U.S. Secretary of State Mike Pompeo issued a formal statement rejecting China’s claims to much of the offshore resources in the South China Sea, called the East Sea in Vietnam, as unlawful and accused Beijing of coercing its neighbors, on July 13.

"We are making clear: Beijing's claims to offshore resources across most of the South China Sea are completely unlawful, as is its campaign of bullying to control them," he said in the statement published on the U.S. Department of State's website.

The South China Sea is known in Vietnam as the East Sea.

Commenting on this move of the U.S., Collin Koh Swee Lea, a research fellow at Singapore's S. Rajaratnam School of International Studies, said the States has long been criticized for lacking a South China Sea (SCS) strategy beyond performing freedom of navigation operations (FONOP) and theater security engagements with regional allies and partners, "so this statement may result in a more holistic strategy beyond just using military tools to assert rules based order in the SCS."

The U.S. statement continues by saying: "As Beijing has failed to put forth a lawful, coherent maritime claim in the SCS, the U.S. rejects any PRC (People's Republic of China) claim to waters beyond a 12-nautical mile territorial sea derived from islands it claims in the Spratlys (Vietnam’s Truong Sa)."

"As such, the U.S. rejects any PRC maritime claim in the waters surrounding Vanguard Bank (off Vietnam), Luconia Shoals (off Malaysia), waters in Brunei’s Exclusive Economic Zone (EEZ), and Natuna Besar (off Indonesia)," Pompeo said.

Any PRC action to harass other states' fishing or hydrocarbon development in these waters, or to carry out such activities unilaterally, is unlawful, it warned.

Gregory Poling, director of Asia Maritime Transparency Initiative and a fellow with Southeast Asia Program at the Center for Strategic and International Studies (CSIS) in the U.S., said the States "is taking a more explicit position on maritime rights," as it is more firmly endorsing the substance of a 2016 ruling by a tribunal convened under the U.N. Convention on the Law of the Sea (UNCLOS), which concluded that most of the resources of sea belong to the nearest coastal states: Brunei, Indonesia, Malaysia, the Philippines and Vietnam.

The U.S. has always seen China’s actions in its neighbors’ EEZs and continental shelves as illegal but it would not come out and say so until now, Poling said.

"It is now explicitly declaring it's illegal for China to engage in fishing, oil and gas exploration, or other economic activities in those areas, or to interfere with its neighbors’ rights to do so," he said.

Lucio Blanco Pitlo, research fellow at the Asia-Pacific Pathways to Progress Foundation in the Philippines, said along with the June 1 note, this recent U.S. State Department statement on the SCS "opens a new dimension for America's efforts to roll back China's attempts to consolidate its position in the strategic and resource-rich sea."

"By throwing its weight in support of international law, notably UNCLOS and a historic ruling by a tribunal based on it, the U.S. is going beyond asserting navigational and overflight freedoms," he said.

On June 1, U.S. ambassador to the U.N. Kelly Craft sent a diplomatic note to U.N. Secretary General António Guterres protesting China’s claims in the SCS.

The note was sent in response to the one sent by the Permanent Mission of China to the U.N. on December 12 last year in response to Malaysia’s submission to the Commission on the Limits of the Continental Shelf. "The U.S. rejects these maritime claims as inconsistent with international law as reflected in the 1982 Law of the Sea Convention," that note read.

"Beijing uses intimidation to undermine the sovereign rights of Southeast Asian coastal states in the SCS, bully them out of offshore resources, assert unilateral dominion, and replace international law with ‘might makes right’," Pompeo's latest statement read.

Derek Grossman, a senior defense analyst at RAND Corporation, an American nonprofit global policy think tank that focuses on national security policy and Indo-Pacific security issues, said what the U.S. has been doing lately is "a logical progression in the ongoing ratcheting up of U.S.-China tensions."

The Trump administration made clear years before Pompeo’s announcement that Washington planned to keep the Indo-Pacific region "free and open" from coercion.

Washington has also made explicit it has a strategy, per National Security Strategy, National Defense Strategy, and Indo-Pacific Strategy Report, to compete with and counter China at every turn both regionally and globally and this is just the latest manifestation of the strategy, he said.

On July 13, just after Pompeo’s statement was released, U.S. senators Jim Risch and Bob Menendez, chairman and ranking member of the Senate Foreign Relations Committee; and representatives Eliot Engel and Michael McCaul, chairman and ranking member of the House Foreign Affairs Committee, said in a statement "China has failed to abide by the Permanent Court of Arbitration's legally binding ruling from 2016, or provide any credible legal justification for its claims."

"Instead, it has resorted to coercion of its neighbors, an aggressive campaign of reclamation and militarization of features, and continued activities in the exclusive economic zones of other countries. This has only accelerated over the last several months as the world focused on Covid-19.

