Journal of ASEAN Studies, Vol. 2, No. 2 (2014), pp. 103-120 ©2014 by CBDS Bina Nusantara University and Indonesian Association for International Relations ISSN 2338-1361 print / ISSN2338-1353 electronic China’s Crisis Bargaining in the South China Sea Dispute (2010-2013)1 Eryan Ramadhani Pembangunan Nasional University “Veteran” at Surabaya, Indonesia Abstract As one of China’s most intricate territorial dispute, the South China Sea dispute has sufficiently consumed significant amount of Chinese leaders’ attention in Beijing. This paper reveals that China exerts signaling strategy in its crisis bargaining over the South China Sea dispute. This strategy contains reassurance as positive signal through offering negotiation and appearing self- restraint and of negative signal by means of escalatory acts and verbal threats. China’s crisis bargaining in the South China Sea dispute aims to preserve crisis stability: a stabilized condition after escalation in which neither further escalation nor near-distant resolution is in order. From the yearly basis analysis in the four-year span study, China’s longing for crisis stability fits into its conduct in crisis bargaining with Southeast Asian states. Keywords: China, ASEAN, South China Sea Dispute, Crisis Bargaining Background The relations between China and the Association of Southeast Asian Nations (ASEAN) date back to early 1990s when China struggled to break out the ostracism by international community following the Tiananmen incident in 1989 (Storey, 1999). China acknowledged the importance of Southeast Asia region for its economic and strategic values (Li, 2010). In their first encounter, the South China Sea dispute stood as an obstacle that could pose a threat to the nascent relations. China asserted its claims on the disputed territory in the South China Sea by releasing its Law on the Territorial Sea and the Contiguous Zone in February 1992, hatching uproar from the apprehensive ASEAN states about China’s wave of aggressiveness (Buszynski, 2003). Soon after, at the 25th ASEAN Ministerial Meeting (AMM) in July the six regional leaders issued ASEAN Declaration on the South China Sea. It was ASEAN’s first common stance on the territorial row involving China. The succinct Declaration called for all interested parties to exercise peaceful manner in handling the dispute so that it would not magnify into an open conflict. Facing the more urgent and beneficial relations especially in economic field, inter alia, both China and ASEAN doggedly agreed not to let the dispute drive a wedge between them. In fact, China has firmly announced incessantly its position to put aside dispute settlement and to harness the more possible joint development (Fravel, 2011). Any attempts pertain to settlement must be discussed bilaterally between China and each ASEAN claimant states (Buszynski, 2003). Despite its recalcitrant to have discussion with ASEAN as a group, China moderated its attitude in 1999 by toeing the line of ASEAN’s path-breaking agenda to establish a regional code of conduct (COC) on the South China Sea. It is worthy of notice that during that period China decided to play relatively miniscule role while unequivocally reiterating that joint development was of no consequence than dispute settlement writ large. The first ‘phase’ of discussion on a COC did not lend 104 China’s Crisis Bargaining in the South China Sea Dispute (2010-2013) any success. Devoid of unified positions on what a COC should be, a non-legally-binding declaration of conduct (DOC), in lieu of a COC, was signed in 2002. Valencia correctly asserts that “the sad truth is that the claimants agreed on a ‘declaration’ because they could not agree on a binding code,” (Rowan, 2005: 435). The DOC aims to tone down the tensions in the respected area and rein the claimant states in from any escalation by means of building trust and confidence between and among them and holding dialogues. China agreed to sign the document for it does not touch on dispute settlement, a position China withholds. For the past two decades China has been maintaining the pivotal role of bilateral negotiation, for the dispute itself is bilateral in nature, over multilateral negotiation. It is worth highlighting that bilateral negotiations are set only for sovereignty-clung issue which is ambiguous since China believes that it has indisputable sovereignty over the notorious nine-dashed line (Yahuda, 2013). The negotiation on a COC, as well as its predecessor the DOC, is based not on one-on- one dialogues. China’s malleability is associated with the characteristic of a COC itself: a means to manage the dispute, not to settle it. Before the idea of regional COC was put forward on the negotiation table, China was in an agreement with the Philippines (Storey, 1999) and Vietnam (Thao, 2001) to have bilateral COCs-alike although the implementation of the codes remains questionable (Odgaard, 2003). Hence, the border should be drawn to differentiate between China’s bilateral and multilateral negotiation on the South China Sea dispute. China is fine to have talks with ASEAN as one entity in managing the dispute so as to preserve stability. Adversely, China is highly resistant to discuss sovereignty-related resolution beyond bilateral domain. China’s then Premier Wen Jiabao once said “we disapprove of referring bilateral disputes to multilateral forums because that will only complicate the issue,” (Thayer, 2011: 560). This is consistent with China’s claims that the South China Sea dispute is by all accounts bilateral issue. That China has been indifferent to live up to ASEAN hope for concluding a COC; a sudden detour can be contemplated as marvelous. At the 19th ASEAN-China Senior Officials’ Consultation held on 2 April, Chinese officials appallingly announced their willingness, on behalf of China, to commence discussion with ASEAN on a COC later in the year (Thayer, 2013). The success organization of the 9th ASEAN-China Joint Working Group on the DOC and the 6th ASEAN-China Senior Official Meeting (SOM) on the DOC in Suzhou in mid-September 2013―dubbed as the first official round of consultations on the COC, sheds the light on a more cooperative China and a hope for a better dispute management and, to a lesser degree, settlement (Thayer, 2013). The formulation of a COC undoubtedly has been a much-awaited result the negotiation between China and ASEAN could bring about. Although a COC does not amount to