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China-Vietnam Relations and Land Reclamation in the South China Sea

Carlyle A. Thayer, C3S Paper No. 2056

We are currently prepapring a backgrounder on the South China Sea conflict. The reason is Prime Minister Nguyen Tan Dung’s visit to Germany. We request your assessment of the following issues:

Q1. China is building artificial islands in the South China Sea. What are the reasons for that? What strategic goal does China hope to achieve with this action?

ANSWER: China has several motivations for its land reclamation activities in the Spratly Islands. First, China is seeking to create infrastructure to support its economic activities such as fishing and oil and gas exploration including improving the conditions for its workers. Second, China is seeking to change the “facts on the ground” to mitigate any risk that the Arbitral Tribunal’s decisions on the Philippines case negatively impact on China’s interests. The Tribunal is expected to make its decision during the first half of 2016. China is in effect creating artificial islands that do not fall under the Philippines’ case. Both developments will result in an increased presence of China law enforcement vessels such as the Coast Guard. Invariably the People’s Liberation Army Navy will deploy to lend muscle if any Chinese law enforcement vessel is challenged by a regional state.

It is far too early to speculate about Chinese military bases on the features where it is reclaiming land. These are very small, quite distant from China and vulnerable to attack by littoral states. China will undoubtedly place early warning radar and other electronic sensors on its artificial islands to bolster the communications network it has already established.

Q2. What is the current state of ties between China and Vietnam?

ANSWER: Bilateral relations are strained but they have not ruptured. Trade continues but there is evidence that new Chinese investment is being curtailed. Tourism has dropped, especially in central Vietnam. There is friction in some aspects of relations, such as the difficulties currently being experienced by Chinese IT companies for a piece of Vietnam’s domestic market.

The communist parties in both China and Vietnam have taken the lead to explore how to improve bilateral relations. In addition to the well-publicized visit by Le Hong Anh, special envoy of the Secretary General of the Vietnam Communist Party, other lower-level exchanges have taken place. It is important to note that the visit of State Councilor Yang Jiechi in June was to attend the annual meeting of the Joint Steering Committee that oversees all aspects of bilateral relations. Most press reporting at the time focused on the chill in the relations following the oilrig crisis of May-July. Yang’s visit signaled that China was not seeking to cause bilateral relations to deteriorate. The Joint Steering Committee meets annually alternating between Hanoi and Beijing.

Tension in the South China Sea has abated for the moment. It is important to note that the timing of China’s withdrawal of its oilrig came prior to the annual round of meetings hosted by the Association of Southeast Asian Nations. China is now playing down South China Sea disputes as it moved to host the APEC Summit.

Q3. What do you believe is the way forward for both parties to resolve the dispute?

ANSWER: In October 2013 Premier Li Keqiang visited Hanoi. According to Chinese media, agreements reached at this time represented a breakthrough in bilateral relations. Agreement was reached on a wide number of areas including the South China Sea. The oilrig crisis of this year seriously undermined strategic trust.

When Premier Li and Prime Minister Nguyen Tan Dung met they agreed to “stringently implement” the 2011 Agreement on Basic Principles Guiding the Settlement of Maritime-Related Issues and pursue maritime cooperation following the principles of “step by step” and the “easy-first, difficult-later.” The two leaders reaffirmed the role of the existing government-level mechanism on boundary and territory negotiations; and they reiterated the key point in the 2011 Agreement to pursue “mutually acceptable fundamental solutions that do not affect each side’s stance and policy.”

With respect to territorial disputes in the South China Sea, the two leaders also reaffirmed their existing agreement to implement the 2002 Declaration on Conduct of Parties in the South China Sea and “based on mutual consensus, both sides will do more for the adoption of a Code of Conduct” in the South China Sea. The two leaders further agreed “to exercise tight control of maritime disputes and not to make any move that can further complicate or expand disputes.” In this regard both sides vowed to make use of hot lines established between their ministries of foreign affairs and ministries of agriculture.

Bilateral relations need to be reset back to these agreements and move forward from this base by convening joint government-level working groups to work on specific irritants. Ultimately these discussions should set the stage for a visit by Vietnam’s party Secretary General. In the past these high-level summits were instrumental in reaching an agreement on their land border and delimitation of the Gulf of Tonkin. Disputes in the South China Sea will not be solved so quickly but self restraint and joint cooperation could diffuse tension.

Suggested citation: Carlyle A. Thayer, “China-Vietnam Relations and Land Reclamation in the South China Sea,” Thayer Consultancy Background Brief, October 14, 2014. All background briefs are posted on (search for Thayer). To remove yourself from the mailing list type UNSUBSCRIBE in the Subject heading and hit the Reply key.

Thayer Consultancy provides political analysis of current regional security issues and other research support to selected clients. Thayer Consultancy was officially registered as a small business in Australia in 2002.

(Article reprinted with the permission of the author Carlyle A. Thayer, Emeritus Professor,The University of New South Wales at the Australian Defence Force Academy, Canberra email:

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