|A Chinese coast guard ship fires a water cannon at a Vietnamese vessel.|
Image Credit: AP News (16 May 2014)
Over the last two weeks remarkable things have happened in the South China Sea. I assume that the readers of The Stage have read the relevant news reports; I will not copy them here. At the time of this writing (21 May 2013) the situation seems to have stabilized somewhat, giving us a chance to assess what has happened and sketch out the potential consequences of China’s decision to send the Hai Yang Shi You 981 into Vietnamese waters and the riots in Binh Duong and Ha Tinh that soon followed.
I offer here a few observations on neglected facts and themes that may help interested readers make sense of these events.
1. UNDERSTANDING CHINESE INTENTIONS
Western analysts need to be brutally honest when we attempt to discern the intent behind Chinese actions on the international stage. Despite the good work produced by the scholars who write for the China Leadership Monitor, Journal of Contemporary China, or The China Brief, the decision making process of the CPC remains opaque. We know less about the cliques, internal debates, and power plays that drive Zhongnanhai’s decisions than those of any other great power. We do not have the information we need to properly assess the intentions of and conflicts between China's most important players. We will not have this information for decades—if ever.
This has practical implications for all observers trying to make sense of Eastern affairs. When it comes to decisions made at highest levels of China’s national leadership, we simply do not know which policies were designed to resolve challenges internal to the CPC and which policies are driven by events on the international scene. As the rest of this post shall show, it is not difficult to analyze the PRC’s behavior solely in reference to regional geopolitics. Yet this type of analysis is inherently flawed. It ignores the incentives nearest and dearest to the men who are making the decisions that matter. We can say with certainty that anything written by an outside observer is incomplete. There is a fair chance it will be completely and utterly wrong. This is an inevitable weakness of any attempt to understand an opaque regime. One should read any sweeping analysis of Chinese foreign policy—including what follows—with a well deserved grain of salt.
1.a With that disclaimer in mind, I submit that China’s decision to send a flotilla and oil rig into the Vietnamese EEZ should not be seen as senseless or unexpected. Chinese leaders have suggested for some time that its territorial island claims in the East and South China Sea are a ‘core interest’ of the People’s Republic of China.  For the last two decades these leaders have followed a consistent strategy towards these periphery possessions and the other powers of maritime Asia who contest China’s claims to them. Andrew Erickson was able to fit an outline of this strategy into one neat paragraph during his testimony to the House Armed Services Committee last year:
“Chinese leaders are acutely attuned to perceived changes in relative national power, and periodically examine other nations’ stated policies for potential changes in the will to maintain their position regarding issues that are important to Beijing. They will create incidents and probe relentlessly when circumstances suggest that something may have changed, whether timing, leaders, or resources. When met with convincing capability—provided that they do not perceive gratuitous humiliation or threats to the most vital of interests—they typically retreat. When insufficiently opposed, they see how far they can push” 
The widespread perception that China has become increasingly aggressive over the last few years obscures what is really going on. For the most part, they are doing the same sort of things they were doing 15 years ago. In Erickon’s words, they “probed relentlessly” back then and they “probe relentlessly” now. There is little evidence that the tempo of these probes has increased dramatically over the last twelve months or even the last five years.  In comparison to America’s strategic schizophrenia, the essential contours of Chinese policy have been fairly stable. If the situation in the South China Sea is dramatically different now than it was 20 years ago, it is not because the nature of the PRC’s strategy has changed, but because the relative power of the parties involved has changed dramatically over this time period.
Given the clear priority Chinese leaders have given to China’s maritime disputes and its long term policy of creating crises to test the resolve and reaction of other claimants, Zhongnanhai’s decision to send the Hai Yang Shi You 981 and its flotilla to contested waters is not shocking.
Acknowledging this leaves us with two much more interesting questions:
1) Why now?
2) Why Vietnam?
1.b Why Now?