settlement, it certainly will become a guarantor of dispute management in South China Sea (Thao, 2001). Literature Review When a territorial dispute ensues, there are three distinct destinations it can end up in: escalation or war, settlement or resolution and stalemate or status quo. China is of no difference. Looking back at history, China has long experience of dealing with twenty seven territorial disputes: both resolved (twenty two) and enduring (five). Of this number, seventeen are resolved through negotiation. The only occasion when China brandished its weapon was during the border wars with India in 1962 and the defunct Soviet Union in 1969―the latter eventually results in peaceful border demarcation culminating in 2005.2 Regardless the appalling low level of coercion China has performed, the rhetoric of China’s proneness 105Journal of ASEAN Studies toward using force lingers. In the period between 1949 and 1992, Alastair Iain Johnston (1998) finds that among major powers China holds higher probability to be violent in territorial dispute as opposed to foreign policy-related issues and regime change, except for the United States (US). This, Johnston (1996) asserts, is rooted in China’s strategic culture that does not depart from realpolitik that justifies the long-standing offensive nature of China’s foreign policy. Andrew Scobell (2003: 193) finds that China performs a dual-mentality he calls ‘Cult of Defense’ representing both China’s nature of defensive and offensive (neither pacific nor belligerent) that renders “Beijing readiness to employ military force assertively against perceived external or internal threats all the while insisting that China possesses a cultural aversion to using force, doing so only defensively and solely as a last resort.” The negative power shift theory by M. Taylor Fravel (2007/2008) addresses that in some of its territorial disputes China takes inimical and dicey moves by exerting force based on two indicators responsible for state’s bargaining power: the amount of disputed land it holds and the ability to project power. Thus, when its claim is weak relative to the adversaries combined with declining power, China is keener to use force to avoid further unfavorable position. Taking the opposite view, some scholars argue that China also has proclivity to not use force in coping with territorial-related row. Fravel’s (2005) regime insecurity theory forges link between China’s regime insecurity and China’s decision to give concession of territorial claims to its neighboring states. The embattled regime is more lenient in conferring concession in exchange for domestic security. China’s domestic cleavages bring out negotiations aimed for domestic political stability which in turn will pull China from the brink of regime collapse. Using the South China Sea dispute as a case study, Ian James Storey’s (1999) ‘creeping assertiveness’ theory underlines that China refrains from using force and maintains diplomacy while concurrently strengthening its claims in the contested area. The same thought is depicted by Fravel’s (2011) delaying strategy, in which China prefers to delay the settlement in favor of conflict management without abandoning its claims. This strategy is chosen when China confronts an intractable dispute and reluctant claimant states to accept China’s terms. Ang Cheng Guan (2000: 202) says that China allows for a same pattern to recur with regard to the way it grapples with the South China Sea dispute called ‘capitalizing on opportunities’: dexterity in taking action at the right moment “when its perceived opponents are either distracted or when no strong response is expected.” According to Sun Xuefeng and Huang Yuxing (2012: 414-415), “in the absence of the homeland encirclement by foreign powers China might not respond to territorial disputes by resorting to forces.” To sum up, the existing literatures mostly focus on the enigma of how and when China uses force and gives concession. However, none of them provides satisfactory explanation on China’s policy in negotiation with the adversaries. Furthermore, the way China conducts negotiation relating to territorial dispute over the South China Sea is left unexplored. Thus, this paper aims to fill the gaps on China’s territorial dispute policy in the South China Sea. Crisis Bargaining and China’s Strategy When states get embroiled in a conflict or crisis, the options available to them are either to go to war or to negotiate. As war becomes even more costly to execute, when the parties involved reach a ‘mutually hurting stalemate’, bargaining through negotiation can be a promising alternative to ponder (Zartman, 2001). Although there is no guarantee that crisis bargaining will always lead to a peaceful trajectory, once states learn the benefit of taking such strategy, even slightly compared 106 China’s Crisis Bargaining in the South China Sea Dispute (2010-2013) to that of shooting war, they are likely to carry it through (Fearon, 1995, 1998). The importance of crisis-bargaining lies in its ability to both prevent escalation and to usher in war. States involved both want to prevail on the crisis as well as to thwart war from happening (Morrow, 1992: 153). History provides abundant examples how crises were managed through bargaining that wound up in either peaceful resolutions or further crises or even wars. There is no universal definition of what crisis bargaining is. Bargaining, according to Robert Powell (2002: 2), is deciding how to divide a ‘pie’, in which although potential gains might lure states to cooperate, they also posses the lust to maximize each own gains. In a not-so-distant view, Thomas Schelling states that bargaining is not a zero-sum game for the sake of winning absolute gains; rather, it is a relative-gains game with which states can cooperate to accomplish through bargaining (Lebow, 2006: 431). Crisis bargaining, simply put, is a way states entrapped in a crisis make attempts to bargain through various strategies to secure its interests and pursue gains. Spotted in an inter- state crisis, state A employs a gesture of demand that results in state B’s response whether to accede to or defy such demand. If state B accedes, the crisis is resolved and state A gets what it demands. If state B defies, state A examines the defiance and sends threat asking for further compliance. Here, two scenarios might happen: either state B complies or state A compels once it learns