Last weekend there was unprecedented military activity in the South China Sea. For the first time ever, the Chinese Navy deployed three aircraft carriers at the same time and in the same place. In addition to the United States, Australia, Japan and the Philippines, New Zealand also took part in naval exercises in the exclusive economic zone of the Philippines for the first time. In recent months, China has significantly expanded its military exercises and related activities – sometimes alone, sometimes together with Russia.
Although demonstrating newly developed weapons is not uncommon, China typically displays them in peaceful aerial or naval displays. But that is starting to change. In late August, for example, a Chinese Y-9 surveillance aircraft violated Japanese airspace for the first time while Chinese ships were advancing on the disputed Senkaku/Diaoyu Islands.
A record number of Chinese naval vessels and aircraft were also reported near Taiwan over the summer. China’s increasingly routine incursions into the island’s air defense zone have taken a toll on Taiwan itself. Violent clashes with the Philippine navy near disputed maritime areas in the South China Sea have also become more frequent, prompting both nations to increase their presence in the area.
Demonstrate stability and power
China’s show of strength is intended to remind its neighbors that it is still a regional power worth allying with. This has become all the more urgent for Beijing as the US-led Pacific Alliance increases its defense cooperation. But there is another reason why Beijing is flexing its military muscles now: money.
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Although trade negotiations between the USA and China are continuing, the two countries have not yet been able to reach an agreement. U.S. investors are at the forefront of a steady exodus of foreign capital from China. Additionally, a new round of U.S. tariffs on $18 billion in Chinese goods just took effect.
Affected items include electric vehicles, electric vehicle batteries and solar panels, putting China even further away from what it had hoped to achieve in the talks. (Separate tariffs on electric vehicles imposed by the European Union could come into force at the end of October.) As a result, Beijing has begun to give up hope that its economy could be boosted with Western direct investment. The military exercises are intended to demonstrate stability and power while Beijing has to solve its own economic problems.
China’s behavior in the South China Sea
It is no coincidence that at the time of these incidents at sea, Beijing was mulling a decision that would fundamentally change the way it handles its economy: should stimulus measures be rolled out slowly and their effects tested gradually, or should an aggressive, coordinated one Package to be introduced all at once?
Just a month ago, it seemed as if most Chinese economists and Politburo members agreed that starting small was the way to go. After all, this has been the government’s preferred approach for years. But on Tuesday a week ago, People’s Bank of China Governor Pan Gongsheng unveiled a new package of large-scale support measures, including cuts in the mortgage interest rate on existing loans and the reserve requirement ratio, as well as new tools to support the stock market. These measures were followed by the unexpected announcement that the government was planning one-off cash handouts to people living in poverty – a welfare program that was considered ineffective less than a year ago.
Put simply, Beijing has concluded that the steady decline in real estate prices, the insolvency of property developers, weak consumer confidence, dependence on foreign markets for surplus production and high youth unemployment cannot be slowly or gently pushed away. So Beijing has realized that it must rely on itself, and not on foreign direct investment from the West, to solve its economic problems. And it means there is no need to “behave” in the South China Sea anymore.
On high alert
It is understandable that China’s military activities have put the United States and its Pacific allies on high alert. The recurring coordination with Russia has only increased their concerns. During Ocean 2024, a joint naval exercise in the Pacific and Arctic, as well as the Mediterranean, Caspian and Baltic Seas, Russian aircraft were spotted invading Alaska’s air defense identification zone, highlighting the risk of a Sino-Russian alliance .
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To a certain extent, such an alliance makes sense. Russia is in the midst of a protracted military campaign that has led to international sanctions against the country, and China must find a way to repair its economy. Both want to shift global attention from their weaknesses to their strengths and, more importantly, maintain their regional influence.
A serious setback
A key strength of China and Russia is their respective armed forces, both of which have modernized in a relatively short period of time. It is therefore not surprising that their cooperation in the field of technology, especially military technology, is constant and intensive. With joint military demonstrations, both countries can show that they are capable of maintaining their status and that they are capable of starting a fight if they want to.
But China’s military capabilities have some serious shortcomings. A recent U.S. report said a Chinese nuclear-powered attack submarine sank in its dock this summer while it was under construction – a major setback for the Navy and an indication that while China’s military program is booming, but quality may be sacrificed for speed.
Still, China is likely to continue its defense-based relationship with Russia, even risking conflict with its regional allies. Earlier this week, Vietnam criticized an attack by Chinese law enforcement officers on Vietnamese fishermen near a disputed island, while Malaysia has increased its drilling in a disputed area in the South China Sea despite Beijing’s new military stance. These incidents show that China may be achieving the opposite of what it wants: to be a feared actor in the Asia-Pacific region. Its economic problems and its military’s deficiencies are clearly damaging the country.
