15 July 2016, Hong Kong

Introduction

      I’m greatly honored to have the opportunity to speak in front of such an august gathering of legal experts.  To those of you coming from different parts of the world, welcome to Hong Kong.

China’s strategic intent

      Your discussion today is about International Maritime Dispute Settlement.  A discussion on this topic in today’s environment will inevitably involve the South China Sea.  I thought it might be helpful to talk to you about China’s side of the story of the Spratlys. 

      In order to more thoroughly understand China’s objective with the Spratlys, I believe one must first understand China’s global strategic intent, particularly her strategic priorities of today, as she progresses toward eventually joining the ranks of developed nations.

      To understand the nature of this strategic intent, we need to understand China’s very recent history of nation building, which began on the 1^st of October, 1949, with the formal establishment of the People’s Republic of China.  At that time, the country was bankrupt.  Only very rudimentary infrastructure, housing, schools, and health care facilities were available.  The fact was, following years of chaos, civil war, and Japanese invasion and occupation, the country suffered enormously from the destruction.  But 1949 was a turning point in China’s history, for the fractious country was at last in peace and was at last united, and proper nation building could begin.  Even so, it was Mr Deng Xiaoping’s decision in 1978 to launch the policy of reform and opening up, that began the crucial step towards the country’s modernization.

      The result of this modernization drive is truly astonishing.  Today, in China, essential physical infrastructure is present throughout the country; education, health care and other social services have become widely available; urbanization has progressed; and peoples’ livelihoods have improved dramatically.  Furthermore, a market economy thrives.  The fact is, today the private sector provides over 60% of the GDP and the number is still rising.

      China’s economic statistics bear out this progress.  Since 1978, the economy has expanded at a rate of close to 10% per annum, until about two years ago.  Since then, the Chinese economy has entered into a sustainable new normal, growing between 6.5% and 7% per annum.  Today China has become the second largest economy in the world.  China holds the world’s largest foreign exchange reserves, and is one of the two largest trading nations in the world.  Throughout all this, 600 million people have been lifted out of poverty.  Never before in the history of mankind, has so much been achieved for so many people in such a short period of time.

      I think you will understand that China’s strategic intent is in part a result of her past destitution, and that economic development and better livelihoods for her people stands as her greatest priority.  The other side of this coin is that prosperity can only be achieved through building social stability at home, and peace with her neighbors.  All at the same time, China wants to take a more responsible role internationally to help address the many challenges the world faces today, in order to build common prosperity for all.

      What is China vision of herself for the future? China’s vision is that, by 2049, when the People’s Republic marks its centennial, she will have joined the ranks of the developed countries of the world.  What this means internationally is that China needs to continue to pursue peace and common prosperity with her neighbors and countries around the world for years to come.

      Even for the longer-term, if history is any proof, China has no desire to colonize or conquer foreign lands.  Nor does she pursue any religious or ideological motives to influence other people or to acquire foreign lands.  In the height of the Ming Dynasty, when China had 30% of the GDP of the world, China remained peaceful and did not make incursions into foreign lands.  China’s behavior is very much influenced by teachings of Buddhism and Confucius, in which peace stands above all.  The modernization of her military is to act as a deterrent to foreign aggression against China.

      But while her strategic intent is to pursue peace above all, China will firmly and steadfastly pursue the protection of territorial integrity.  During the last 100 years of the Qing Dynasty, China lost one-third of its territory to foreign powers.  Therefore, you can appreciate that territorial integrity is an emotional and sensitive issue to the Chinese people. 

      China shares a land border with 14 neighbors, more than any other country in the world.  At the time of the establishment of the PRC, her border demarcation with neighboring countries was very often ambiguous.  There were many complicated discussions to settle border disputes with many of these neighbors.  But today, the record shows that China has successfully concluded territorial disputes with 12 of those 14 land neighbors.  In order to reach these agreements, China surveyed and demarcated around 20,000 kilometers of boundaries, about 90% of China’s land boundaries.  Although many of these agreements took years and sometimes decades to complete, they are still quite an accomplishment.  There were some skirmishes, but through patience, good will, restraint, give-and-take and the recognition of mutual benefits, these negotiations were eventually brought to a successful conclusion.  Despite enormous difficulties to solve the remaining territorial disputes, China is determined to continue to pursue these discussions peacefully.

