I. The Nature of the South China Sea Issue

Five other countries have raised sovereignty requests in varying degrees over the South China Sea Islands and the sea area which are belonged to China, and some of them have actually already occupied part of the islands. Why such situation has occurred since China's sovereignty over this region is "indisputable"?

The key reason lies in that China's sovereignty over the South China Sea is not in a modern sense. The so-called modern sovereign state concept is actually one developed by the westerners and its formation has something to do with the western history. Since the fall of the Roman Empire, Europe has been in the state of fragmentation, with countries confronting and fighting against one another. The boundary between two countries is, thus, an equilibrium line of the two countries' strengths and formed through wars, bloodshed, and then negotiation. Therefore, state sovereignty is not an isolated concept. When we say a country owns the sovereignty over a certain region, we mean that this fact must have been recognized and respected by relevant countries. A boundary line must be recognized by both relevant countries. The frontier of the South China Sea, however, does not possess this character. I say this, with no intention to make any value judgment, but because the history of the southern frontier of China is very different from that of Europe. China differs a lot from Europe in history in that China was a united country for most of the time. Compared with its surrounding areas, China has many advantages in terms of culture and economy. Therefore, there were no clear boundaries between China and the surrounding countries, or these countries used to be vassal states of China. China is more of a cultural concept rather than a military concept, and her boundary is more of a gradual slope rather than a line. It's only in modern times when the western powers met and confronted with China in their eastward overland invasion that national boundaries in a modern sense were developed. However, no modern sovereignty states were formed around the South China Sea until World WarⅡ. That's why no recognition was achieved from the surrounding countries at that time though China had long placed the South China Sea into her territory and claimed her sovereignty over this region several times at the end of the Qing Dynasty and during the Period of Republic of China, including regaining the South China Sea Islands from Japan after World War Ⅱ. Therefore, though we are confident that we have more adequate evidence to prove our sovereignty over the South China Sea Islands than other countries, we should be soberly aware that it will take a long "course of modern sovereignty boundary formation" for the surrounding countries which had just gained independence after World War Ⅱ to recognize China's sovereignty over the South China Sea.

II. The Nature of Sovereignty States

Why a country can exercise sovereignty over a certain region? We can explain this problem with theories of modern institutional economics. According to this theory, a country is created to supply society or the public with public goods, which are such kind of goods that are noncompetitive and non-excludable. These goods can no be obtained through market transactions as market is incapable of solving the problem of charging. For example, in the case of national defense, when we provide it to one person, we actually also provide it to all of the other people. Therefore, public goods are very different from private goods in marketplace which people buy if they are willing to, and do not buy if they are unwilling to. The creation of states solves the charging problem of public goods through taxation. Among the many public goods, the most important public goods which constitute the core content of a state's service are property-rights protection, order maintenance, and dispute resolution. Simply speaking, a country is born to protect property rights. In this sense, a country is a product of a particular exchange which exchanges service for taxes. A state owns its sovereignty on the premise that it supplies the service of property-rights protection. Any plunder under the name of the state will not constitute the foundation of sovereignty, and will only undermine the legitimacy of the state.

In Chinese history, one easy way to judge if a political military force which entered and stationed in the capital city would be able to rule the country for long, is to see if it let its troops loot. If yes, it proves that this political military force did not have the minimum qualification for attaining state power, and definitely would not be able to rule the country for long. If we apply this theory in the South China Sea sovereignty issue, we will firstly emphasize whether we have provided services which should be provided by a sovereignty state before we prove that we have solid foundation in our sovereignty over the South China Sea. To emphasize on providing service is to emphasize on fulfilling obligations, which will consume costs and not every surrounding country feels like doing. This is exactly where China differs from the surrounding countries in. It should be pointed out that the sovereignty requests of some surrounding countries is merely one-sided plunder of resources with rare consideration of obligations they should fulfill, which is also the fatal weakness in their sovereignty requests. It should also be made clear that the property-rights protection service provided by the government of a country should apply to both the people of the country and people of other countries who conduct activities within the territory of the country and pay tax by law. In this sense, Philippine’s action of arresting Chinese fishermen and threatening to condemn them will only reduce its legitimacy in this region, as the sovereignty of one state does not exclude people of other countries from entering, and definitely should not pose threat to their personal and property security.

III. Significance of the South China Sea Resources

Why it is this state instead of another that should exercise sovereignty over a particular region? It depends on which country the people conducing activities in this region belong to. Why people conduct activities in this particular region? This is because resources in this region could bring benefits to these people. In the final analysis, China's sovereignty over the South China Sea is an issue of how China depends on resources of this region, or what sort of benefits resources of this region will bring to Chinese people.