"The United States is committed to upholding international law; to flying, sailing, and operating where international law allows; and to supporting our regional partners and institutions who seek peaceful diplomatic resolution of disputes in the South China Sea," they said.

What's next

Meanwhile, the world will of course see the U.S. keeping military activities aimed at asserting freedom of navigation and overflight in the South China Sea, said Collin.

The USS Ralph Johnson just did a FONOP, sailing within 12 nautical miles off Cuarteron and Fiery Cross reefs of Vietnam’s Truong Sa (Spratly) Islands where China constructed outposts on July 14.

The operation occurred right after Pompeo’s statement, "in an apparent act of reinforcing the message," Collin said.

It is also possible the U.S. will apply more economic sanctions on China.

"If the Trump administration chooses to pursue the sanctions pathway, it’ll create an impact on Chinese companies’ business dealings with their Southeast Asian counterparts, especially those South China Sea claimants," he continued.

Last year, Senator Marco Rubio proposed sanctions against China over its activities in the South China Sea and East China Sea.

Then on July 14, Assistant Secretary David Stilwell told a CSIS conference on SCS that sanctions could be on the table for Chinese state-run companies operating survey ships and marine research vessels within other countries’ EEZs without permission.

Poling of CSIS said, "U.S. officials will likely begin working this stronger language into statements at international forums and putting pressure on partners and allies to do the same. This can be expected not just at regional meetings like East Asia Summit, but in bodies like the Quad, the Group of Seven, and various bilateral and trilateral meetings."

This might also encourage Southeast Asian claimants, particularly Vietnam and the Philippines, to advocate for themselves more forcefully.

"The next time a China Coast Guard ship plays chicken with an oil rig off Vietnam or a flotilla of Chinese fishing boats appears in Indonesian waters, the U.S. will likely speak up more forcefully to decry the illegal action," Poling said.

This approach will likely extend beyond November, as any future administration will find it difficult to rescind this new rhetorical position, he said.

The USS Ronald Reagan, the USS Nimitz and other accompanying vessels perform
drills on the South China Sea, July 6, 2020. Photo courtesy of the U.S. Navy.

Economic costs for China might also follow from this policy, Poling added.

"By declaring so much of China’s maritime activities illegal, the administration has provided a justification for potential sanctions against Chinese companies and entities that conduct them."

This would involve a much wider and timelier set of potential targets than previously mooted U.S. sanctions legislation.

Bills introduced in the Congress during 2017 and 2019 for example focused more narrowly on dredging, construction, and other activities on Chinese artificial islands yet Stilwell has specifically directed attention to the role of Chinese state-owned enterprises engaged in illegal maritime activity, he said.

Bonnie Glaser, senior adviser for Asia and director of China Power Project at the CSIS, shared the same idea.

Based on statements by Stilwell, it is possible the U.S. would impose sanctions on Chinese state-run companies operating survey ships and marine research vessels within the EEZs of other countries, including Vietnam, the Philippines and Malaysia, without permission, Glaser said.

"The U.S. may also encourage environmental protection organizations to take legal action against damage wrought to the marine ecosystem by Chinese dredging," she said.

What is clearer now is that Washington plans to double-down on diplomacy to strengthen alliances and partnerships throughout the Indo-Pacific region to counter China, said Grossman of RAND.

As he guessed, "the U.S. will also continue, and perhaps intensify, its military activities designed to both send deterrent messages to China and challenge Beijing’s excessive maritime sovereignty claims."

Most experts and insiders said it is clear the latest U.S. move will only create heightened tensions between China and itself, after a recent spate of unhappy developments such as Trump’s sanctions on Chinese officials over Hong Kong, Tibet and Xinjiang, as well as Huawei, to name a few.

Several days before Pompeo’s statment, Chinese Foreign Minister Wang Yi said U.S.-China relations are the worst they have been since the establishment of diplomatic ties in 1979.

Collin said this certainly riles up Beijing, which now accuses the U.S. of no longer being neutral and bent on taking sides on the SCS.

"I don’t think the Chinese would take it lying down."

There is a chance the Chinese ramp up their challenge of U.S. military operations in the SCS, creating heightened risks of incidents in the air and at sea between Chinese and American forces, he said.

For that, Poling said there would of course be downsides to the U.S.'s policy, and that it will raise tensions between Beijing and Washington in the short term.

But in the long term, if successfully couched within a broader policy combining pressure on Beijing and greater international coalition building to support Southeast Asian parties, it could help steer China toward a compromise the international community could live with.

"And that ultimately is the best chance to peacefully manage South China Sea disputes," he said.