The Hague-based Permanent Court of Arbitration ruled yesterday (Jul 12) that there was no legal basis for China's claims in the South China Sea.

In its ruling, the court said that China - which claims nearly 85 percent of the South China Sea through its 'nine dash line' - had interfered with Philippine fishing rights in the disputed waters. The court added that China had caused severe harm to the coral reefs and the habitat of endangered species with its actions on the Spratly Islands, and interfered with rights to Philippine fishermen at the Scarborough Shoal by restricting access.

China's state Xinhua News Agency said that the court issued a 'ill-founded award' on the issue, and its Defence Ministry said that the ruling would not affect how China views its sovereignty.

"No matter what kind of ruling is to be made, Chinese armed forces will firmly safeguard national sovereignty, security and maritime interests and rights, firmly uphold regional peace and stability, and deal with all kinds of threats and challenges," the Defence Ministry was quoted as saying.

China has been increasingly assertive in the public relations front and military front in the run up to the ruling. It has said that it will not recognise the ruling, issued veiled threats to the Philippines, denounced the proceedings and sent officials to convey its opposition. The state-run People's Daily has also urged the Philippines to return to talks, and the US to stay out of the dispute.

China wrapped up military drills near the Paracel Islands to the north of the South China Sea yesterday (Jul 11) while US destroyers has been patrolling around the Spratly Islands to the south.

With the arbitration's ruling and China not acknowledging that ruling, tensions are sure to rise.

So where is the South China Sea, and why do so many countries want it?

The South China Sea is a 3.5 million sq km ocean, ranging from the Malacca Straits to the Taiwan Straits. While the southern part is largely uncontested, the northern part, which has several reefs, is contested by several countries, including China and the Philippines.

Nearly half of the world’s commercial shipping - most of which passes through Singapore - comes through this sea. It is vital to trade, which Singapore thrives on. Tensions would likely raise the cost of cargo transit as routes get diverted. Regional economies - like ours - will be affected as a result of an increase in insurance and shipping costs, and cargo companies may opt for ports other than Singapore to make a pitstop.

What do countries want in the South China Sea?

The area has natural resources - including oil and natural gas. Natural gas reserves are estimated to total around 7,500 cubic kilometers, and the oil reserves are estimated to be 11 billion barrels.

Then there is the issue of fishing. Fisheries constitute a small but modest 1.8% of Philippines’ GDP, and 3% of the total GDP of Indonesia. Indonesia’s navy has fired on Chinese fishing boats in disputed fishing grounds off the coast of Borneo.

Resources in the area can be shared through bilateral and regional cooperation - a 2004 bilateral agreement between China and Japan helped resolve the dispute over oil and gas in the East China Sea - but the control over the South China Sea's nearly 250 islands cannot.

China, however, has consolidated its hold on the islands it administers through unilaterally reclaiming land.

An estimated 13 square kilometers of land have been reclaimed over the Spratly Islands, which are also claimed by the Philippines. The Chinese has also built military structures, including radar equipment and airstrips.

What is each country saying and doing over the South China Sea dispute?

The Chinese

Chinese state-run People’s Daily has issued veiled threats ahead of the ruling to the Philippines - stating in an editorial that the Chinese army is ‘fully capable’ of removing its military presence on the Second Thomas Shoal. The Philippines deliberately grounded an old US-built landing craft there in 1999 and has since kept a presence of around a dozen military personnel to maintain the island’s occupation.

Chinese foreign minister Wang Yi has also told the US secretary of state John Kerry that it hopes that the US ‘speaks and cautiously', and take no actions that may infringe on its sovereignty.

The US

The United States lifted an embargo on the sale of arms to Vietnam in May. While US President Barack Obama claimed that the lifting of the embargo was not meant to be a counterweight to China, the timing of the lift - in the midst of rising tensions in the South China Sea - is notable. The embargo would ensure that Vietnam has ‘access to the equipment it needs to defend itself’, Obama had added when he visited the country. Vietnam is expected to modernise its coastal defences with initial sales.

The US has also conducted its frequent ‘freedom of navigation’ operations in the South China Sea.

Asean

Asean has been divided over the South China Sea issue - the area claimed by China (the nine-dash line) is also claimed by six other countries and nation-states, five of which are members of Asean.

China has frequently opted for a divide and conquer option when it came to Asean, preferring to use its economic leverage on states like Laos or Cambodia, who have no stake on the South China Sea at all.

