alleged threat. Interestingly, though, there was no immediate denial from China.

China’s Foreign Affairs Ministry did say that it urged “the relevant party to cease the relevant unilateral infringing activities and with practical actions safeguard the hard-earned positive situation in the South China Sea.”

What that “hard-earned positive” situation is as open to interpretation as China’s nine-dash-line expansive map which claims most of the South China Sea as its territory and cuts deeply into Vietnam’s 200-mile Exclusive Economic Zone (EEZ), where the 136-03 block in question sits off the country’s southern coast.

South China Sea and disputed islands

China’s nine-dash-map lays claim to nearly all of the South China Sea. Image: AFP

Though actual force was apparently not threatened, Repsol’s decision to vacate the contested area reverses the strides Vietnam has made in its oil and gas exploration in recent years.

China had previously intimidated all other multinational and state-run oil and gas companies, (save the US’s Exxon-Mobil, until recently run by US Secretary of State Rex Tillerson), out of the disputed maritime area.

What was notable then, however, was that China used a carrot and stick approach directly towards the companies, not Vietnam, by suggesting their interests in and with China might be hit if they continued to explore with Vietnam.

Chinese Foreign Minister Wang Yi (R) shakes hands with U.S. Secretary of State Rex Tillerson at Diaoyutai State Guesthouse on March 18, 2017 in Beijing, China. Reuters/ Lintao Zhang

Chinese Foreign Minister Wang Yi (R) and US Secretary of State Rex Tillerson at Diaoyutai State Guesthouse on March 18, 2017 in Beijing, China. Photo: Reuters/ Lintao Zhang

China has been displeased with both Vietnam’s deal with Exxon-Mobil to develop the $10 billion Blue Whale (Ca Voi Xanh) project off central Quang Ninh province, where an estimated 150 billion cubic meter of natural gas lies, as well as with Hanoi’s recent two-year extension for exploration granted to Indian state oil company ONGC Videsh Ltd.

Though India’s chief of navy V.K Joshi suggested to Indian media in December 2012 that his forces would defend its Vietnam-given energy exploration interests in the South China Sea – a view that was not obviously shared at the time in Indian foreign policy and military circles.

India values keeping China occupied in the South China Sea to slow its expansion into the Indian Ocean and to maintain a rules-based global maritime order. But it hardly wants to open another front with China, particularly at sea, as the more strategically crucial Sikkim border dispute escalates.

A Vietnamese naval soldier stands quard at Thuyen Chai island in the Spratly archipelago in a file photo. Photo: Reuters/Quang Le

A Vietnamese naval soldier stands quard at Thuyen Chai island in the Spratly archipelago in a file photo. Photo: Reuters/Quang Le

The Repsol incident has raised questions if Exxon-Mobil will be next. The US company’s interests in Vietnam would likely require American war ships to protect from a Chinese threat, a scenario that would send ripples of instability through the region despite Vietnam’s positive view of US’ commitment to freedom of navigation patrols in the area.

Tillerson, the US oil giant’s former chief executive, said during his Senate confirmation hearing last year that the US would send Beijing a “clear signal” over its island-building in the South China Sea, which strategic analysts warn could eventually shift the region’s balance of power in China’s favor.

The Donald Trump administration has not yet followed up those firm words with actions. Last weekend two Chinese fighter jets reportedly intercepted a US Navy surveillance plane over the East China Sea, with one of the jets coming within about 300 feet of the American aircraft, US officials said on Monday, according to Reuters.

FILE PHOTO: A live-fire drill using an aircraft carrier is seen carried out in the Bohai sea, China, December 14, 2016. REUTERS/Stringer/File Photo

A Chinese aircraft carrier in a live fire drill in a December 14, 2016 file photo. Photo: Reuters/Stringer

While Vietnam and China’s relationship is as complicated as ever, both sides have aimed to keep ties on a cordial track, seen in a constant stream of bilateral meetings and agreements. Hanoi works especially hard to state its positions clearly when incidents crop up, often publicly agreeing to disagree to diffuse delicate situations.

