China's Maritime Trade
China's foreign trade has increased significantly over the past two decades and shows no signs of slowing. Between 1978 and 1995, the nation's dependence on Sinoforeign trade rose from $21 billion to $280 billion, or from 10% of gross national product to nearly 56%. By 1997, Sino-foreign trade totaled $365 billion and ranked China as the tenth-largest trading nation, with nearly 4% of the world's total trade. Its share could exceed 13% by 2015, and the World Bank estimates that China could be the second-largest trading nation in the world by the close of the second decade of the twenty-first century. To support this, China's merchant marine fleet—already ranked third internationally, behind Japan and Greece—is expected to rival Japan's for the top spot by 2016.
Maritime shipping is vital for the country's economic growth and stability. China's domestic production of food, energy, and industrial resources is declining compared to consumption, and as a result, its consumer and industrial economic sectors rely on foreign imports of oil, gas, minerals, metals, chemicals, and food commodities.
Energy Imports . In 1996, China was the third-largest oil consumer nation, importing 160 million barrels of foreign oil worth $3.4 billion. By 2000, its imports are estimated to reach one million barrels per day, and by 2010, three million barrels per day—which will require more than 500 very large crude carrier trips annually.
Industrial Imports . The world's largest steel manufacturer, China depends on steel production for economic development. Since 1988, its annual iron ore imports—primarily from Australia, Brazil, Peru, South Africa, and Venezuela—have increased steadily, and by 2000, they are estimated to reach 10-15% of the world's market.
Food Imports . To feed its current population of more than 1.2 billion, China imports grain primarily from Australia, Argentina, Canada, and the United States. The Organization for Economic Cooperation and Development cites estimates that the nation's grain imports could reach 100 to 200 million metric tons by 2015.
Based on its current consumption and production rates, China will be among the world's largest importers of strategic commodities in the near future, and a majority of these imports will be transported by maritime shipping.
Impact on China's Maritime Security Strategy
China's economic dependence on shipping and trade influences Beijing's perceptions of its potential vulnerabilities. Specific transnational threats to the security of China's merchant marine fleet include hostile foreign navies, piracy, and terrorism. These perceptions may result in an expansion of the PLAN's range of operations in international waters to protect Chinese interests.
Beijing's leaders probably perceive China's merchant marine fleet as vulnerable to interdiction by the expanding naval capabilities of the United States, Japan, and other countries of the Association of Southeast Asian Nations. A primary mission of these navies, as well as those of other Asia-Pacific nations, is to protect their maritime territorial interests out to 200 nautical miles from their respective coastlines. These territorial interests overlap key international sea lines of communication that China depends on for the transport of Sino-foreign trade. As two senior Chinese naval officers commented:
The struggles among the pertinent countries to control these crucial sea lanes are growing ever sharper. So the rivalry over sea lanes remains a key part of the international rivalry in maritime strategy. The Asia-Pacific region will become one of the priority regions of maritime strategic competition.
In addition, if foreign nations choose to impose economic sanctions for political reasons, their navies can enforce sanctions or blockades against China's merchant shipping in international waters.
China's merchant marine also is vulnerable to piracy and terrorism while transiting international waters, but thus far these threats have had little effect on China's economy. However, between 1991 and 1993, piracy in Southeast Asia accounted for more than 50% of all such incidents reported, and the number of reported piracy and terrorist attacks worldwide is increasing. During the fall of 1997, five merchant ships, including one Chinese bulk carrier and two Singaporean-flagged oil tankers, were robbed or attacked in the Southeast Asia region. The Chinese ship, Cordiality , was seriously damaged and five Chinese crewmen were killed, allegedly by Sri Lankan terrorists, offshore near the port of Trincomalee, Sri Lanka.
These actual and perceived threats to China's merchant force are causal factors in the PLAN's move to extend its presence in international sea lanes. As one Chinese security analyst wrote:
A blue-water navy must respond to the needs of national strategy and the national defense strategy. The PRC merchant marine fleet sails to over 600 ports in over 150 countries. China can only follow the world trend by moving farther and farther out to sea to conduct operations in blue water . . . inexorably China's naval defense strategy moves toward blue water, ultimately the Chinese Navy will be a blue-water navy.