I am inclined to agree with Hugh White, Peter Lee, Carlyle Thayer, and others who have suggested that Beijing’s actions make most sense when placed in their regional context.  Thayer is succinct:
“The deployment of the CNOOC mega rig was a pre-planned response to President Barack Obama’s recent visit to East Asia. China was angered by Obama’s support for both Japan and the Philippines in their territorial disputes with Beijing. Therefore China manufactured the oil rig crisis to demonstrate to regional states that the United States was a “paper tiger” and there was a gap between Obama’s rhetoric and ability to act.” President Obama’s tour, which ended shortly before the whole HYSY-981 fiasco began, brought the President to Kuala Lumpur, Manila, Tokyo, and Seoul. One wonders if it was wise to exclude Beijing from this list—particularly seeing as the President’s agenda included signing a ten year military pact with the Philippines, declaring that the Senkaku/Diaoyu islands are under U.S. military protection , and cajoling South Korean and Malaysian government officials and corporate bigwigs into joining the
Prompting a crisis was an adroit way to show that the PRC cannot be contained. Washington will not crusade against Moscow and Beijing at the same time. Beijing has forced the Americans to choose between the two. To the chagrin of our Asian allies, Washington’s priorities are not those proclaimed in the President’s speeches last month. ASEAN’s inability to stand as a united front against China’s actions is icing on the cake. Reports from the ASEAN negotiations have been more muted than the last time China was able to sow disunion in ASEAN’s ranks, but it is a safe guess that Chinese diplomats were able to pull many of the same strings they did in 2012. One suspects that China specifically timed the crises to display ASEAN’s disunity, showing the region’s middle tier powers that attempts to use ASEAN to stifle China’s ambitions are nothing but a pipe dream.
1.c Why Vietnam?
Experience suggests that Vietnam is a low risk punching bag. China’s expectations for their oil rig escapades are influenced by their past experience with Vietnam; as I suggested above, they have been ‘probing’ the country for the better part of two decades. Many of these past confrontations closely parallel current events. Andrew Chubb explains:
Despite the obvious tensions, one thing that may be important to bear in mind when interpreting this incident is its resonance with other incidents over the past 15 years. Although it may be the first time China has tried to drill for oil in the area, as opposed to conduct seismic surveys, the PRC’s practice of positioning energy survey platforms in provocative locations west of the Paracels dates back well before even the 2007 incident discussed below. In March 1997 and November 2004, for example, CNOOC set up its Kantan-3 survey rig around 65nm from the Vietnamese mainland.
The most remarkable resonance is with the 2007 confrontation in the Paracels, made public for the first time in a CCTV documentary late last year (see Scott Bentley’s excellent writeup on The Diplomat). That time, Chinese law enforcement ships were likewise escorting an energy survey operation, in a similar area of sea (on the Vietnamese side of Triton Island), which about 30 Vietnamese ships were attempting to disrupt. In 2007, following a brief period of standoff, the China Marine Surveillance ship Haijian-84 was instructed to ram the Vietnamese ships….
The similarities between the two incidents’ initial causes (Chinese energy exploration activities), responses (Vietnam sending a fleet to try to interfere with the survey), locations (near Triton Island), and specific actions (Chinese ramming of Vietnamese boats) carry at least a couple of implications. First, to date at least, this incident at sea is probably not the “accident or miscalculation” that many Western government officials and think tankers are often warning about. Given the close following of past patterns, the Chinese side would surely have anticipated Vietnam would respond as they did, and Vietnam had every reason to expect the Chinese countermeasures that ensued. 
If Beijing saw the past as pattern for the future then the entire affair is one of little risk and great reward. The Americans and ASEAN would be humiliated, the PLAN would have fun playing with water cannons, ramming Vietnamese ships, and practicing fleet maneuvers in a real but not too dangerous situation, and tensions would simmer away when the rig departs in August. The end result would be immediate gains, a few short term pains, and no long term costs.
2. CAUSES OF VIETNAMESE MOBBERY
Beijing’s decision was a miscalculation. The Vietnamese government played their role according to plan, but the Vietnamese people did not. At this point the mobbery on land has eclipsed the confrontation at sea as the main story. The violence of this backlash has surprised many—it certainly surprised both governments involved. A few things to keep in mind as we try to account for the intensity of the violence:
2.a There is no way to say this delicately: Asia is home to a base and deep seated sort of racism most educated Americans have never experienced or are likely to ever encounter. One must search long and hard to find a society east of the Oxus where it is unacceptable to scorn and abuse people of another race. On a continent chock full of ethnic superiority complexes, the intensity and complexity of Southeast Asia’s ethnic tensions are in a class of their own. Vietnamese perceptions of the Chinese are a particularly volatile cocktail, mixing the standard feelings of bitterness and resentment felt by peoples across Southeast Asia towards the well-to-do Chinese diaspora with a nationalist narrative that champions centuries of resistance to Chinese aggression. The lower elements of Vietnamese society do not distinguish between local ethnic Chinese, Chinese nationals, Taiwanese, and employees of the PRC government—for the most part they are all seen as rich Chinese speakers living a life more comfortable than theirs. It was these same cruder elements that were whipped into a destructive frenzy last week.
