Vanguard Bank is a clear example of Beijing’s South China Sea strategies in action

People's Republic of China, People's Liberation Army (Navy) ship Qiandaohu (AO 886) steams in close formation as one of forty-two ships and submarines representing 15 international partner nations during Rim of the Pacific (RIMPAC) Exercise 2014. Photo: RIMPAC

China is trying to manipulate international dispute resolution mechanisms to sew confusion and further its economic interests in the South China Sea. Its diplomatic and military activities are pushing the region closer to the brink of conflict.


Tensions are flaring once again in the South China Sea. For weeks, Chinese and Vietnamese coastguard vessels have been involved in a standoff over Vanguard Bank, a disputed reef in the Spratly Island chain off the coast of Vietnam.

A Chinese survey ship Haiyang Dizhi 8 (HD8) entered waters near the Vietnamese-controlled Vanguard Bank on July 3 to carry out a seismic survey. Escorting the survey ship was a 12,000-ton Chinese coastguard vessel with a helicopter on board and a smaller 2,200-ton coastguard ship.

The move prompted the Vietnamese government to deploy four armed coastguard vessels to the scene, igniting a standoff, bringing the two nations to the brink of confrontation.

The incident triggered a wave of anti-Chinese sentiment in Vietnam and around the region, with the US criticising Beijing for its “bullying behaviour” in the area. The US accused China of “repeated provocative actions aimed at the offshore oil and gas development of other claimant states” by threatening “regional energy security” and undermining “the free and open Indo-Pacific energy market.”

China wants access to Vanguard Bank’s oil and gas

The Vanguard Bank basin is in the westernmost reef of the Spratlys and is known for its rich oil and gas reserves. The Vietnamese government has dozens of oil rigs in the area. The government announced it would extend drilling operations following the

China’s navy conducting drills in the South China Sea. 2013.
Photo: Asitimes / Wikimedia Commons

According to the United Nations Convention on the Law of the Sea (UNCLOS), this reef sits within the 200 nautical miles of Vietnam’s exclusive economic zone (EEZ). However, that claim is contested by Beijing.

The reef sits within Beijing’s nine-dash line, the demarcation of China’s territorial claim to maritime rights in the South China Sea. The line runs as far as 2,000km from the Chinese mainland to within a few hundred kilometres of the Philippines, Malaysia, and Vietnam.

In 2016, the Permanent Court of Arbitration in The Hague dismissed Beijing’s claim to territories within its nine-dash line, a decision that angered infuriated the Chinese government. Beijing urged members of the Association of Southeast Asian Nations (ASEAN) to ignore the ruling and continue to negotiate on the South China Sea Code of Conduct (COC).

China is using diplomatic and military means to get its way

Beijing has proposed that development projects in the South China Sea be restricted to claimant states, without the involvement of extra-regional powers. In other words, Beijing wants Vietnam, Malaysia, the Philippines, and other claimant states to restrict their joint ventures to Chinese national oil companies.

At the same time, the Chinese government continues to boost its military presence in the region. China brought its coastguard under military control in 2018 and has bolstered its capabilities. It also built and reclaimed seven islands in the Spratlys and built up a strong troop presence.

Beijing manipulates international dispute resolution mechanisms to promote its strategic interests

According to international practice, when two countries’ exclusive economic zones overlap, the nations involved can conduct maritime joint development until the disputes are resolved.

However, in the case of the Vanguard Bank, which belongs to Vietnam’s EEZ, China’s proposal for maritime joint development is an attempt to manipulate international practices to turn undisputed waters into disputed ones. As Hanoi often relies on “peaceful means on the basis of international laws” to protect its sovereign rights, China hopes to force Vietnam to accept maritime joint development.

By creating new disputes in the SCS, China also discourages foreign companies from investing in the region. It hopes that the economic losses to Vietnam and other ASEAN countries will drive them into accepting its joint development proposals.

Increased militarization is pushing the region closer to the brink

China’s recent anti-ship ballistic missile tests in the South China Sea mark a clear escalation of its militarization in the region. The exercises, along with further tests of land-based anti-ship missiles, are a deliberate showcase of China’s naval power designed to deliver a warning message to the United States and its regional partners.

China is employing a ‘cabbage strategy’ to expand its maritime boundaries, under which a contested area is surrounded by multiple security layers to deny access to the rival nation. Eventually, the surrounded territory is fully claimed by the aggressor.

As part of the strategy, China deploys its ‘fishing militia’ to harass fishermen from other nations. These military-trained, government subsidised fishing vessels gather information on foreign vessels and have been involved in rescuing illegal Chinese fishing boats detained by other governments.

The recent deployment of HD8 to Vanguard Bank is the establishment of another layer in China’s security cabbage. But it is pushing the region closer towards conflict.

On August 7, the US Navy deployed the USS Ronald Reagan to the South China Sea. In a statement, Washington said the carrier’s motto is “peace through strength,” and insisted that claimants “follow international law”.

The USS Ronald Reagan’s arrival in the region could be the threat China needs to withdraw HD8 from Vanguard Bank. The Spratly Islands are a long way from mainland China and could easily see their supply chains disrupted in the event of conflict. Its arrival also signals that the US is striving to reassure regional partners and offset China’s naval dominance.

All eyes will be on China’s next move. As the US-Chinese rivalry plays out on the international economic stage, the South China Sea could be the next theatre for the two powers to bring their show of force.