The South China Sea resources fall into two types, namely, renewable resources and nonrenewable resources. Nonrenewable resources mainly include oil and bird droppings. By now, bird droppings do not possess exploitation value any more, while oil exploitation still has great potential. It is worth while pointing out that oil resources was not the initial reason for Chinese people to conduct activities in this region, because the economic value of oil had not been discovered when the South China Sea was placed within China's territory and there was no estimation on oil reserve in this region. In contrast, oil is the major motive for the surrounding countries to nibble away the South China Sea Islands. Oil is exhaustible and nonrenewable. Therefore, in the long run it only represents the short-term interests of a country. Though the South China Sea oil resources are of huge value at the moment, the crowd will drift away in the end when oil there is exhausted. In addition, the demand for oil springing up from modern industrialization itself is a manifestation of the defects of this economic structure in that quite a few crushes and wars have already been caused by oil. Demand for oil will drop ultimately with improvement of human economic systems. Thus, oil resources should not constitute the interest foundation of the sovereignty request of a state. Oil exploitation will last for one or two hundred years at the most. The boundary of a country, however, would be permanent. [Page]

Renewable or inexhaustible resources also fall into two types. One is fishery resource, and the other is navigation channel resources. The former is a traditional resource which our Chinese people depend on for economic activities and remains the interest foundation for China's claiming her sovereignty. The latter not only is a traditional resource which has been enjoyed by our Chinese people, but also, with the rise of China's economy and the rapid growth of international trade, has the value for China which will become more and more important as time goes by. In the long term, China's interest in the South China Sea should be based on these two renewable or inexhaustible resources.

What's more, the navigation channel of the South China Sea is also an important international one which influences the interests of some other countries, such as, America, Japan, etc., and that's why it will definitely draw concern from these countries. For them, safety of the South China Sea navigation channel is of vital importance, and a rather ideal way to ensure safety of this navigation channel might be a country's control over this region. Military crushes in this region will damage safety of the navigation channel, and thus will not get support from relevant countries. Even the equilibrium state of multinational separation will not be satisfactory, as it will increase joint areas of different precincts of this navigation channel, not only bringing much troubles to ships but also creating space for activities of pirates.

　　
IV. The Solution of South China Sea

The ideal aim for settling the South China Sea issue should be obtaining recognition of China's sovereignty over this region from all of or most of the surrounding countries. To resort simply to force will cause the surrounding countries to expand arms for future wars, undermine harmony among nations, and harm China' peaceful image, yet still being unable to get recognition of our sovereignty from the surrounding countries. On the other hand, doing nothing about the nibbling action of surrounding countries will also violate sovereignty integrity of our country and hurt the national pride of Chinese people.

According to the previous discussion, our South China Sea solution should firstly emphasize on providing instead of taking. In other words, sovereignty safeguarding will be self-evident enough when we emphasize on providing security. With regard to the two different types of resources, namely, renewable and nonrenewable resources, China should pay more attention to long-term interests, for which we should give up partial short-term ones.

To be specific, in terms of resources in the South China Sea, we should take the method of separating state sovereignty and property rights. While emphasizing on our sovereignty over the South China Sea region, we could lease islands or sea areas which seem to contain oil to relevant countries at symbolic rent or tax for quite a long rental term, for instance, one hundred years. This sort of rent or tax, however much it is, is the economic embodiment of state sovereignty. As long as this sort of rent or  tax is recognized, property rights of any foreign governments or enterprises will be confirmed and protected in this country. This arrangement might encounter fewer objections in relevant sovereignty negotiations as it takes interests of relevant countries into consideration. In addition, this arrangement does not exclude Chinese government or enterprises from regaining the oil resources through investment, either. [Page]

In terms of the navigation channel, it is the long-term interests which we should defend. Regarding the problem of pirates in the South China Sea, we should propose a plan to protect safety of the navigation channel, for example, the South China Sea military alliance, which would be a transitional plan on the premise of not giving up our sovereignty over the South China Sea. To be specific, a combined fleet should be formed and the relevant expense would be shared by the surrounding countries to defend safety of the South China Sea navigation channel. With her enormous state scale and economic strength, China will take the largest share in the combined fleet and its expense, and naturally will be the leader of the military alliance. If this turns out the fact, China would be enjoying sovereignty over the South China Sea in reality. As time goes by, this reality will gradually be turned into a notion recognized by the surrounding countries, and play a significant role in the ultimate formation of the concept of China's modern sovereignty over the South China Sea. One possible situation might be that, some small surrounding countries would withdraw from this military alliance as they are unwilling to share the costs. This situation will be more favorable for China. It should be pointed out that this plan is very likely to be supported by such big countries as America and Japan because great powers' intervention aiming to destroy stability of this region against China does not conform to their interests.