      In sum, China would like to resolve territorial disputes peacefully, so that the countries of the region can live together in peace and prosperity.  The Spratlys is no exception.  China aims to continue to seek a resolution of today’s dispute peacefully.

China’s historical relationship with the Spratlys

      Let me now talk about China’s historical relationship with the Spratlys that underpin her claims to sovereignty.

      The Chinese discovered the Spratlys (known as Nansha Island in China) with the earliest archaeological evidence of their use dating back hundreds and sometimes thousands of years.  Navigation guides for fishery activity, compiled by fishermen from China’s Hainan Island as early as the 18^th Century, not only designated specific names to most features in the Spratlys, but also provided detailed narratives on the direction and distances (expressed in the length of travel time) of the navigational routes.  Chinese fishermen would live on these islands during the more favorable fishing seasons.

      In addition, China exercised sovereignty over the Spratlys from the Yuan Dynasty (1271 – 1368 AD) starting with a patrol over the Spratlys, followed later by the formal incorporation of the Spratlys as well as Hainan Island into the administration of Guangdong Province during the Qing Dynasty (1644 – 1911 AD).

      In more recent history towards the end of the 2^nd World War, there emerges ample, clear and convincing evidence that China has sovereignty over the Spratlys.  This evidence has been recognized by the international community, including the United States.  These can be found in the following very important international treaties and declarations.

     First, is the Cairo Declaration of 27 November 1943.  Second, is the Potsdam Declaration, of 26 July 1945.  Third, is the Treaty of Peace, also known as the Treaty of San Francisco, signed on 8 September 1951, between 48 nations and Japan.  (Because of the onset of the cold war, the People’s Republic of China (PRC) was not invited to San Francisco.  The Republic of China (ROC) was also not invited.  However, the treaty preserved in full, the rights of China).  Fourth, is the Sino-Japanese Peace Treaty, signed on 28 April 1952, between Japan and the ROC.  Fifth, is the United Nations General Assembly Resolution 2758, passed in 1971, recognizing the PRC to be the only lawful representative of China to the United Nations, in place of the ROC.  And lastly, the Joint Communiqué of the Government of Japan and the Government of the People’s Republic of China, signed 29 September 1972, which acknowledged that all territories stolen from the Chinese shall be restored to China.  Reading the six treaties and declarations separately, or reading them together, you will find definitive evidence supporting the legal position that the Spratly Islands actually belong to China. 

Recent Developments in the Spratlys

      Now, I would also like to briefly describe what has been happening in the Spratlys since the 1970s.  Since that time, the Vietnamese have been actively and aggressively taking over many of these features in the Spratlys.  The Philippines has also done the same.  So today, of all the features in the Spratlys, Vietnam occupies 29, the Philippines occupies 8, China has 9, and there are still a few more being occupied by other countries.

      By the 1970s, there was discovery that the South China Sea possessed a wealth of oil and gas reserves.  This resulted in a dramatic escalation of interest in the region, particularly by Vietnam and the Philippines.  As a result, increased tension ensued.

      Since the 1970s, China urged restraint.  And while insisting on her sovereignty and rights, China suggested that peace can be maintained if the countries agreed to explore the resources jointly, sharing the resources together, and leaving the sovereignty dispute for future generations to resolve.  China began bilateral negotiations with the claimants.

      Unfortunately, there has been no tangible progress in those negotiations, while since that time, more than a thousand oil wells have been drilled, mostly for the accounts of the Vietnamese and the Filipinos.  But up to now, China has not drilled a single well in the area.

