Bloomberg News

China Pushing for Binding S. China Sea Code, Aquino Says

September 01, 2011

(Adds Indian comment on naval incident in sixth paragraph.)

Sept. 1 (Bloomberg) -- Philippine President Benigno Aquino said China is pushing for a legally binding code of conduct in the South China Sea, a move that may reduce confrontations in the waters claimed by several countries.

China wants clear rules for operating in the seas that go further than the non-binding guidelines they agreed to at a July meeting with Southeast Asian nations in Bali, Indonesia, Aquino said after meeting with President Hu Jintao. China’s official Xinhua News Agency cited the Chinese leader as saying disputes in the waters should be resolved peacefully.

“It’s significant that they will be pushing for that code,” Aquino told reporters in Beijing last night. “Not just as a statement of principle, but rather a binding agreement as to how each and every party in the dispute will conduct themselves.”

China has used patrol vessels in recent months to thwart efforts by Vietnam and the Philippines, a U.S. treaty ally, to explore for oil and gas in the South China Sea. U.S. Secretary of State Hillary Clinton warned in July that increased confrontations in the area are a threat to sea lanes that are “absolutely essential” to world trade.

“I don’t think China is going to make such a major concession anytime in the near future,” said Arthur Ding, a research fellow at the Institute of International Relations in Taiwan. “Minor friction is likely to continue.”

‘Entering Chinese Waters’

India’s Foreign Ministry today denied a Financial Times report that said a Chinese warship confronted an Indian navy vessel after it left Vietnamese waters in the South China Sea in late July. A caller identifying himself as “Chinese Navy” contacted India’s INS Airavat and stated “you are entering Chinese waters,” the ministry said.

“No ship or aircraft was visible from INS Airavat, which proceeded on her onward journey as scheduled,” the statement said, adding that the incident took place 45 nautical miles from the Vietnamese coast. “There was no confrontation.”

China received no diplomatic protest over any naval incident, said Foreign Affairs Ministry spokesman Ma Zhaoxu in response to questions about the report at a regular briefing today in Beijing. He said he has made inquiries about the report but has no information on any incident.

Chinese vessels in May sliced cables of a survey ship doing work for Vietnam, the second such incident in a month. In March, Chinese ships chased away a vessel working for U.K.-based Forum Energy Plc off the Philippines.

‘Properly Handle’

“Previous to this, all of those incidents with us and Vietnam made people pause,” Aquino said yesterday. The sentiment in the meeting with Hu was that it’s time for “an actual code of conduct that guides everybody as to how to behave within these disputed territories.”

Chinese Premier Wen Jiabao told Aquino during a meeting in Beijing today both governments must “properly handle the disagreements between us.”

China and the 10-member Association of Southeast Asian Nations agreed in July to a framework for implementing a 2002 agreement on behavior in the sea. That document calls on signatories to avoid occupying disputed islands, inform others of military exercises and resolve territorial disputes peacefully.

China’s claims to most of the sea are disputed by the Philippines, Vietnam, Malaysia, Taiwan and Brunei. In a 1988 skirmish over the Spratly islands, China killed more than 70 Vietnamese troops and sank several ships, according to the U.S. Energy Information Administration.

Joint Development

China is open to jointly developing energy resources in the sea, Ma said today. Vietnam and the Philippines have rejected China’s map of the sea as a basis for cooperating to exploit the resources.

The Philippines, with an economy about 1/30th the size of China’s, plans to boost hydrocarbon reserves by 40 percent in the next two decades to reduce its almost total reliance on imports, according to a department of energy plan. Mineral fuels accounted for 17 percent of total monthly imports on average last year, from 11 percent in 2000, data compiled by Bloomberg show.

Vietnam’s domestic gas demand is set to triple by 2025, according to World Bank estimates.

Chinese studies suggest the waters sit atop more than 14 times estimates of its oil reserves and 10 times those for gas.

--James Rupert, Daniel Ten Kate, Editors: Ben Richardson, John Brinsley

To contact Bloomberg News staff for this story:

To contact the reporters on this story: James Rupert in New Delhi at; Daniel Ten Kate in Bangkok at

To contact the editor responsible for this story: Peter Hirschberg at

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