2.b There is also a strong economic element to the riots. Four days ago I had the chance to chat with a friend who has business dealings in Binh Duong (she currently lives in Binh Phuoc, just north of the Binh Duong). As she told me about the various selfies friends had sent her from inside the factories when the riots were at their peak , she repeatedly emphasized a fact few commentators acknowledge. Most of the rioters tearing apart factories work as laborers in the very industrial parks they gutted.  These protests were not led by Vietnam’s students, middle class, or its peasantry. They were an affair of the industrial underclass. For many of these rioters, nationalism was simply an excuse for theft.
Vietnam’s tremendous growth has concealed how thinly stretched the growing urban underclass actually is. Along with growth has come inflation—more than 20% in 2008 and 2011, while 2013 was the first time in a decade it dipped below 7%.  The Vietnamese government has had to increase the minimum wage 10 times over this period simply to keep pace with inflation. The last minimum wage hike was prompted by “a study [from] the Vietnam Labor Union [that] found a properly sustainable diet, which is defined as a diet of about 2,300 calories a day, costs approximately VND900,000 per month to fund… [while other government] officials estimated that the previous minimum wage rate covered just 70 percent of the cost of basic necessities.” 
This is before these workers send a chunk of their paycheck home to rural families as remittances. 
By Western standards factory conditions can be very rough—and they are made rougher by the Korean, Taiwanese, and Chinese supervisors who run the factories. Western audiences were first introduced to their abuses during the Nike sweatshop scandal of the early 1990s. Famously, a supervisor working for Sam Yang, one of Nike’s Korean subcontractors, had lined up unproductive Vietnamese workers and beat them over the head with a shoe.  The incident caused controversy because of Nike’s global reach, but it is not the last time Northeast Asian management has relied on force to put Southeast Asian workers in their place.  Northeast Asian companies’ disregard for labor and safety rules, different cultural attitudes towards hierarchy, dissent, and conflict resolution , and a perceived sense of inferiority on the part of many Vietnamese workers produces tensions that periodically erupt into violent conflict between Vietnamese workers and Chinese, Taiwanese, or Korean management.
A riot in Thai Nguyen (9 Jan 2013) during the construction of a new Samsung production facility.
These same elements are seen in the interviews with those present at last week’s riots:
"I saw 13 Chinese dead and dozens of them injured," said the Ha Tinh factory worker, who asked Reuters to withhold her name. "Vietnamese workers didn't want to send the Chinese to hospital. They said, 'Let them be. We treat Chinese like they treated us'. But then the police came and took them to hospital." (emphasis added) 
The resentment Vietnamese factory hands feel towards their foreign supervisors helps us understand how anti-Chinese protests could morph into the indiscriminate gutting of Taiwanese and Korean factories so easily. 
3. REGIONAL REPERCUSSIONS
3.a Perhaps the biggest winner in all of this is Cambodia. Hun Sen’s government and ranking members of the CPP have suggested on multiple occasions that the labor protests that rocked Cambodia earlier this year have damaged the country’s investment climate. The delays caused by those protests do not hold a candle to the destruction wrought by the mobs in Ha Tinh and Binh Duong. As with Vietnam, Cambodian industry is dominated by factories owned and managed by South Koreans, Taiwanese, and Chinese companies. Those fearful of more violence in Vietnam may find her western neighbor a more secure location for direct investment. Cambodia’s sketchy electricity grid puts a limit on how quickly heavy industry can move production to Phnom Penh, but given the long experience Northeast Asian subcontractors have in Cambodia and its physical proximity to Vietnam it is not difficult to imagine such a transition taking place if companies expect tensions between Vietnam and China to worsen on the long term.
3.b 190 of the factories ransacked by the mobs were owned and managed by Taiwanese companies. In desperation, the Taiwanese Ministry of Foreign Affairs printed out 20,000 stickers reading “I am Taiwanese, I am from Taiwan” that Taiwanese nationals could post outside of their factories and facilities in a futile effort to distinguish themselves from the Chinese in Vietnam. The stickers arrived too late to help—it is questionable if they would have helped had they been available when the riots started—but the lesson was not lost on the Taiwanese expats in Vietnam or the Taiwanese government. Beijing’s “one country” claims, the acceptance of these claims by other governments, and the blurring of the legal and economic lines between Taiwan and China endanger lives and damage Taiwanese interests. As was the case in Vietnam, Taiwanese citizens and businesses abroad are forced to run the gauntlet whenever and wherever there is a backlash against Beijing’s policies. Taiwan’s status as a not-quite-a-country also complicates any attempts on Taipei’s part to press for compensation for damages through normal legal channels. 
