Analysis: China, the Philippines and the

Scarborough Shoal
IHS Security Intelligence Briefing
Sarah McDowall, Regional Manager, IHS Asia-Pacific Country Analysis

June 2012

www.ihs.com/jir
Analysis: China, the Philippines and the Scarborough Shoal
IHS Security Intelligence Briefing

Contents

1. Introduction .......................................................................................................................3
2. About the Shoal .................................................................................................................4
3. National claims...................................................................................................................4
4. International and domestic pressures ...............................................................................5
5. Outlook ..............................................................................................................................6
About IHS and IHS Jane’s ...........................................................................................................8

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Analysis: China, the Philippines and the Scarborough Shoal
IHS Security Intelligence Briefing

1. Introduction

China and the Philippines have been engaged

 Scarborough Shoal – Factfile
since April in a tense stand-off over the
Size 150 km²
Scarborough Shoal in the South China Sea,
raising concerns about possible escalation Location South China Sea
into more serious conflict. Coordinates 15°11′N 117°46′E
 Names Scarborough Shoal
The confrontation at Scarborough Shoal  Panatag Shoal
(known as the Panatag Shoal in the Huangyan Island
Philippines and Huangyan Island in China)  Claims China
began on 10 April when a Philippine warship  The Philippines
attempted to arrest Chinese fishermen but  Taiwan

was prevented from doing so by two vessels
from China’s Marine Surveillance (CMS) force, which is responsible for law
enforcement within China’s territorial waters.

China’s ministry of foreign affairs has summoned the Philippine ambassador in

Beijing several times over the incident, while the Philippine government has lodged
seven diplomatic notes to the Chinese government.

Despite the imposition of a temporary fishing ban on 16 May by both countries,

bilateral tensions have shown little sign of easing after the Philippines accused China
of continuing to fish and collect protected corals at the Shoal in late May. The
Philippines said its naval personnel had seen large quantities of illegal coral and fish
on board Chinese vessels during the 10 April incident and Manila is now demanding
an immediate withdrawal of the fishing vessels, saying that they are violating its
sovereignty.

The prolonged stand-off over the Shoal has also affected the regional economy. On
10 May, Chinese travel agencies, including the Shanghai Tourism Bureau and
Ctrip.com, announced they had suspended tours to the Philippines, owing to the
uncertain political climate. Similarly, China’s General Administration of Quality
Supervision, Inspection and Quarantine on 8 May issued a notice ordering stricter
inspections of fruit from the Philippines, ostensibly due to the discovery of bacteria
and insects.

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Analysis: China, the Philippines and the Scarborough Shoal
IHS Security Intelligence Briefing

2. About the Shoal

The Scarborough Shoal is a triangular shaped chain of islands and reefs spanning
approximately 150 km². It is located in the South China Sea, roughly 318 km east of
the Macclesfield Bank, 215 km away from Philippines’ Zambales province on the
western side of Luzon Island and 800 km from the Hong Kong Special Administrative
Region (HKSAR) of China. The atoll encloses a lagoon of 130 km² with a depth of 10-
20 metres. Many of the reefs sit just below the surface of the water at high tide with
several of the islands rising between one and three metres high.

Marine resources surrounding the Scarborough Shoal are abundant and the reef is a
rich fishing ground that provides fishermen with shelter during poor weather. Sitting
close to an international navigational waterway, it also occupies an important geo-
strategic position, with the majority of energy shipments to China and Japan passing
through waters off the Shoal on their way to and from the Philippines port of Subic
Bay.

3. National claims

China

China claims that the Shoal was first mapped as early as 1279 during the Yuan
dynasty and was used by Chinese fishermen at the time. China adds that it listed the
Scarborough Shoal as part of the Zhongsha Islands, also known as the Macclesfield
Bank, in 1935. A map published by the government in 1947 asserted that the Shoal
lies within the claim administered by Hainan province, and the Chinese government
reiterated its claim shortly after the United States Navy departed from Subic Bay in
the 1990s.

China claims all the islands, reefs and shoals within its 1947 unilaterally drawn U-
shaped line in the South China Sea as its territory, including Scarborough Shoal.
China is unlikely to relinquish its claim to the Shoal because this would weaken its
wider claim to the Macclesfield Bank.

The Philippines

The Philippine claim goes back to the Spanish colonisation of the country, when
fishermen took shelter at the reef during poor weather. In conjunction with the US
Navy, the government carried out an oceanographic survey of the area in 1957 and

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Analysis: China, the Philippines and the Scarborough Shoal
IHS Security Intelligence Briefing

used the area as a testing range for defence purposes. Manila also built a small
lighthouse there in 1965, although this is no longer operational.

