China and US raise stakes over South China Sea dispute

Financial Times Financial Times

US President Barack Obama in March delivered a stark admonition to Xi Jinping over the South China Sea, warning the Chinese leader of serious consequences if China reclaimed land at Scarborough Shoal, one of the most dangerous flashpoints in Asia.

According to current and former officials, Mr Obama raised the stakes with Mr Xi after US intelligence concluded that China was moving towards reclaiming land at the shoal where Chinese and Philippines ships engaged in a high-stakes confrontation in 2012.

Following the meeting in Washington, China withdrew its ships from the area. That gave the White House a victory that some officials saw as vindication for a tougher approach than over the previous three years when it failed to force China to curb its controversial activities in the South China Sea.

“The signalling from the US side was that this was serious,” said a former official. “There was an accumulation of pieces … the conclusion was that the People’s Liberation Army was advocating (action). It wasn’t necessarily indicators that Xi himself had made any decisions, but there was the feeling that it was on his desk and coming to him for a decision.”

One reason for the tougher US line was concern that China would try to cement its control of Scarborough before a ruling, expected on Tuesday, by an international tribunal adjudicating a case brought by the Philippines against China.

“Obama’s meeting with Xi in March appears to have been a key turning point,” said Evan Medeiros, managing director at Eurasia Group and the top White House Asia adviser until last year. “Obama made crystal clear the US interests at stake and the risk of military escalation. Afterwards Beijing did not take the expected provocative action towards the Philippines.”

China has come under criticism for building man-made islands in recent years, but the US saw Scarborough as more strategically significant given its proximity to the coast of the Philippines, which has a mutual defence treaty with the US. One former official said Washington was also sensitive to Chinese activity at Scarborough since China “hoodwinked” the US in 2012 by reneging on a deal to end the stand-off with Manila.

Some officials worried that China could install radar and missiles on Scarborough. Along with facilities in the Paracel and Spratly Islands, that would help China create a strategic triangle, which would enable the policing of any air defence identification zone in the South China Sea.

Several of the people familiar with the Obama-Xi meeting said the warning about the impact on Sino-US relations was critical because Mr Obama stressed that any reclamation at Scarborough would cross a red line. He made clear that the resulting rise in tensions would hurt China in a year when the US was holding a presidential election and China was hosting the Group of 20 summit.

Chris Johnson, a former top China analyst at the CIA, says that while China appeared to have pulled back for now, there was little evidence to suggest the US had won a strategic victory. “China’s decision this spring not to significantly reclaim Scarborough Shoal certainly is consistent with the administration’s narrative of a Chinese climb down, but Beijing’s decision making is more opaque under President Xi than ever before,” he said. “The administration has no reason to conclude that Xi has ever shown willingness to be flexible on the issue of China’s sovereignty in the South China Sea.”

The Pentagon followed the Xi-Obama meeting with increased activity in the region. In late April, US Pacific Command took the rare step of saying it had flown A-10 Warthogs, which are not usually used for surveillance, near Scarborough to provide “air and maritime situational awareness”.

One military official said that while the White House had long viewed reclamation at Scarborough as a red line and was pleased with the current result, some parts of government, including Pacific Command, were more sceptical. “The real question is what happens after the G20,” the official said.

Andrew Shearer, a former Australian national security adviser now at CSIS, said the Chinese move was only a “tactical victory” for the US. “Over the past two years, US policy has failed to prevent China from largely succeeding in the de facto militarisation of the South China Sea,” he said. “Media reports suggest that when Pentagon officials and Pacific Command have pushed for a stronger response, the White House has consistently reined them in for fear of jeopardising Chinese support on global issues such as climate change.”

Mr Obama’s rhetoric also came weeks after he had ordered a new strategy following a meeting with Southeast Asian leaders in California where they criticised China. The move also signals a subtle shift in the pendulum towards Pacific Command, which has long urged the White House to take a more assertive stance on China.

Ned Price, White House national security council spokesman, denied the accounts of both meetings, saying Mr Obama had “consistently raised issues of maritime security” with Mr Xi. “The characterisation by unnamed officials — none of whom were present — of the conversation between President Obama and President Xi at the Nuclear Security Summit is inaccurate and does not capture what transpired then or subsequently.”

As tensions between the US and China have risen over the South China Sea, Mr Obama and Mr Xi have both begun to worry about the growing risk of confrontation. “Both presidents recognise the strategic value of us getting along,” said one official familiar with the March meeting. “But the more [the Chinese] show that they don’t want to work with the international community, the more we’re going to do what we have to do.”