China, Vietnam, and the Rich Resources of the Gulf of Tonkin

in Program

An extraordinary demonstration by several hundred young Vietnamese outside China’s embassy in Hanoi on December 9, 2007, punctured an aura of warming relations between China and Vietnam that had been carefully cultivated in both capitals.  The demonstrators, shouting ”defend our homeland” and ”down with China” were reacting to China’s announcement that its State Council had established a new administrative entity on Hainan Island with jurisdiction over the Paracel and Spratly island groups in the South China Sea, including areas also claimed by Vietnam.     

Shouting slogans such as ”defend our homeland” and ‘China hegemony jeopardizes Asia,” the demonstrators were reacting to China’s official incorporation of both the disputed Parcel and Spratly island groups into its Hainan Island Province, just off its southern coast. Vietnam is a party both to a dispute over ownership of the Paracels, in the shared Gulf of Tonkin, and to the broader dispute between China and several of its Southeast Asian neighbors over the Spratlys. Vietnam formally denied any role in the protest, but few observers doubt that it could have taken place without official sanction, if not encouragement. Interestingly, on a much smaller scale the demonstrations were reminiscent of anti-Japanese demonstrations in China in 2005 related to their dispute over control of undersea oil and gas resources in the Sea of Japan, or what China calls the East Sea.

A number of announced agreements between China and Vietnam since 1993 that its leaders have claimed to have resolved the maritime boundary issues have failed to resolve almost anything, most notably the Tonkin Gulf Agreement of 2000. The demonstrations in Hanoi were just the latest incident in a long war of words and sometimes armed conflict between Vietnam and China over their conflicting territorial claims in the Gulf of Tonkin and the South China Sea.

Hanoi is particularly sensitive about the Paracels, in the Tonkin Gulf, which were on Vietnam’s side of a line drawn by the Sino-French Treaty of 1887. Ownership of the Paracels had remained with South Vietnam after the 1954 division of the country into rival North and South governments. China seized the islands by force in 1974, following the stated intent of the then government of South Vietnam to prospect for oil in the island chain. In 1988, China occupied another disputed area with Chinese and Vietnamese naval forces clashed in the vicinity of Johnson Reef. Vietnam’s forces lost two gunboats and about 70 sailors and had to withdraw from the area.

China also claims the Spratly Islands based on its highly contested assertion that it has a historical claim to virtually the entire South China Sea. (See map) This claim not only includes the disputed islands and reefs, also claimed by Vietnam, the Philippines, Malaysia, Brunei and Taiwan, but well into the Exclusive Economic Zones (EEZs) claimed by littoral states under the international 1982 Law of the Sea Convention. One reason for China’s assertiveness in the Spratlys may be its belief that other countries had moved to claim and sometime occupy these islands and islets in the 1960s and 1970s, when China had turned inward because of the turmoil of Mao Zedong’s Cultural Revolution. This explanation gets little sympathy in the light of the audacity of China’s claims such as its assertion of sovereignty over Indonesia’s Natuna undersea gas field, some 1,000 kilometers from any uncontested Chinese territory.

China sent a chill through Southeast Asian capitals in 1995 when it constructed some small buildings and a dock at Mischief Reef, only about 80 miles off the coast of the Philippines, which claims the area as part of its EEZ. Reassuring ASEAN of its peaceful intentions has been the main thrust of China’s “Smile Diplomacy” ever since, including a pledge not to use force and to jointly share the resources of the disputed areas. The catch in its proposal for joint development of the disputed areas is Beijing’s insistence that participants conclude separate bilateral agreements with China, which maximizes its leverage, rather than a multilateral accord. Moreover, the negotiation of an agreement would implicitly acknowledge China’s insistence that its sovereignty over the disputed areas is “indisputable.”

The maritime disputes between Hanoi and Beijing have been a continuous discordant note in both countries’ efforts to forge closer economic ties. Two-way trade reached about $15 billion in 2007; much of it via a major highway link has been established between Kunming, the capital of Yunnan Province and Hanoi and the Vietnamese port of Haiphong under the Greater Mekong Subregion (GMS) economic infrastructure development project spear-headed by the Asian Development Bank (ADB). Vietnam and other Southeast Asian neighbors continue to worry about the development of a economic relationship that benefits China more than them, and the clear expansion of China’s political influence and economic presence in Burma/Myanmar, Cambodia and Laos.

In 2007 China proposed a Pan-Tonkin Gulf Regional Economic Cooperation organization, an idea first mentioned in the China-ASEAN agreement on a framework for concluding a regional free trade agreement by 2010. Vietnam has supported the concept, but it would be remarkable if it resulted in actual joint development of seabed resources without a resolution of the underlying maritime claims.

The maritime disputes also involve far more than the legal aspects of their conflicting claims. Other important factors include asymmetry of national power and a legacy of more than a thousand years of rivalry and conflict up to and after the era of western and Japanese colonial and imperial domination. Although China and Vietnam successfully concluded an agreement on co-fishing in a square kilometer area straddling the center line between Hainan Island and the Vietnamese coast, even this agreement has not prevented bumping and shooting incidents.

Realistically, the fulfillment of past Sino-Vietnamese agreements to delineate the maritime boundary for the purpose of exploiting the oil and gas resources under the Gulf still appears highly problematic. Among other obstacles:

  • China’s proposal for a zone of co-development pending a final resolution of the maritime boundary is much more favorable to Beijing than Hanoi.
  • Vietnamese officials and researchers speak bitterly about China’s alleged failure to fulfill its obligations under past agreements, such as the 2000 agreement to deliniate their maritime boundries and its refusal to negotiate Vietnam’s claim to the Paracels.
  • Given the fast rising cost of energy, the stakes only grow larger.

These obstacles notwithstanding, some practical calculations may lead Hanoi to accept a deal that includes more compromise on its part than that of Beijing. Among other things, Vietnam’s oil and gas production has flattened out and cannot be increased without the participation of multinational companies. Unless Vietnam and China reach some kind of agreement, Vietnam has little prospect of exploiting promising oil and gas fields off its coast. Beijing has the upper hand, because it has been able pressure multinational oil companies operating in China to stop their survey and drilling operations in valuable leases given by Vietnam. Even more disturbing to Hanoi, China has joined hands with American and European based multinational oil companies to drill in waters claimed by Vietnam. It remains to be seen if a Sino-Vietnamese agreement for their national oil companies to conduct joint surveys in the Gulf of Tonkin for mutual development will lead to positive results, but the record thus far does not augur well for the future.

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