that state B is unlikely to bend and back down. The bargaining itself takes place when each state responds to each other’s demands and threats that transpire in a sequential manner (Morrow, 1989: 941). Crisis bargaining steers state to considerately gauge the cost and benefit of every visage it displays to its own advantage. In so doing, a state employs disparate strategies that best fulfill its interests as costless as possible. Different strategies bear different costs and benefits. There is no best strategy that is superior to others. Nor is one that can guarantee the accomplishment of interests a state seeks for. As James Morrow (1989: 965) sums up, “the appropriate crisis bargaining strategy must reflect a nation’s commitment to the stakes of the crisis and its willingness to run the risks of escalation.” Signaling Strategy A classic work of Robert Jervis (1970: 18) on images in IR signifies the indispensable role of signals as one component that buttresses crisis bargaining: “signals are statements or actions the meanings of which are established by tacit or explicit understandings among the actors.” From this definition a signal is premeditatedly showcased and deployed so that the other side can surmise the meaning of such action and learn the message contained. James Fearon (1997) is among the laudable scholars whose work roots in crisis bargaining. In one his seminal work, he proclaims that when a sender sends a threat adequately credible that it incurs cost that he might otherwise be unwilling to do, it is a costly signal. Here, he chains costly signal to the credibility of using a threat. A credible threat is associated only with a resolved sender who is willing to pay the cost. Andrew Kydd (1997: 141) weighs in by stating that states can capitalize on a costly signal as a means to unfold their utilities and sustain themselves in a crisis without turning eyes to war. A costly signal is more palatable for security seeker states than aggressive ones. A security seeker signals its willingness to do certain things, e.g. arms control, costly enough for it to renege and jeopardize the security it seeks. On the other hand, an aggressive state would be reluctant to forfeit its arms in exchange for insecurity and vulnerability because for it the cost is too extravagant. A costly signal shared and exchanged between security seeker states enables cooperation to be achievable. In another work, Kydd (2000: 326) 107Journal of ASEAN Studies defines costly signals as those that distinguish trustworthy from untrustworthy states―only trustworthy states that are not hesitant to issue such signals, while untrustworthy ones find it too risky to materialize. Regarding trustworthy-vs.-untrustworthy actors described by Kydd (2000: 326), a costly signal is of relevance to reassuring the other side of goodwill and trust that shepherds to cooperation. Janice Gross Stein (1991: 432) defines reassurance strategies as an “attempt to reduce miscalculation through verbal assurances but a broad set of strategies that adversaries can use to reduce the likelihood of the threat of use of force.” On the same page, Richard Ned Lebow (2001: 128) affirms that reassurance can allay the would-be challenger from taking any action that could inflame the crisis by communicating its benign and defensive intention. Taking a bit distinctive stance, Alexander George (2003: 466) assumes that the very conditions by which an adversary is more prone to taking hostile action due to its weaknesses, vulnerability, or misperception toward the intention of the other side is the reason that evokes reassurance’s prominence over deterrence. That adversary possibly feels vulnerable and insecure respecting its position in a crisis, strategy of reassurance can help manage fear and misunderstanding to dissipate, thus toning down the menace of escalation and war (Lebow & Stein, 1995: 317). Joining the discussion, Kim Jungsoo (2010) inserts an alternative definition of reassurance strategy as a compensation for what deterrence cannot attain by performing a positive signal instead of threat. To ward off the use of force in a crisis, Stein says, reassurance can help gradually scale down the tension and make recourse-to-force an infelicitous option (Kim, 2010: 9). China’s Signaling Strategy The South China Sea discord is believed to be the hot spot for an actual man-to-man conflict insofar it is not handled considerately. Since the first military clash between China and Vietnam in the battle for Paracel Islands in 1974 onwards, the region has been oscillating between escalation and de-escalation. In the past decade, nonetheless, the parties involved has buckled down in formulating regulation alike called the DOC, albeit not legally- binding, to manage the crisis to not spiral out into an open military conflict. Such attempt is a part of crisis bargaining between China and ASEAN states and is still undergoing. The current tug-of-war centers on discussion and consultation among parties involved to orchestrate a legally-binding COC. China’s signaling strategy is divided into two categories: positive and negative signals. Positive signal is any policy that helps temper the crisis from escalation. If a signal is positive, China is reassuring Southeast Asian neighbors of its longing for stability. A positive signal of reassurance constitutes displaying openness to negotiation on a COC and appearing self- restraint. In reverse, if a conduct triggers a surge in crisis or escalation, it is a negative signal. Negative signals consist of escalatory acts (e.g. display of force, sanction, etc.) and verbal threats. Looking through the events coming about year-on-year from 2010 to 2013, it is conceivable to break down each policy into positive or negative signals. Positive Signals Reassuring self-restraint Among other actions that can be classified as signal, protest remarks are not oblivious. One example was a rebuttal to Vietnam’s indignation that China’s vessels transgressed its sovereignty over the Paracel Islands in August 2010. A remark such this can be either positive or negative signal, depending on the message herein. If the remark was a proclamation of war, it certainly was a negative signal. In contrast, a self-restraint remark, such that displaying disagreement about other claimant state’s infuriating statement or controversial policy, could be 108 China’s Crisis Bargaining in the South China Sea Dispute (2010-2013) regarded