China’s Oil Rig Removal and the ASEAN Regional Forum

China National Petroleum Corporation (CNPC) made a surprise announcement on July 16: it had decided to withdraw a drilling rig from waters claimed by Vietnam south of the Paracel Islands. The $1 billion rig had been placed in that disputed zone two months earlier over the objections of Vietnam and the international community, and Beijing had suggested it could remain in place until mid-August to conduct exploratory drilling. The sudden withdrawal, just weeks before the ASEAN Regional Forum (ARF), leaves Washington and its partners with more questions than answers.

The most immediate question following the rig’s withdrawal was the obvious, why? CNPC said that the rig, after drilling two exploration wells, had completed its work earlier than scheduled. Samples will now be analyzed, the company said, and after an undisclosed amount of time the next stage of exploration might continue. This explanation is possible, but not compelling. First, it assumes that the nature of the rig’s operation in those disputed waters was primarily commercial; it was not. Second, it presumes that the rig completed its work a full month ahead of schedule even after considerable delays due to the efforts of Vietnamese ships to prevent its operations.

The second explanation, also given voice by official Chinese media, is that the rig’s withdrawal was due in large part to the approach of Typhoon Rammasun, which made landfall in the Philippines a day earlier. Doubtless the typhoon did influence the timing of the withdrawal. As Carl Thayer has pointed out, the drilling rig was built to withstand typhoons, but the more than 100 Chinese vessels protecting it were not. But withdrawing the rig to waters off Hainan Island, as CNPC declared it would, was neither necessary nor the safest course. That is where Rammasun was headed. Instead, China could easily have pulled the rig back into the protection of the Paracels.

The most likely explanation is that the approaching typhoon was the trigger for Chinese authorities to announce a withdrawal toward which they were already favorably inclined. The rig was pulled from disputed waters at an opportune time, just weeks before the August 10 ARF. This year’s forum was, and still is, shaping up to be the most critical ever toward China, and it seems likely that Beijing hoped to blunt at least some of that opprobrium. This reading of the situation is lent credence by China’s simultaneous release of two groups of Vietnamese fishermen arrested in disputed waters.

During the 2012 ARF and accompanying ASEAN Ministerial Meeting (AMM), China was able to split ASEAN’s consensus on the South China Sea by employing its considerable influence over then-chair Cambodia. This was made easier by the fact that the primary source of tension then was over China’s seizure of Scarborough Shoal from the Philippines—an act for which it found some success in blaming Philippine missteps. In 2013, several ASEAN members were hesitant to fully blame Beijing for tensions, believing that Manila had overreached with its decision to bring a case against China to international arbitration.

But it is clearly China that has overreached in 2014. The strength of Vietnam’s resistance to the placement of the drilling rig took Chinese authorities by surprise. Worse, from Beijing’s point of view, is that the incident pushed Hanoi to the brink of following Manila down the path of arbitration. Numerous Vietnamese officials, including Prime Minister Nguyen Tan Dung, have said that the country is variously considering bringing its own case against China or joining in the Philippines’ case as an interested party.

As Vietnam-China relations were being driven to new lows, Beijing kept tensions with the Philippines at a near boil by blockading Filipino troops stationed at Second Thomas Shoal in March, and then launching reclamation activities at several low-lying features in the Spratlys that make up part of the Philippines’ arbitration case. Even Malaysia has been set to worrying after Chinese ships patrolled James Shoal—a completely submerged feature off the Malaysian coast—in January and vowed to defend China’s sovereignty over it.

The result of all these incidents, plus others, has been to drive regional states’ perception of the threat from China to new heights. Malaysia, the Philippines, and Vietnam have held unprecedented three-way claimants’ meetings. The ASEAN foreign ministers for the first time issued a standalone statement ahead of the organization’s leaders’ meeting in May expressing concern over tensions caused by the drilling rig. And even post-coup Thailand, which has sought to use good relations with China as a bulwark against international isolation, on July 17 voiced support for the Philippines’ right to resort to international arbitration.

One might reasonably assume that Beijing has decided to recalibrate ahead of the ARF. ASEAN foreign ministers have already released draft language that will be included in the joint statement after the AMM, which calls on all sides to refrain from unilateral provocative actions. Indonesian foreign minister Marty Natalegawa and Philippine foreign secretary Albert del Rosario have also said that they will present a joint document on a path forward in the South China Sea for their ASEAN counterparts’ consideration. They are considering including a complete freeze on construction and other activities in disputed waters—an idea that gained popularity after U.S. deputy assistant secretary of state Michael Fuchs proposed it during the annual CSIS South China Sea conference on July 11.

It is important to recognize, however, that China’s withdrawal of its rig does not represent a strategic shift in its approach to the South China Sea. It is at best a tactical stepping-down of tensions, not a permanent de-escalation. After all, Beijing has given no indication that it hopes to reduce tensions with the Philippines or with Vietnam, or that it is growing more receptive to international calls to clarify its claims according to international law or forego the use of coercion.

For the United States and its partners, this means that the ARF should be approached on two fronts. Secretary of State John Kerry can play an important role in offering support to ASEAN ministers—stiffening their spines in a sense—in taking a firm stand against China’s recent activities in the South China Sea. Most importantly, he can rally international endorsement for any consensus position they might take, especially if it includes a freeze on activities in disputed waters and an endorsement of the right of all parties to resort to arbitration.

At the same time, Secretary Kerry should not enter the ARF intent on lambasting China as a villain. The withdrawal of the oil rig offers the first real window of 2014 during which Beijing can be congratulated for taking a constructive step to de-escalate the situation—even if both parties know it was only a tactical maneuver. The July 9–10 Strategic and Economic Dialogue in Beijing and China’s ongoing participation in the Rim of the Pacific Exercises lend some additional positive momentum to U.S.-China engagement. Chinese participants at the ARF probably will not offer any concessions on the South China Sea, including a freeze on unilateral activities, but that does not mean that the groundwork cannot not be laid for a constructive outcome at the ASEAN and East Asia summits in November. Even if that is a distant possibility, it should not be dismissed out of hand.

(This Commentary originally appeared in the July 24, 2014, issue of Southeast Asia from Scott Circle.)

Gregory Poling is a fellow with the Sumitro Chair for Southeast Asia Studies at the Center for Strategic and International Studies in Washington, D.C.

Commentary is produced by the Center for Strategic and International Studies (CSIS), a private, tax-exempt institution focusing on international public policy issues. Its research is nonpartisan and nonproprietary. CSIS does not take specific policy positions. Accordingly, all views, positions, and conclusions expressed in this publication should be understood to be solely those of the author(s).

© 2014 by the Center for Strategic and International Studies. All rights reserved.