Legally, the Philippines’ claim is based on an Exclusive Economic Zone (EEZ) up to

200 nautical miles (370 km) from its coastline, from which its territorial sea is
measured, as stipulated by the UN Convention on the Law of the Sea (UNCLOS).
More recently, in 2009, then Philippines president Gloria Arroyo enacted the
Philippines Baselines Law, which classified the Spratly Islands and the Scarborough
Shoal as being under the Philippines’ jurisdiction.

4. International and domestic pressures

Coverage of recent events at the Shoal by China’s state-run media has been imbued
with a strong nationalist tone. Chinese members of social networking sites and blogs
have been calling for assertive action by the government to resolve the problem.
Beijing also wants to project a strong image to the country ahead of the decennial
leadership transition in late 2012, when seven of the nine members of China’s
Standing Committee of the Politburo are due to step down. The risk here is that
Beijing will quietly encourage jingoist rhetoric over such issues as the Scarborough

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Analysis: China, the Philippines and the Scarborough Shoal
IHS Security Intelligence Briefing

Shoal in order to distract the populace away from issues of political instability at
home, particularly after the removal of Bo Xilai, the Communist Party secretary for
the city of Chongqing and touted future member of the Politburo Standing
Committee, in March, just months ahead of the 18th National Party Congress.

Meanwhile, Philippines’ President Benigno Aquino is keen to show that his

government will not be intimidated by China. Aquino came to power pledging to
return the country to national dignity after his predecessor, Arroyo, was criticised in
the domestic media for cosying up to Beijing to secure Chinese investment. Instead,
Manila has been making efforts to strengthen military ties with the US. It has also
proposed that ASEAN members set aside disputes among themselves over the South
China Sea in order to form a united front against a common adversary, Beijing. The
Philippines wants the dispute to be resolved through the international Tribunal for
the Law of the Sea – despite China’s firm rejection of international arbitration.

The US has responded positively to the Philippines’ calls for greater engagement.
Washington has spoken out on the issue at several ASEAN forums, increased the
frequency of troop rotations and conducted joint training exercises with Manila. In
October 2011, it sold a declassified Hamilton-class coast guard cutter to the
Philippines. It was this warship that attempted to arrest the Chinese fishermen in
April.

The US, as a regional security underwriter, has an active stake in the issue.
Washington must ensure freedom of navigation in the world’s second busiest trade
route. It also has a legal obligation to defend the Philippines through a 1951 mutual
defence treaty. Washington’s increasing involvement in the issue ties in with its
wider strategy of enhancing its presence in the Asia-Pacific region. Nonetheless,
while Washington has said that it will help build the Philippines’ sea patrol
capability, it has also stressed that it does not take sides on competing sovereignty
claims. The defence treaty between Manila and Washington remains ambiguous,
making no explicit mention of the South China Sea.

5. Outlook

The longer the stand-off continues, the more difficult it becomes for either side to
back down. With neither of the parties showing any inclination to soften their
stance, the prospects for resolving the dispute remain dim. Because of this, the
possibility of conflict over the Scarborough Shoal cannot be ruled out. China seized
control of Mischief Reef in the Philippines’ claim zone in 1995 and sent a warship to

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Analysis: China, the Philippines and the Scarborough Shoal
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survey the Philippine-occupied islands of Panata and Kota. In 1974, China took
control of the Paracel Islands from Vietnam and continues to maintain sovereignty
over the islands. In 1988, 70 Vietnamese sailors died when China sank three
Vietnamese naval vessels in a confrontation at Johnson Reef in the Spratly Islands.

Although the risk of conflict is real and arguably growing, the possibility of a serious
clash over the issue remains low. Even though China has yet to escalate the current
dispute by deploying actual People’s Liberation Army Navy (PLAN) assets, instead
preferring to use paramilitary vessels from China’s Marine Surveillance force, the
Philippines is all too aware of the superiority of China’s naval strength, which would
likely be deployed should the situation escalate seriously. It is also conscious of
China’s importance in terms of trade and economic links.

China needs stability to concentrate on its domestic development goals, principally

because the legitimacy of the Communist Party rests on improving the living
standards of the Chinese population. The worst-case scenario for Beijing is that the
US sets up a naval blockade, perhaps in response to a clash with the Philippines over
disputed waters in the South China Sea. China’s overall strategy appears to be to
bide its time so that it can build up its military and economic strength so when the
time comes for serious negotiations it will be able to do so from a position of
strength. This does not preclude the possibility of small-scale skirmishes over the
coming months which carry the risk of escalation.

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Analysis: China, the Philippines and the Scarborough Shoal
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