as a positive signal. The aforementioned remark on Vietnam accusing China’s violation of its sovereignty exemplifies a positive signal, for it could be translated into keeping China from provocation. The rift between China and the Philippines was another source of Beijing’s appallingly positive signals. In July 2011 during his visit to Beijing, Philippines Secretary of State Albert del Rosario made an agreement with China to concertedly look after the peace and stability in the South China Sea. President Aquino then made his own official visit to China in September for the sake of securing the $60 billion-worth economic cooperation between the two nations. China appeared self-restraint when spokesperson Hong Lei on 14 July remarked a response to Philippines’ argument that China would not be able to validate its claims in concurrent with UNCLOS. He instead reaffirmed China’s insistence on resolving the dispute through “direct negotiations between related parties… [as] the most effective way,” (An, 2011). Positive signals rooted in self-restraint remarks were detectable in 2012. Departing from the Scarborough Shoal incident, in April the Philippines requested China to bring their dispute before the ITLOS (International Tribunal for the Law of the Sea). It was soon rejected by spokesperson Liu Weimin echoing the agreement that presaged the deal agreed by the two states to handle the dispute delicately through bilateral talks (China summons Manila, 2012). Deputy Foreign Minister Fu Ying then summoned Manila’s chargé d’affaires in Beijing to protest against the incident in the Scarborough Shoal in accordance with China’s rejection of the Philippines’ earlier request (Zhang & Qiu, 2012). The protest and rejection served dauntingly as China’s positive signals that revolved around the standoff in the disputed territory. Even though the hawkish atmosphere hovered in Beijing, it did not make China exploit the moment forthwith. China’s Embassy to the Philippines consigned strong- worded protest to the government in Manila castigating the harassment of Chinese fishermen who took shelter at a lagoon as the storm hit the area. On 19 June Vietnam National Assembly passed the Law of the Sea encompassing both Paracel and Spratly Islands. Following this news Vice Foreign Minister Zhang Zhijun summoned Vietnamese Ambassador to China to protest Hanoi’s unilateral move that was also infringement upon China’s indisputable sovereignty. Zhang said that such action was “illegal, invalid and detrimental to peace and stability in the South China Sea,” (China opposes Vietnam, 2012). Along with the summons, China’s Foreign Ministry released a declaration to protest the law and the NPC officially shoved Vietnamese government to correct the disservice. China’s reaction toward this particular conduct was less belligerent than it actually could do. Instead of exerting a more coarse counteraction, China’s feedback on those protests was undoubtedly positive signals. Beginning the year of 2013, the Philippines decided to follow through its plan to file an arbitration case, respecting the dispute against China, with ITLOS. Besides sending back a note verbale to the Philippines government, China basically did not take any superfluous action to correct or even punish Manila. Instead, China issued a remark that counter- corroborated Philippines baseless claim for arbitration and explicated that China’s turndown of the request was solidified by international law, i.e. UNCLOS (United Nations Convention on the Law of the Sea). Reassuring openness to negotiation on COC Remarks can also carry positive signals to buoy negotiation on a COC. On 30 September 2010 China and ASEAN started negotiation on establishing a binding COC. Held in Manila, the discussion converged on the making of draft for the COC. China convinced its counterparts of its willingness to work with 109Journal of ASEAN Studies ASEAN in constructive way to conclude a COC. As of the end of the discussion, no specific date was set for the conclusion of the negotiation, leaving it at a standstill. Albeit China’s commitment to push for negotiation had satisfied ASEAN states, China was resistant to “the inclusion of sanctions in the draft against claimant states that [would] violate the code under the process of consultations,” (China, ASEAN begin 2010). This conduct referred to China’s positive reassurance toward ASEAN by welcoming a discussion on a COC, regardless some reservations China held as to what to include in the document. With the signing of the Guidelines for the Implementation of the DOC in the South China Sea in 2011 a positive outlook for peace and stability came to live. On all accounts, China acknowledged the value of having a COC to keep the stability in the region intact. Assistant Foreign Minister Liu Zhenmin said that “enacting a COC is part of the process to implement the DOC [and] China is willing to actively push forward the implementation of the DOC with ASEAN nations,” (Li & Zheng, 2011). The commitment to move forward discussion on sustaining peace and stability was reiterated at the 14th China-ASEAN Summit on 18 November in Indonesia. On his official speech before the Summit, Premier Wen Jiabao said that China is “ready to work actively with ASEAN… and begin discussions on a COC in the South China Sea,” (Wang, 2011). At the 6th East Asia Summit on 19 November Wen phrased that China along with ASEAN shared the common will to work for a COC (Ministry of Foreign Affairs of the PRC, 2011). Although the detail of when and how the discussion shall be embarked on was not present, such statement embedded a clue on the positive trajectory China wanted to take. Representing China at the 45th AMM on 9 July 2012, Vice Foreign Minister Fu Ying informally held a dialogue with ASEAN leaders to determine the best way for them to forge a COC. Similar tone was detected when Foreign Minister Yang Jiechi delivered a statement at the 19th ARF that “China is ‘open’ to launching discussions on COC on the basis of full compliance with the DOC by all parties [and] hopes that all parties [would] do more to enhance mutual trust, promote cooperation and create necessary conditions for the formulation of COC,” (Yan, 2012). Wen’s iteration of the consensus reached by China and ASEAN to brew favorable conditions for the DOC to be fully actualized and a COC to be hashed out during the 15th China-ASEAN Summit invigorated China’s attempts to reassure