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Background Briefing: South China Sea: Tourism Development in the Paracel Islands Carlyle A. Thayer April 8, 2013

[client name deleted] China is to open up the disputed Paracels Islands to tourism this month, state media reported Sunday [April 7]. The plan to allow tourists to visit the Paracel Islands before the May Day holiday is the latest stage in Beijing's development of the territory. The plan to allow cruise tours follows rapid development of infrastructure in a new city -- Sansha -- along with the establishment of an army garrison in the Paracels last year. Tourists can only visit the islands on cruise ships as the hotels and other facilities are inadequate, Xinhua News Agency said, citing Tan Li, executive vice governor of Hainan province. Tan was speaking on Saturday at the Boao Forum for Asia, which is being held in Hainan. The report quoted shipbuilder Haihang Group Corp Ltd as saying its cruise ship was ready to take almost 2,000 passengers on a tour of the islands. A second cruise ship was being built by Hainan Harbor and Shipping Holdings Co, the report added. Tan said local authorities would build more supply ships and ports, and beef up the infrastructure in Sansha. 1.Will the latest stage in Beijing's development of the territory stoke more tensions in the South China Sea dispute? ANSWER: The territorial dispute over the Paracel Islands is a bilateral one between China and Vietnam. No other country in Southeast Asia is involved and none will protest or comment negatively on this latest development. In the past Vietnam has confined itself to diplomatic protests and I expect the same response this time. Tensions over the South China Sea have risen because of other Chinese actions such as the flare incident involving Vietnamese fishermen and recent naval patrols and military exercises. 2.What do you think will be the next move by China? ANSWER: China will continue to develop the Paracel Islands to demonstrate that it is in effective occupation of the islands and is exercising administrative control. The next move by China will be to impose its annual unilateral fishing ban in the South China Sea above 12 degrees north north latitude, or the waters around the Paracel Islands. Chinese civilian authorities may step up their arrest of those they consider "illegal fishermen."

2 3.How does this move and the recent actions by China have a bearing on the negotiations on the draft Code of Conduct (COC) and the upcoming ASEAN summit later this month? ANSWER: China's actions are unrelated to the Code of Conduct. It should be recalled that ASEAN reached agreement on a code of conduct in 1999. In 2000, China and ASEAN exchanged drafts in the hopes of adopting a common position. After two years they failed and the result was the Declaration on Conduct of Parties in the South China Sea. One of the main sticking points was identifying the geographic scope of the COC. Vietnam wanted the Paracels included and China refused. China is very likely to insist on progress in implementing the DOC before it begins serious negotiations on the current ASEAN COC drafted by Indonesia. 4.Should Vietnam consider some kind of retaliation in this matter? If, so why? If not, why not? ANSWER: Several years ago Vietnam toyed with the idea of allowing tourists to visit Truong Sa Lon. This island is located in the Spratly islands not the Paracels. Vietnam has no effective measures to retaliate against Chinese actions. Vietnam would not have unanimous support of all ASEAN members. For the time being Vietnam is better served by pursuing its negotiations with China on waters forming the mouth of the Gulf of Tonkin. It is sufficient to support Vietnam's claim to sovereignty over the Paracels by tabling a diplomatic protest. 5. Are there any further comments you want to add? The major development affecting the South China Sea is the action by the Philippines to seek an Arbitral Tribunal to make an award on the legal issues it has raised. This initiative should be given every chance of succeeding. The deadline has been reached for the president of the International Tribunal for the Law of the Sea to nominate the final three members of the five-member Arbitral Tribunal. Vietnam should not undertake any action that would give China the opportunity to create a distraction. China appears on the diplomatic back foot and is struggling to find a way to respond.

Suggested citation: Carlyle A. Thayer, South China Sea: Tourism Development in the Paracel Islands, Thayer Consultancy Background Brief, April, 8, 2013. Thayer Consultancy Background Briefs are archived at Scribd.com