China’s Approach to Resolving the Crisis

      The situation was further exacerbated in 1982, when the United Nations Convention on the Law of the Sea (UNCLOS) was promulgated, establishing a 12-mile from shore territorial demarcation, and a 200 nautical mile from shore economic zone (also known as the EEZ).  Claims and counter-claims of overlapping EEZs further complicated and broadened the dispute, and enticed even more ASEAN countries to make claims in the Spratlys.

      I would now like to address the allegations that China does not adhere to international legal norms on the settlement of sovereignty disputes in the South China Sea.  It is not commonly known that the UNCLOS successfully produced an agreement only after nine years of marathon discussions and negotiations.  The stalemate was broken partly because the Convention provided the parties with an option to make an exception in cases concerning maritime boundary delimitation.  You may also be interested to learn that, in addition to China, three other UN Security Council permanent members, Britain, France and Russia, as well as nine OECD countries, have taken the same option.  Indeed, in total, over thirty countries have done so.

      On that basis, China ratified the Convention on 15 May 1996.  At that time, she made a declaration reaffirming her sovereignty over all its archipelagos and islands, including those of the Spratlys.  Further, on 25 August 2006, China made another declaration, under Article 298 of the Convention, that any maritime boundary delimitation issues are excluded from the jurisdiction of any dispute resolution mechanism under the Convention.

     There is another reason why China refuses to participate.  It should be noted that, in 2002, because of intensive efforts of ASEAN countries and China, a Declaration on the Conduct of Parties in the South China Sea was agreed, promoting bilateral negotiation among the disputing nations over sovereignty issues, and calling for the freedom of navigation in the South China Sea for all nations of the world in accordance to UNCLOS.  A Code of Conduct between the ASEAN countries and China to reflect the above is now being actively pursued.  This exercise began in 2013, and is still continuing.  China believes that this process, although at times fraught with difficulty, continues to be the best way to resolve the dispute.  To have attended the arbitration proceedings at the Hague would undermine a process that has long been in place to resolve the dispute in a bilateral and peaceful manner.  Furthermore, UNCLOS rules clearly provide that, until the bilateral discussions have been exhausted, a country should not approach the Permanent Court of Arbitration to adjudicate border disputes.

      For the above reasons, China declined to attend the arbitration proceedings, and for obvious reasons rejected the ruling of the tribunal that was made on 12 July.

      I hope, from the above, you can appreciate that China’s activities in the South China Sea have not been aggressive, nor assertive, but rather has been restrained.  Furthermore, she has indeed adhered to international legal norms.

The Importance of Peaceful Resolution of the Spratlys Dispute

      Ladies and gentlemen, it is most likely that the ruling at the Hague may well lead us nowhere.  Indeed, it is possible that the outcome may lead us to a crisis of enormous consequence.  This is very worrying indeed.  However, the word crisis in Chinese is 危機, which literally translates to mean: “Where there is danger, there is opportunity”.  Can we turn this crisis in to an opportunity?

      We need to realize that we live in a troubled world.  Indeed, the world has not completely recovered from the global financial crisis of 2008.  The world economy at present is sputtering along, close to recession.  Europe faces many challenges; the Euro currency crisis is continuing; the crisis created by migrants from the Middle East is festering; geopolitical tension in Europe and the Middle East has become worse.  And to add to all of this, Britain has voted to leave the European Union.

      The only area that holds promise for growth and stability is in the vast Asia Pacific region.  The economic data of Asean and China is especially full of promise.  Let me read to you the following figures.

The growth of the Asean economy and the Chinese economy will not only be beneficial to the countries in this part of the world, but also will impact the whole of the Asia Pacific Region and the world at large.  For obvious reason, we do not need unnecessary geopolitical tension,

China and the Philippines

      Now let me have a word about the relationship between the Philippines and China.

      Since the establishment of diplomatic relations between China and the Philippines under President Ferdinand Marcos on June 9^th, 1975, there have been six other presidents of the Philippines.  They are President Corazon Aquino, President Fidel Ramos, President Joseph Estrada, President Gloria Arroyo, President Benigno Aquino, III, and starting on June 30^th of this year, President Rodrigo Duterte.  Until the last few years, our relationship has been cordial and mutually beneficial.  This is reflected in the trading relationship between the two countries.  Trading volume in US Dollar terms in 1975, when the diplomatic relations began, was US$72 million.  By 2015, this number had risen to $46 billion.  This economic relationship can expand by leaps and bounds, as the two nations are at a stage of development where there is enormous mutually beneficial potential.  All this will be affected if, as a result of the court case, tension rises, and confrontation ensues.

