Why China won’t risk war over troubled waters

Too bad Deng Xiaoping is no longer around to resolve China’s complex problems into one-liners.

But it was not very long ago that 150 years of British rule in Hong Kong, an eternity of delicate diplomacy and high anxiety, ended according to a four-word doctrine by the Chinese patriarch: one country, two systems.

So, on a wet summer night in 1997, five months after Deng’s death, Hong Kong solemnly returned to Chinese sovereignty, its democratic institutions and way of life intact, never to be touched by its communist masters for another 50 years.

I had been in Hong Kong eight years almost to the day, long enough to have become aware of historic developments across the border.

In a 1972 visit to a dust bowl on Hong Kong’s doorstep that would become Shenzhen, Deng settled the Marxist-capitalist debate over wealth and social justice by proclaiming: “To be rich is glorious.”

Perhaps he never meant to dictate the future course of history when he weighed in on China’s supranational issues, particularly its longstanding dispute with several of its neighbors over uninhabited islands in the East and South China Seas.

But he did. He cooled the rhetoric by telling the mandarins to “leave the problem to future generations.”

And until some years ago, before China’s growing economic and military might gave it a disproportionate voice on regional issues and increased assertiveness on the world stage, the territorial dispute had been on Beijing’s back burner.

As with most conflicts involving territory, sovereignty is at the heart of this one. But it is an overarching concept, and despite its long history, it is more easily applied within borders. Outside, it is open to interpretation, especially when it overlaps national interests.

Deng understood that the problem was intractable from a sovereignty standpoint, and by kicking the can down the road, he left the field open for future generations to come together and talk common sense, or at least agree to disagree. As long as everyone recognized that sovereignty was the goal line, they were free to do as they pleased on the pitch. No hard and fast rules of engagement, only a willingness to preserve the status quo. That is how the region spent the past three decades considerably free of territorial tensions.

China has been mainly responsible for ratcheting up the political temperature in recent months with a series of questionable moves.

The most recent comes from the southern province of Hainan. The provincial government began requiring permits to fish disputed waters in the South China Sea. The new policy, promptly challenged by China’s neighbors, followed a controversial air defense identification zone announced last month by the central government in Beijing. In the fall of last year, at the height of tensions with Japan over the Diaoyu Islands (Senkakus to the Japanese), China quietly established an offshore political department to administer the disputed territory.

Yet, there has been no large-scale annexation of territory by the Chinese or other claimants, and Beijing’s naval posturing aside, the troubled waters remain largely accessible to commerce.

That is a starting point for a newer, braver approach to the whole territorial question.

Without saying it in so many words, Deng might have meant to set aside political sovereignty to allow progress on the commercial front. The premise might have been born out of his ambition to turn China into an economic powerhouse, which has come to pass, but it is as relevant and important now as it was then. By most accounts, the Chinese leadership continues to hew to the idea.

It is up to the major claimants, which include the Philippines, Japan, South Korea and Vietnam, to engage China and each other along those lines and set aside political considerations for economics. If that takes politicians disengaging from the process and allowing the private sector to come forward and play a leading role, so be it.

After all, the quarrel is not about shoals, barren rocks, fisheries and air space. It is over what lies beneath the water—oil and natural gas potentially sufficient to power all the claimants for the next 100 years.

Corporate dealmakers, not politicians or diplomats, hold the key to those resources. As long as governments can guarantee a level playing field, companies from these countries can cooperate on a whole range of exploration activities. China has been doing oil exploration deals from Canada to Latin America and Africa. It is more interested in oil dividends than any wages of war.

That is why, barring accidents and impulsive actions, China will avoid armed conflict with its neighbors. As the largest trading nation, it is too dependent on a stable world order to allow the slightest disruption. It owes much of its prosperity to postwar loans from Japan and to world peace guaranteed by the United States that, together, helped it produce gross domestic product growth of up to 30 percent for many, many years in the past three decades.

And contrary to conventional wisdom, China is more vulnerable to external shock than a smaller country because its resources-hungry economy literally eats out of the hand of others. It imports grain from the United States and South America, iron ore from Australia, oil from the Middle East and Russia, and so on.

History tells us that in the world’s multilateral systems, finance ministers, central bankers and corporate executives achieve more than presidents and prime ministers, and that markets are more efficient than governments.

If nothing else, it’s a reminder that for all their differences, the claimants have more than one way to settle them and the solution could be as simple as a one-liner.

Reggie Amigo is a Hong Kong-based media entrepreneur and former sports editor. He has worked for the South China Morning Post and the Hong Kong Standard.