Post a Comment On: China Matters

My take on the Chinese oil rig HYSY 981 off the Vietnam coast is up at Asia Times Online.
Today the PRC government has offered talks with Vietnam on the issue.
Talks have always been on the table with Vietnam, since the PRC is determined to discuss its South China Sea issues bilaterally.
On the table also, I expect, has been a big pile of economic/trade related inducements to Vietnam if they go bilateral and eschew the pivot-worthy multi-lateral united front against the PRC.  The PRC has reportedly been trying to buy its way out if its various South China Sea hassles, and I assume Vietnam is no exception.
In a report that I find credible, a lobbyist for the Japanese embassy had op-eded that the PRC offered gigantic enticements to the Philippines in order to resolve their maritime fracas bilaterally:
China appeared to blink and made last-minute offers if the Philippines wouldn't file its case [in The Hague where a five-judge tribunal will determine if China has violated international law by its continuing efforts to take over the South China Sea]. The offers were believed to include withdrawal from contested islands and reefs and a huge trade-and-aid package to the Philippines, described as leading to a new golden age of cooperation between the two countries.

I am assuming that the Philippines’ diplomats passed on this information to Japan, perhaps in somewhat exaggerated form, in order to show Japan the extent to which Philippines was willing to sacrifice material advantage for principle (with the expectation that Japan would display an equal degree of principled solidarity) and also discretely advertise the price Japan was expected to stump up in order to keep the Philippines firmly in the anti-PRC camp.
If the determinedly, perhaps even suicidally belligerent Philippines was being offered a sweet deal by the PRC, it stands to reason that Vietnam was getting offered something similar.
I also wouldn’t be surprised if Vietnam tried to have it both ways, discussing the economic package with Beijing while trying to improve its leverage by threatening to support condemnation through ASEAN for the PRC's various maritime outrages.
And perhaps the PRC decided that, in the context of the US pivot--and Japan's plan to become a major economic partner and alternative to the PRC in Vietnam--it was going to play hardball sooner rather than later…by positioning a billion-dollar drilling rig and several dozen PRC coast guard, maritime patrol, and, reportedly PLAN vessels, in Vietnamese coastal waters…just before the ASEAN Summit in Myanmar on May 10-11.
In other words, the PRC is demanding that Vietnam get off the fence, and will not be deterred by the likelihood it will get totally flamed at ASEAN next week for acting like a goon.  
In Matrix-speak the PRC offer to Vietnam is either take the blue pill (comfortable subordination to China) or the red pill (pursuing the struggle against the PRC at ASEAN and in coordination with the pivot).
An indicator that the PRC might be threatening to take the goodies off the table is the simultaneous crash of the Vietnamese stock market, which I imagine is replete with insiders aware of what the PRC  might do, either in withdrawing a bonanza package or simply making difficulties for Vietnam in the trade and investment fields.   
The Vietnamese index, which has been sagging for several weeks, recorded its biggest single-day loss in the last decade yesterday, 5.9%, in response to the China tensions.
If Vietnam goes bilateral with the PRC, Beijing will have achieved some important objectives vis a vis the Philippines: isolating it, demonstrating Beijing’s determination to force the issue and the lack of recourse by the United States and Japan, and putting the business community on notice that the choice, in the PRC’s strategy is not “yes” or “no” to bilateral resolution.
It’s “yes with benefits” or “yes and the PRC takes what it wants and leave the Philippines high and dry”.
It will be interesting to see if Vietnam sticks to a line of “Talks shmalks, Get OUT of my coastal waters!” and what it says and does at ASEAN next week.
It’s a pretty big deal, IMO.