In the coming months I think we will see moves from Taipei to emphasize its “Taiwaneseness.” Taipei’s harsh rejection of Beijing’s offer to cooperate in the South China Sea last week is a harbinger of what is to come. With legislators in the KMT (!) now suggesting that Taiwan should “seek to establish diplomatic relations with countries engaged in confrontation with China” , the DPP raising their standard objections, and the memory of the Sun Flower Movement still fresh in everyone's mind, the Ma administration will be placed under immense pressure to distance itself from Beijing. In the coming months we should expect Taiwanese officials and businesses to take every chance they can get to sharply distinguish themselves from China, despite objections Beijing may raise.
 Paul B. Stare, “Ask CFR Experts: Is the South China Sea, Like Taiwan, now a Core National Interest for China?” Council on Foreign Relations: Ask CFR Experts Blog (29 July 2013).
 Andrew S. Erickson, “China’s Naval Modernization: Implications and Recommendations,” Hearing for the Armed Services Committee of the United States House of Representatives (11 December 2013), 11.
 For example, Chinese naval patrols sent into the East China Sea have decreased substantially over the last six months. M. Taylor Fravel and Alastair Ian Johnston, "Chinese signaling in the East China Sea," The Monkey Cage (12 April 2014).
 Hugh White, "Explaining China's Behavior," The Interpreter (22 May 2014); Peter Lee, "Bell Tolls for U.S. Pivot in South China Sea," Asia Times Online (14 May 2014); panel discussion, "The China-Vietnam Standoff: How Does it End?" China File (9-17 May 2014),
comment by Carlyle Thayer (9 May 2013).
 A much more significant event than most analysts admit. Despite what the President claimed to the press, before his statement last month American policies in the East China Sea were ambiguous and dangerously unclear. See my earlier post, "The United States Does Not Know What It is Doing in the East China Sea," The Scholar's Stage (6 February 2014).
 Andrew Chubb, "China-Vietnam Clash in the Internet Era: History Repeats itself in the Internet Era?" South Sea Conversations (7 May 2014).
 If the idea of workers barely surviving on Vietnamese minimum wage taking selfies seems a bit confusing, I recommend this summary of how the cell phone business in Vietnam works: Anh-Minh Do, "In Vietnam, For Every 100 People There Are 145 Phones," Tech in Asia (5 December 2012).
 This accords with reporting on the ground. Most of the riots seemed to follow a “two-wave” pattern, starting when factory workers began peaceful protests but escalating when agitators and thugs arrived on the scene, began smashing things up, and told the original protestors to “take what you want.”
See Andrew R.C. Marshall, “How a stand off at sea led to mob violence in Vietnam,” Reuters (16 May 2013); Eva Dou and Jenny Hsu, “Foreign Firms Regroup After Vietnam Riots,” Wall Street Journal (16 May 2013).
 See IndexMundi’s “Inflation Rate (Consumer Price %)” data by year for Vietnam.
 Dezan Shira & Associates, “National Wage Council Established in Vietnam, Minimum Wage Rises,” Vietnam Brief (16 July 2013).
 I have had trouble finding data on the exact proportion that send indemnities home, but a general demographic picture of these factory workers is not hard to compile. Binh Duong has the highest in-migration rate of all provinces in Vietnam. Recent surveys suggest that the majority (64%~) of Vietnamese internal migrants come from rural areas, and more than a third did not graduate high school. The number of migrants under twenty—who, lacking families of their own, are expected to support their families back home—has trebled between 1989 and 2009.
Le Thi Kim Anh, et. al, "An analysis of interprovincial migration in Vietnam from 1989 to 2009" Global Health Action (5 December 2012) dec.
 A summary can be found at Vietnam Labor Watch, “Nike Labor Practices in Vietnam” Saigon.com (or. pub. 20 March 1997).
 This power dynamic was seen most recently seen in the violent crackdown of the Cambodian factory workers strike in January. Geoffrey Cain, “South Korea Pulled Strings as Cambodia Violently Smashed Labor Protests,” Global Post (10 January 2014).
 See note 13, Marshall, “How a stand off at sea”
 In Bin Duong, more Korean factories were ransacked than Chinese ones! Phila Siu and Ng Kang-chung, “Just 14 factories targeted in Vietnam's anti-China protests belonged to mainland Chinese” South China Morning Post (19 May 2014)