For its part, China has spent three years repairing charred and smoking bridges with Vietnam after the HYSY-981 oil rig incident of May 2014, when the giant exploration vessel moved into waters visible from Vietnam’s shores, a move seen then as a flagrant betrayal of friendship and ties.

Nationalistic protests in Vietnam targeted Chinese commercial interests in the country, leading to the evacuation of hundreds of Chinese nationals.

File photo of an oil rig which China calls Haiyang Shiyou 981 and Vietnam refers to as Hai Duong 981 in the South China Sea, off the shore of Vietnam

China’s HYSY-981 oil rig is seen in the South China Sea off the shore of Vietnam in this May 14, 2014 file photo. Photo: Reuters/Minh Nguyen/File Photo

China and Vietnam have a cooperative comprehensive strategic partnership, the highest echelon of ties, one cooperative notch above Hanoi’s relations with Russia and India. China is also Vietnam’s largest trade partner, a major investor (though still lagging South Korea) and an increasingly important tourism market.

In April and May this year, relations were seemingly on an upswing with various high-level meetings, including on the sidelines of the Belt and Road initiative summit in Beijing.

Vietnamese President Tran Dai Quang also met Chinese leaders Le Keqiang and Xi Jinping, an occasion where Xi spoke highly of the bilateral relationship by referring to the nominally communist nations as “comrades.”

Vietnam's President Tran Dai Quang (L) shakes hands with China's President Xi Jinping during a signing ceremony at the Great Hall of the People in Beijing on May 11, 2017.Tran Dai Quang is on a visit to China and will attend the Belt and Road Forum for International Cooperation from May 11 to 15. / AFP PHOTO / POOL / JASON LEE

Vietnam’s President Tran Dai Quang (L) and China’s President Xi Jinping during a signing ceremony at the Great Hall of the People in Beijing on May 11, 2017. Photo: AFP/Jason Lee

China also agreed to address the two sides’ trade imbalance, where Beijing enjoys a massive and growing surplus in two-way trade estimated last year at US$100 billion last year. In January this year, China notched a US$ surplus of around US$2 billion.

A joint statement signed by Quang and Xi also agreed to better manage their maritime disputes by not taking “any actions to complicate the situation or expand the dispute and maintain peace and stability in the South China Sea.”

Still tensions have remained, witnessed in General Fan Changlong’s, Vice Chairman of China’s powerful Central Military Commission, early departure from a meeting Hanoi earlier this month. His truncated trip came two days after China deployed a rocket defense system on a Fiery Cross Reef island, part of the Spratly island chain that both sides claim.

Construction is shown on Fiery Cross Reef, in the Spratly Islands, the disputed South China Sea in this June 16, 2017 satellite image released by CSIS Asia Maritime Transparency Initiative at the Center for Strategic and International Studies (CSIS) to Reuters on June 29, 2017. MANDATORY CREDIT CSIS/AMTI DigitalGlobe/Handout via REUTERS ATTENTION EDITORS - THIS IMAGE WAS PROVIDED BY A THIRD PARTY. NO RESALES. NO ARCHIVE

Chinese construction on Fiery Cross Reef in the Spratly Islands. Photo: CSIS/AMTI DigitalGlobe/Handout via Reuters

Vietnam is apparently keen to keep the latest row out of the media to avoid a repeat of the anti-China protests that turned violent in mid-2014.

While Hanoi has previously allowed small groups of usually orderly activists to march to the Chinese embassy to show their polite displeasure over perceived slights, the 2014 attacks spun dangerously out of control resulting in deaths and destruction.

The timing of China’s apparent threat is delicate for Vietnam. Should China’s belligerence increase, there will likely be more spontaneous protests at a time the regime is already cracking down hard on dissent.

Bloggers critical of both the government and China have recently been handed harsh prison sentences or forced into exile. It is thus not a good time for Hanoi to allow anti-China protests that could morph into something larger.

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