ASEAN, especially after the fray at the July meeting. China reassured ASEAN about its willingness to perpetuate consultation on a COC at the 19th China-ASEAN Senior Officials’ Consultation in April 2013. The newly appointed Foreign Minister Wang Yi vouched China’s lingering will to work along with ASEAN to develop a COC from the principles laid out in the DOC. The 8th China-ASEAN Joint Work Group on the DOC celebrated the same spirit to promote a COC. To up China’s goodwill to contribute toward the management of peace and stability in the South China Sea, China and ASEAN made an accord at the 20th ARF in July to start the official consultations on establishing a COC. The same message was conveyed by Prime Minister Li Keqiang at the 10th China-ASEAN Expo in September that China would “continue to comprehensively implement all provisions in the [DOC] with an attitude of accountability and steadily facilitate talks over a COC in the South China Sea step by step under the framework of the [DOC],” (Yan, 2013). Official consultations eventually were held between China and ASEAN under the tagline of the 6th SOM and the 9th Joint Work Group on the Implementation of the DOC in September. The official dialogues were a follow-up of the shared commitment between the two sides that there was “the need to steadily move 110 China’s Crisis Bargaining in the South China Sea Dispute (2010-2013) toward the conclusion of a COC on the basis of consensus,” (Fu, 2013). Vice Foreign Minister Liu briefed that the meetings concluded “an agreement on a principle guiding the COC consultations which is a principle of gradual approach based on consensus and the consultations on the COC within the framework of implementing DOC,” (Bi, 2013). Attending the 16th China-ASEAN Summit in October, Premier Li vowed to pursue the official consultations with ASEAN to formulate a COC as to better manage the dispute over spared territories and waters in the South China Sea. In the same month, Li later made a promise at the 8th EAS that China would “work jointly with ASEAN members to effectively implement the DOC and advance the consultations on a COC in an active and prudent manner based on the principle of consensus-building,” (Mu, 2013). As the year drew to an end, at the 9th Conference of the Council for Security Cooperation in the Asia Pacific (CSCAP) on 3 December, Liu confidently stated that “China and ASEAN countries are making joint efforts to implement the DOC comprehensively and effectively and will push forward COC discussion,” (MOFA of PRC, 2013). Negative signals Escalatory acts The first negative signal discovered in 2010 stemmed from the National People’s Congress (NPC) Standing Committee approval of the National Defense Mobilization Law in February. This new Law would step up the regulation, organization and coordination of such program in all level of governance from county to state up to the state level. Even though in its Defense White Paper China restated its adherence to peaceful development dictum, this Law constituted to some degree China’s preparation for dealing with external uncertainties. In February 2011 a China’s ship threatened a group of Philippines’ fishing boats whose activities were located in the west of Palawan Island. According to the Philippines government, the China’s ship opened fire to the fishing boats as they sheared off. There was no casualty reported as the three-round shots landed hundreds of meters from the fleeing fishermen. Another strain between China and the Philippines was repeated in March when a China’s vessel gave strong order to a survey ship MV Veritas Voyager to leave the Reed Bank. The ship was conducting research for oil and gas exploration. The next flashpoint of the year was the cable-cut incidents involving China and Vietnam in May and June. Accusations and counter- accusations as to who was right and wrong marred the retained stability in the South China Sea. On a remark dated 28 May spokesperson Jiang Yu bluntly quipped that Vietnam had stained the bilateral consensus between the two states on the South China Sea―the same remark was repeated by spokesperson Hong Lei on June 9 (MOFA of PRC, 2011). The harbinger of 2012 sprang majorly from the Scarborough Shoal standoff between China and the Philippines. Both states took hawkish approach in order to prevail on the crisis. The decision not to back down which at one point contributed to the escalation that could drive both states to a shooting war nightmare illustrated China’s negative signal. The follow- up decision not to escalate the heated crisis at the same time proved China’s weighing on the need for de-escalation. Unfortunately, conversed policies were soon taken by China that helped hamstrung the dispute management in the South China Sea. Following it, China’s Embassy in Manila issued a safety alert for Chinese people in the country of an impending wide-scale protest. The tension did not wane yet. The Chinese government announced a travel advisory to the Philippines that pummeled its tourism hardly. Tourism is one of Philippines most important source of domestic income, accounting for 5 percent of the total income. The travel warning “led to the cancellation of 111Journal of ASEAN Studies scheduled airlines seats by approximately 15- 20 percent” (Ortuoste, 2013: 247). Tourism was not the only economic aspect struck by the territorial row in the Scarborough Shoal. Due to the tension China suspended its banana imports from the Philippines―the country’s fifth largest export commodity. The next big wave struck in July after the establishment of Sansha City located in a Woody Island, the biggest island in Paracel groups, equipped with a military garrison. Spokesperson Qin Gang expressed that “setting up Sansha City is the Chinese government’s necessary adjustment of the current administrative agencies, which is completely within China’s sovereignty,” (China opposes US, 2012). As a result of this policy, the Philippines and Vietnam addressed strident protests toward China. In March 2012 China’s naval exercise that took place in waters near James Shoal approximately 80 km from Malaysia’s Sarawak inciting protest from Kuala Lumpur. A month later a China’s maritime surveillance ship came back to the area and left steel markers to assert Beijing’s sovereignty. Although this incident was quickly scuttled by Malaysia, it could not help but raising fidgetiness among other claimant states. Later on, China and