      Resolving territorial disputes between any two nations is never easy.  It takes patience, restraint, commitment, and a spirit of accommodation by both sides. Conflict is not the way to solve territorial problems.  Working together, building trust and friendship, developing mutually beneficial economic activities in the meantime, is the way to move forward.  Many of us hope that, with the inauguration of President Duterte, we can turn the page on this unfortunate chapter in Chinese-Philippine history, and begin a new relationship founded upon common prosperity for our people, and peace in the South China Sea.  Yes, a crisis can indeed be turned into opportunity.

US-China Relations

      Now a word about US-China relations.  The other important player in the South China Sea since the Second World War, is the United States of America.  She obviously has a role to play.  Unfortunately, there is tension between the United States and China on this issue.  If not handled carefully, it will affect US-China relations.

      The fact is, while the Americans feel that the Chinese are being assertive, aggressive, unreasonable, and fail to adhere to international legal norms, the Chinese people feel strongly that history, logic and the law is on the Chinese side, and despite this, China is still patiently and constructively seeking peaceful solutions through agreed channels with Asean.

      United States officials have publicly maintained that their wish is for the claimants to settle their disputes peacefully, and to ensure freedom of navigation through the South China Sea.  This is also China’s wish.  Therefore, Chinese people cannot understand, given what China has done, why America accuses China of being aggressive, assertive, and flouts international law.  Additionally, they cannot understand why America goes so far as to frequently carry out military exercises in the South China Sea, sometimes in conjunction with the military of another claimant to the disputed region.   This helps to consolidate suspicions of many Chinese people that America’s pivot to Asia is to contain China.  If this suspicion persists, many of us are afraid that the positive sentiments of the Chinese people toward America will be affected. 

      In my view, the United States can play a positive role at this moment.  The best way to demonstrate this is for the United States to persuade the Philippine government to positively engage with the Chinese government on resolving the territorial dispute.

      It is well recognized that the US-China relationship today is the most important bilateral relationship in the world.  Economically, the relationship is becoming more and more interdependent in terms of trade and investment.  China also increasingly collaborates with the United States to help contain or settle global hot-spot disputes, such as with Iran, or on the Korean Peninsula.  Furthermore, the US and China collaborated successfully in Paris last December to achieve a successful conclusion at the climate change conference.  This landmark agreement will have impact for humanity for generations to come.  The two countries now conduct economic and strategic dialogues once a year, led by very senior officials from both governments.  In the meeting held a month ago in Beijing, they again had constructive discussions on many fronts, but most notably, agreed to collaborate closely to confront the deterioration of our oceans, such as dealing with acidification, over-fishing, and etc.

      Then there are the people to people exchanges.  There are 495,000 Chinese students studying in the United States.  Learning Chinese language in American schools is becoming more and more popular.  Every 16 minutes, one flight takes off between China and the United States every day.  Even though these numbers are huge, they are still growing rapidly.  Cultural exchanges, such as in the arts and athletics, are thriving.  Indeed, this relationship has been moving in the right direction too.

      Ladies and gentlemen, a good US-China relationship is important to the economies of the two nations and to the world at large.  It is also important for peace and prosperity all around the world. At this time, protecting US-China relations must be the first priority for all of us.  Unfortunately, because of what is happening in the South China Sea, there is reason to be concerned about the current state of this relationship.  It is time for us to rethink and re-evaluate, with urgency, what are the real differences that divide us in the South China Sea.

      To conclude, may I once again welcome you to Hong Kong to participate in this important forum.  Although this is only a discussion on matters related to UNCLOS, I believe the outcome will have far reaching consequences to the world at large.

      Thank you.