The South China Sea military alliance led by China should also undertake the obligation of protecting ships of other countries, and this obligation could not be compensated by taxation. Otherwise, the established rules of the South China Sea navigation channel will be changed and strong opposition will be drawn from countries involved. Under such circumstance, the fishery resources could serve as reward for the military alliance performing protection obligation. This, however, does not mean that utilization of fishery resources will be enclosed. The South China Sea alliance or their agent, China, could open the fishery resources in this region to any country through selling fishing licenses and obtain compensation for their sea areas safety protection at the same time. Trading volume of this region and importance of this navigation channel will increase, while the fishery resource in this region is very hard to grow along with them. In other words, the expense will increase while compensation will rarely be increased. Only those who benefit a lot from trade here will stick to protection of this region, and the other countries will possibly reduce their input in and even withdraw from the military alliance. After the transitional process of several decades or even several hundred years, the modern sovereignty boundary of the South China Sea will finally be formed. If our judgment in China's interests in this region is correct, the ultimately formed boundary would be very likely to mostly or even completely cover the boundary we are now insisting on..  [Page]

Surely, it does not mean that military strength is not important when we emphasize on peaceful settlement of disputes. The meaning of military force in settlement of the South China Sea problem lies in that it prevents the other surrounding countries from breaking negotiation rules with force, as well as stops them from attempting to achieve by force aims which could not be achieved on the negotiation table. In short, the role of military force is to ensure that peaceful and fair negotiation is carried out smoothly.

V. Significance of the South China Sea Solution

The feature of our South China Sea solution lies in that it attempts to form in peaceful ways the so-called "modern sovereignty state boundary" which used to be realized through wars and bloodshed. Why we could not repeat the sovereignty boundary forming process in Europe and most regions of the world in the past? Is this because we are terrified of battles? Are we lacking in military strength? No. Obviously, it is because we cherish higher ambitions that we are willing to make enormous concession for peace.

When talking about the word "modern" in "modern sovereignty boundary," we actually refer to something which has to be faced up by us, without containing any moral superiority. In reality, there is a not so moral rule behind this word which is popular all over the world in modern times. Summarized as "the one with the most advanced weapons wins the day," this rule only approves the role of military force, and it actually dominates the other rules seemingly to be functioning, such as, fairness, justice, free trade, etc. This rule constitutes the modern history which includes enslavement and humiliation of weak nations by countries with advanced weapons and strong military force, and results in continuous escalation of war scales and arms expansion for future wars all around the world. Almost all countries are putting vast resources, the top-notch talents, and the most advanced scientific achievements in research of weapons, the tool or technique for killing. The globe has stride rapidly from the age of sword and spear into the nuclear one, the most horrible age ever faced by the human race. If we are to stick to this rule today, or if we are to follow the westerners' example of replacing negotiations with force, we are actually hastening destruction of the earth.

Ever since the Sino-British Opium War, Chinese people have suffered a lot from the rule of "the one with the most advanced weapons wins the day," and that's why China had started to follow the example of the west to engage itself in military modernization. By now, China even develops herself into a nuclear power. However, as a country with ancient civilization and splendid culture of several thousand years, China is bound to make her own contributions to world civilization and peace. This contribution would be a change of the rule which has been dominating the world. This also determines that China could not attempt to obtain by advantages in weapons things which she can not obtain through negotiation. Her military modernization is not aimed to cope with weak countries, but strong countries who still want to practice the rule of "the one with the most advanced weapons wins the day." If all modernization efforts by China is only aimed at realizing expansion according to the rule of "the one with the most advanced weapons wins the day," China had really failed in the Sino-British Opium War, as she finally accepts the rule she once declined and gives up completely the moral principles and the dream of peace which she has been sticking to. [Page]

Through the solution of peaceful settlement of the South China Sea dispute, Chinese people will build up new standard of international relationship, which will save the world from the nuclear disaster. Therefore, the new rules are more valuable than the size of a country's territory from the perspective of the whole human race. Those who advocate and follow the new international rules will also benefit a lot. In conclusion, the South China Sea is with higher value than the sum of the value of the South China Sea resources, for it will be the birthplace of new international rules, which would be priceless treasure for us human beings.

In April, 1995