the Philippines were embroiled in a near-to-second-standoff situation on the Second Thomas Shoal. When China dispatched thirty ships to outflank the Philippines soldiers who defended the area, many predicted that an escalation was in the offing. However, Beijing did not live up to that prediction and only accused Manila for illegal occupation on China’s territory. Verbal threats Foreign Minister Yang’s response at the 17th ARF in 2010 Hanoi was acted as China’s negative signal of verbal threat. Having discovered that his fellow stateswoman Clinton encouraged ASEAN states to speak up their minds regarding the South China Sea dispute and herself later addressed a lengthy speech on the prominence the United States placed on the freedom of navigation and uninterrupted economic activities going through the South China Sea, Yang was chafed and retorted that “China is a big country and other countries are small countries and that is just a fact,” (Storey, 2010: 4). He then was reported storming out the room after making such insolent remarks. This reaction is a negative signal that could aggravate tension in the territorial row over the South China Sea. In November another negative signal came out of Chinese leaders’ decision to start the annual naval exercise in the South China Sea. In the aftermath of the Reed Bank incident in 2011, Yang warned for unilateral and illegal activities, including oil and gas exploration, in China’s territory without Beijing’s approval. In the following June, Vietnam and India concurred to jointly explore oil and gas in the blocks located in the contested waters in the South China Sea. China directly condemned such action adding a warning that no foreign company could conduct exploration in China’s waters without its sole permission (MOFA of PRC, 2011). In the beginning of the Scarborough Shoal crisis, China retained its self-restraint not to further confound the imminent crisis through the use of diplomatic protest. Once the crisis failed to be tamed, both China and the Philippines were trapped in a two-month standoff. Beijing could not help but adjust its policy to a more hawkish one creating a surge of counter-action by Manila. China then announced the assignment of combat-ready patrols to disputed areas to defend its territorial sovereignty. Summary of China’s Signaling Strategy This four-year span study discloses changes in China’s bargaining strategy. In 2010 both positive and negative strategies were not utilized sublimely. Reassurance on negotiation and self-restraint was hardly noticeable. Starting in 2011 China became 112 China’s Crisis Bargaining in the South China Sea Dispute (2010-2013) more amenable in signaling self-restraint and especially in reassuring its openness to negotiation, albeit fairly limited to general discussion on managing the South China Sea dispute. In the same year negative signals were also evident, spanning from verbal threat to physical protest toward illegal oil and gas exploration by claimant states. An alluring trend in this crisis bargaining strategy existed in 2012 with abounding positive and negative signals. In 2013 both signals pitched in to maintain the stability in the region, climaxing on the commencement of formal negotiation on a COC in September. China’s strategy in crisis bargaining with ASEAN can be summed up as follows: Table 1. China’s Crisis Bargaining Strategy Self-restraint is powerful reassurance, for states with superior capability have tendency to use it lavishly at their own advantage. This logic is corroborated by Lebow’s study on the Cuban Crisis of 1962. He contends that the success of the crisis defuse lay with the mutual reassurance between John F. Kennedy and Nikita Kruschev. One illustrious factor forging such triumph was Kennedy’s self-restraint not to attack Cuba regardless his country’s superiority both militarily and geographically, instead continuing extensive communication with Kruschev (Lebow, 2001). In this study context, official protest remarks must be differentiated between ones that constitute self-restraint and threat. Threat-bound remarks imply what Stein (2013) calls ‘if-then’ scenario: if B does not do what A says, then A will harm B. This implication however need not accrue in a crystal-clear form. China’s verbal threat through protest remarks, such as the warning for illegal oil and gas exploration in the disputed waters, do not unreservedly touch on harmful treatment the contestant might receive should it defers. Yet, different remarks mentioning and emphasizing China’s resoluteness to defend its territorial integrity accustom Stein’s scenario. For example, spokesperson Hua Chunying said that “China is firm and resolute in defending national territorial sovereignty [while] at the same time…always maintain that relevant territorial disputes should be properly solved through bilateral negotiations and friendly consultations,” (MOFA of PRC, 2013). Self-restraint- bound remarks conversely imply China’s response toward other claimant states’ actions that instead of using force the China’s side opts for verbal protests. Aside from signaling self-restraint, China has been studiously reassuring ASEAN states of its willingness and support to persist dialogue and consultation including negotiation on the widely endorsed COC. Reassurance aims at calming down tensions that otherwise might spur into military conflict. States reassure their adversaries through establishing cooperation or giving certain rewards out of compliance. In this study reassurance focuses on openness to negotiation and self-restraint. This does not mean that cooperation is not offered. Positive signals Self-restraint Openness to negotiation Negative signals Escalatory act Verbal threat 113Journal of ASEAN Studies Instead, both bilateral and multilateral cooperation with ASEAN states has savored an upsurge in the past years. The reason for choosing reassurance on negotiation and self-restraint is that they straightly connected to the dispute itself, in a sense that they do not need longer period of time to affect the responses or policies of ASEAN states. China’s offered cooperation is in majority long-term projects and every single project takes time for adjustment and enforcement. China’s less belligerent conducts in the South China Sea dispute as suggested by preceding analysis does not tally with what the pessimists has long predicted. It is not deniable that China did flex its muscle several