A botched joint statement after the Asean-China summit at Kunming on June 13 and 14 sums this up perfectly. Part of the statement goes:

We look forward to working together with China to bring ASEAN-China cooperation to the next level. But we also cannot ignore what is happening in the South China Sea as it is an important issue in the relations and cooperation between ASEAN and China.

The statement was planned to have been released after the summit, but some of the smaller nations, like Cambodia and Laos (this year's ASEAN chair), reconsidered signing on to the joint statement as China was unhappy, according to a report from The Diplomat. The summit then ended without an official joint statement at all, and the statement was then distributed to the press by the Malaysian Foreign Ministry.

"Malaysia releasing it was a manifestation of the extreme frustration of the original five Asean members plus Vietnam at the particularly crude and arrogant behaviour of the Chinese,” said an Asean official, according to the Straits Times.

Why should Singaporeans care?

Apart from implications of sea trade and inter-Asean relations, Singapore could also be impacted should China impose an Air Defence Identification Zone (ADIZ) over the South China Sea.

While it has stressed that it would not be doing so, China is well-poised to set one up given the radar facilities and military emplacements it has on the Spratly and Paracel Islands.

An ADIZ is airspace in which the identification, location and control of civil aircraft is performed in the interest of national security - in this case, Chinese sovereignty. Basically - if China sets up an ADIZ in the South China Sea, it will be able to ask an aircraft to identify itself and force uncooperative aircraft down.

Singapore also has an Flight Information Region (FIRs, above in black) over the South China Sea, overlapping the disputed waters. Unlike ADIZs, FIRs are merely administrative and do not represent sovereign airspace.

When China implemented its ADIZ over the disputed Senkaku/Diaoyu islands in 2013, Japan demanded that China stop its unilateral action. South Korea, which also had an ADIZ, launched a joint sea and military exercise soon after the announcement, and announced that its own airlines would not be recognising the new ADIZ, and extended its own ADIZ to overlap with the Chinese ADIZ. China then sent fighter jets to investigate US and Japanese aircraft flying through its ADIZ.

The United States said that it would ignore the Chinese ADIZ and disregard Chinese orders, but told its airlines to comply with China's demands.

If China institutes its Air Defence Identification Zone over parts of its claimed territory, it could disrupt air traffic over the South China Sea. Depending on its size, it may overlap with the FIRs of Manila and Ho Chi Minh, or even ours. This means one of a few scenarios might happen:

1) Additional bureaucratic steps have to be taken for civilian aircraft going through the region.

2) Airlines of the region may refuse to recognise the new ADIZ.

3) Tensions may escalate in the region as China implements its ADIZ, monitoring and scrambling aircraft to identify civilian airliners and military aircraft travelling through the area.

Where is Singapore in all this?

Singapore is the country coordinator for Asean-China dialogue relations, and China has essentially stressed that we have to be impartial and play a role in addressing 'historical issues' between claimant countries in Asean and China.

"Singapore needs to act as a bridge between the two sides," Chinese Foreign Minister Wang Yi had said before the Asean-China meeting in June.

Less than a week ago, on Jul 6, Chan Chun Sing - who was visiting Beijing as the chairman of the People's Action Party (PAP) gave a speech to 50 students at Renmin University, where he said that Singapore does not take sides.

"We don't side with any party. We only pursue a world order grounded on principles and openness," Chan had said, citing the executions of two Indonesian marines in 1965 for the McDonald House bombings and the expulsion of a US diplomat in 1988 for interfering in local politics as examples.

And just two days ago (Jul 11), Minister of Foreign Affairs Vivian Balakrishnan said that Singapore's position is that the various claimant countries have to settle their overlapping sovereignty claims in accordance to international law.

"As the current country coordinator for ASEAN-China relations, Singapore will fully support and we will facilitate the existing ASEAN-led processes to manage or to help manage the tensions in the South China Sea," Balakrishnan had said in response to a question by Workers' Party NCMP Dennis Tan. "Singapore will continue to work closely with all stakeholders to advance ASEAN unity, credibility and centrality."

In not siding with anyone, Singapore ensures that core Asean-China trade relations are preserved. It doesn't take a foreign affairs guru to know this - but if China burns its bridges with Asean, we will be burned as well.

Top photo from the US Navy

If you like what you read, follow us on Facebook and Twitter to get the latest updates.