Currently, PLAN combatants do not possess the capabilities for sustained presence beyond China's territorial seas. From a Chinese perspective, however, success would not necessarily be measured by sustained presence but by the PLAN's ability to maintain an occasional presence.
Trade between China and Europe, the Middle East, and Africa is transported along key sea lanes through the Indian Ocean, Strait of Malacca, and the South China Sea. As its capabilities improve, the PLAN most likely will increase its presence in the Western Pacific and Indian Ocean regions, because of China's dependence on the foreign oil and industrial resources imported via these routes.
Influence of Law of the Sea Legislation
In 1996, China ratified the U.N. Convention on the Law of the Sea (UNCLOS III). Many Chinese naval officers and maritime security authorities interpret this legislation as an international legal rationale for modernizing PLAN ships, to provide them with capabilities to protect China's merchant marine fleet in international seas:
From the international law perspective, we can no longer interpret maritime defense to mean only protecting territorial waters and guarding the coast or limiting our activities to waters under China's jurisdiction. . . . To take advantage of the rights granted to us by the law of the sea, the Chinese Navy must gradually step up its activities on the high seas, including . . . patrolling in sensitive areas.
Two Chinese maritime security experts, commenting on the impact of UNCLOS III on China's maritime security strategy, described several "new missions" for the PLAN that include protecting the sea lanes for Chinese merchant shipping; protecting sea transport and fishing fleets; ship visits; rescue and disaster relief; and combating piracy.
Opportunities for Maritime Security Cooperation
Sino-foreign naval cooperation would enhance the protection of China's maritime shipping interests in the Asia-Pacific region. During February 1998, China's Defense Minister Chi Haotian visited, for the first time, Australia, New Zealand, and Fiji. These nations are strategically located near alternate sea routes that China and foreign merchant marine forces would use if key sea lines of communication in Southeast Asia were closed. It would be in China's strategic maritime security interests, therefore, to develop friendly foreign military ties in these regions.
In 1998, the PLAN appeared to be positioning itself for future Sino-foreign naval interaction, first by showing the flag and then by initiating bilateral maritime security cooperation for protecting mutual shipping interests. The chance for such cooperation—albeit limited in size and scope—appears good. As one senior PLA officer noted:
In a bilateral process, both sides can explore areas of common ground in depth, and increase a certain measure of transparency in areas such as military development, troop deployments, and military exercises, so as to enhance mutual trust and understanding. Therefore, China has taken a positive attitude toward military-to-military contacts and cooperation with Asia-Pacific countries. Clearly, China cannot develop its economy and safeguard its security without cooperating with other Asia-Pacific countries.
Between March and April 1997, two groups of PLAN ships—each composed of two combatants and one auxiliary oiler—visited foreign countries in the Asia-Pacific region. One group conducted the first-ever PLAN port visits to the U.S. mainland, Mexico, Peru, and Chile; the other group made sequential port visits to Thailand, Malaysia, and the Philippines. These ships sailed more than 7,000 nautical miles and conducted port calls at the Thai naval base in Sattahip and the Malaysian naval base at Lumut. Between April and May 1998, three PLAN ships visited Australia and New Zealand for the first time, sailing more than 12,700 nautical miles during their 48-day voyage.
Most of the PLAN's newer combatants have the minimal capabilities needed to sail from Asia to the Middle East and Africa; however, its ability to sail long distances would be enhanced by access to foreign ports for repair, refuel, and replenishment. Such access would enable PLAN ships, deploying from the South Sea Fleet naval base at Zhangjiang, to reach foreign ports in the Western Pacific, Indian Ocean, and Persian Gulf.
China's growing dependence on maritime shipping increases its sense of strategic economic vulnerability and will drive the PLAN to maintain at least an occasional presence in international waters. Such a presence will increase China's regional influence. This should be viewed, not necessarily as threatening, but as an opportunity for bilateral naval and maritime security cooperation. The PLAN could improve its capabilities by learning from foreign navies. It would benefit, for example, from familiarization training in ship handling, communications, underway replenishment, helicopter flight operations, maritime law enforcement, and visit, board, search, and seizure. And regional stability and security would benefit from Sino-foreign cooperation.
Commander Hugar , a naval intelligence officer and foreign area officer, is a student at the Naval Postgraduate School and is studying Mandarin Chinese at the Defense Language Institute. He has a degree in international management and a minor in Chinese studies and studied Chinese at Beijing University.