times by signaling threats of both verbal and non-verbal forms. Nor is the fact that China’s naval activities become more numerous in the past few years. However, it is noteworthy to cogitate what veers China to perform certain conducts under the crisis bargaining theme. Connecting China’s Crisis Bargaining to Crisis Stability in the South China Sea The goal of crisis bargaining is avoiding further escalation or war. States resort to bargaining when the cost to continue their bellicose acts exceedingly becomes unaffordable. Or simply because they find it more lucrative to win the crisis through bargaining regardless their willingness and capability to bear the burden of protracted war. Although there is no certainty that such bargaining will cater for resolution instead of exacerbating the crisis, states come to this at least hoping for stability. Stability itself does not necessarily mean resolution. The prospect for both sides to be drawn into another escalation or war remains. Crisis stability in international relations (IR) literatures is mostly associated with the Cold War era nuclear- based stability between the US and Soviet Union. The main thesis is that first-strike advantage might not be offsetting on account of the capability of second strike to induce high-scale retaliation (Powell, 1989). Thus, stability had oddly prevailed during that period, since neither the US nor Soviet Union would like to wager on starting war. Even though most literatures on crisis stability were written during and in the wake of Cold War, some lessons for today’s conditions could be drawn upon. Steven J. Brams and D. Marc Kilgour (1987: 833-834) state that crisis stability ensues after escalation from which states attempt to curb the simmering situations. They find that sometimes threats can be utilized to prop up conciliatory postures of both sides in order to stabilize the crisis. States escalate on purpose before damping it down to stabilize the crisis through the use of threats. Nonetheless, there has to be a capability to recourse the crisis, otherwise it would be just a suicide risk-taking mission (Langlois, 1991: 802). Crisis stability aims primarily to impede an outbreak of war and not merely to come out of feud as a winner (Axelrod, 1990). It can be attained when both sides agree that war gives birth only to mutual destruction (Jervis, 1991). According to these literatures, the element of threat is crucial to support crisis stability. Another is escalation. Albeit none of them mentions how the message of crisis stability states prefer is best conveyed, crisis bargaining can be one way. This paper argues that crisis bargaining is a means for states to achieve crisis stability. As Avery Goldstein (2013, 51-52) says, “crisis stability is greatest when both sides strongly prefer to continue bargaining.” China’s bargaining in the South China Sea is of no difference. Crisis stability in the South China Sea means that the territorial fracas does not 114 China’s Crisis Bargaining in the South China Sea Dispute (2010-2013) escalate into an all-out war. Nor does it get resolved. It does not equal to status quo per se either. Rather, it is a transition from escalation to status quo (Langlois, 1991). Therefore, the South China Sea crisis is stable when there is an upward movement of frictions between and/or among the parties involved followed by a downward movement of such occurrences. A yearly-based analysis shows the dynamic of China’s crisis bargaining that leads to crisis stability over the South China Sea row. The previous section unveils China’s bargaining strategy consisting of both positive and negative signaling. In 2010, no heavy escalations emerged although negative signals were apparent. Reassurance was not ostensible partly because of the lack of escalation. That being said, the year 2010 was entitled to crisis stability. The following year of 2011 was home to a wave of escalation, such as the cable-cut incidents and the expulsion of survey ships in the contested waters. There was for certain an ascending trend of escalation. Reassurance through offering negotiation on a COC and self- restraint started to bounce up too albeit fairly limited. The mixture of varying positive and negative signals was commensurate with crisis stability premise. Moving forward to 2012, the escalation rate was almost similar to that of 2011, perhaps more intense. The brinkmanship in Scarborough Shoal lent support for the heightened tensions between China and some of its Southeast Asian neighbors. The ‘punishment’ received by the Philippines succeeding the incident made the dispute even fester. In spite of it, what is striking was the positive signaling, particularly reassurance of openness to negotiation. Chinese leaders made more remarks and pledges aiming at reassuring ASEAN states of China’s preference of negotiation over force. The mentioning of discussion and consultation on a COC boosted up China’s de-escalation endeavor. Yet, China did not set a certain date for negotiation to start that rendered ASEAN states’ suspicion of Beijing real motive. Despite the dearth of realization of the vowed negotiation, there was the South China Sea crisis stability in 2012. Escalations were discernible in the first half of 2013. China’s incursion in Malaysia-claimed James Shoal and encirclement of the Second Thomas Shoal were the major source that succeeded in straining the relations between China and ASEAN. Similar to the preceding year, positive signals attempting to deescalate tensions were spotted. But unlike 2012, the words orchestrating pledge of negotiation on a COC eventually turned to deeds; hence, making the crisis more stable in 2013. The aforementioned analysis confirms the argument that China seeks for crisis stability in the South China Sea spat through crisis bargaining―by means of signaling strategy. Positive signal of reassurance contributes to stability; the negative one to instability. Table 2. Crisis stability in the South China Sea Dispute (Rough measurement based on China’s signals) Level of escalation Level of de-escalation Crisis stability 2010 Low Low Stable 2011 Medium Medium Stable 2012 Medium High Stable 2013 Medium High Stable 115Journal of ASEAN Studies It can be fairly said that positive and negative signals are offsetting each other in order to keep the crisis stability intact. That Beijing has pinned an ‘indisputable sovereignty’ on the disputed territory and waters in South China Sea, skeptics are certain that any resolution that might strip China off the territory is not on demand. It is true that China has steadily articulated its position that its sole sovereignty is unquestionable. However, China highly values its strengthened relations with ASEAN that it will not let anything, including the South China Sea dispute, to come between the two sides. China delicately takes care of this crisis by ensuring its stability. It is in accord with what crisis stability is about that at a certain point states, regardless of their capabilities vis-à-vis the adversaries, advocate a U-turn from escalation to stabilization. The motivation might vary. China surely is in possession of more cutting-edge military technology against ASEAN states combined, but it has not gone further from escalation stage. Instead, China fosters negotiation with ASEAN on something that it had been against, the COC. This way, China has validated the maintenance of crisis stability in 2013. Conclusion This paper argues that China performs crisis bargaining in coping with the South China Sea dispute against Southeast Asian claimant states in order to keep the crisis stable. By stable it means the crisis does not escalate into a military conflict. Since China keeps insisting on its indisputable sovereignty over the contested areas in the South China Sea which reflects to some degree the unlikelihood for it to give up its claims, a stable crisis could also refer to a condition when concession is unlikely to be given at any time in the near future. Thus, keeping the crisis stable amounts to managing the dispute to stay in the domain of status quo. China crisis- bargains in the South China Sea dispute by means of implementing signaling strategy. This strategy is categorized into two types: positive and negative signals. Positive signals are those that prop up crisis stability over the South China Sea; negative signals are those that catapult the crisis to escalation. In 2010, both signals were hardly conspicuous, making crisis stability difficult to discern, although the dispute itself was sufficiently stable. Escalation began to crescendo in 2011 and peaked in mid-2012 with the cable-cut incidents involving China and Vietnam and the Scarborough Shoal standoff between China and the Philippines served as the highlight respectively. It did not cease in 2013 but slightly descended. Along the way, positive signals of reassurance parched the holes resulting from the negative signals. Reassurance shot in 2012, especially in the half-end of the year, driven partly by the Scarborough Shoal incident earlier in the year. From crisis stability point of view, stability was apparent in 2012 on account of the escalation that opened the year and the reassurance that ended it. This stability was retained in 2013 whose escalation, drawing from the James Shoal and Second Thomas Shoal incidents, was menacing but then offset by a high-level of reassurance climaxing in the initiation of COC negotiation. The major finding from the analysis on China’s crisis bargaining in the South China Sea dispute is that crisis stability at this juncture is the most favored goal the leaders in Beijing are aiming for. Notes 1 The year 2010 as the starting point is chosen because it was the first time the South China Sea dispute became 116 China’s Crisis Bargaining in the South China Sea Dispute (2010-2013) internationalized with the United States’ interference in the regional meeting. This is at odds with China’s persistent in keeping the crisis between itself and Southeast Asian states, especially the claimant states. Some studies suggest that China’s assertiveness started to take off earlier and capped in 2009, e.g. the killing of a Vietnamese fisherman by Chinese patrol vessels in 2007 and the Impeccable incident and Vietnam-Malaysia joint submission to the United Nations Commission on the Limits of Continental Shelf in 2009 (Emmers, 2010; Thayer, 2011). However, during that period interesting twist-and-turn in China- ASEAN relations was not generously ample. China’s responses to such events were quiet modest. Also, there is a constraint with regards to the availability of the archive on China’s official remarks (the English version) before the designated period of this study. According to Bj�rn Jerden (2014), the rhetoric of China’s new assertiveness in its overall foreign policy is a sheer misunderstanding. In contrary, after Clinton’s remarks confirming the United States national interest on the South China Sea in 2010, the tensions began to accrue. Alastair Iain Johnston (2013), in a similar tone, argues that China’s new assertiveness in the South China Sea started to take shape in 2010. Thus, it is worthy of investigation as to how China comes to grips with the new dimension of a more convoluted, if not partially internationalized, territorial dispute against some ASEAN member states. The year 2013 is selected because it was a start of China’s policy change in terms of negotiation with ASEAN from a staunch objection to moving forward with negotiation on a legally-binding COC to an endorsement of one. 2 The war with Vietnam in 1979, though broke out in the border between the two states, was not driven primarily by territorial issue. In a year leading up to the war, scores of border provocations between the two sides occurred without clear evidence of who was responsible for the first shot. Nonetheless, the main reason for China’s ‘teach Vietnam a lesson’ military assault was more geopolitical than territorial: Vietnam’s closer relations with the Soviet Union and invasion to China’s partner Cambodia. Meanwhile, China accused Vietnam for intruding its border, which was counter- argued by Vietnam, and for persecuting and expelling ethnic Chinese to South China provinces. For comprehensive analysis on Vietnam War 1979 see Tretiak (1979) and Zhang (2005). About Author Eryan Ramadhani holds a Bachelor of Social Science degree in International Relations from Universitas Indonesia and a Master of Law degree in Political Science (International Relations) from Tsinghua University. She is currently a full time teaching assistant at the Department of International Relations, Universitas Pembangunan Nasional “Veteran” Jawa Timur, Surabaya. Her research interests include conflict studies, foreign policy analysis, and area studies of Northeast and Southeast Asia. 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