China's New Air Defence Zone: Seven Crucial Factors

BMI View: China's establishment of an Air Defence Identification Zone (ADIZ) overlapping the disputed Senkaku/Diaoyu Islands will increase geopolitical risks in Asia, and potentially undermine Beijing's standing in the region, as it fuels a backlash. More Asian countries will turn to the US to counterbalance China's influence.

China's establishment of an Air Defense Identification Zone (ADIZ) on November 23, 2013, has significantly raised geopolitical tensions in the Asia-Pacific region, and risks creating a major backlash against Beijing. China's new ADIZ appears to be directed against Japan, since the zone covers the Japanese-administered Senkaku Islands, which are also claimed by China (which calls them the Diaoyu Islands) and by Taiwan. By establishing the ADIZ, China appears to be challenging Japanese sovereignty over the islands, as the zone requires all aircraft entering it to identify themselves and report their flight plans to the Chinese authorities. The Japanese government has ordered its airlines not to comply with the ADIZ, after their initial cooperation. The secondary 'target' of the ADIZ would appear to be the US, which is the top ally of Japan, South Korea, and the Philippines. China deeply resents the substantial American military presence in Asia and Washington's stated commitment to 'pivot' towards the Pacific, regarding these (correctly in our view) as a means to counterbalance Beijing's rising influence. Therefore, the Chinese ADIZ may be aimed at testing the US's reaction to changes to the military status quo. The US's immediate response was to fly B-52 bombers through the zone without notifying China, thus demonstrating that Chinese control of its ADIZ is hollow. On November 29, the US military revealed that it had been sending daily flights through the disputed area.

Implications Of China's New ADIZ

BMI View: China's establishment of an Air Defence Identification Zone (ADIZ) overlapping the disputed Senkaku/Diaoyu Islands will increase geopolitical risks in Asia, and potentially undermine Beijing's standing in the region, as it fuels a backlash. More Asian countries will turn to the US to counterbalance China's influence.

China's establishment of an Air Defense Identification Zone (ADIZ) on November 23, 2013, has significantly raised geopolitical tensions in the Asia-Pacific region, and risks creating a major backlash against Beijing. China's new ADIZ appears to be directed against Japan, since the zone covers the Japanese-administered Senkaku Islands, which are also claimed by China (which calls them the Diaoyu Islands) and by Taiwan. By establishing the ADIZ, China appears to be challenging Japanese sovereignty over the islands, as the zone requires all aircraft entering it to identify themselves and report their flight plans to the Chinese authorities. The Japanese government has ordered its airlines not to comply with the ADIZ, after their initial cooperation. The secondary 'target' of the ADIZ would appear to be the US, which is the top ally of Japan, South Korea, and the Philippines. China deeply resents the substantial American military presence in Asia and Washington's stated commitment to 'pivot' towards the Pacific, regarding these (correctly in our view) as a means to counterbalance Beijing's rising influence. Therefore, the Chinese ADIZ may be aimed at testing the US's reaction to changes to the military status quo. The US's immediate response was to fly B-52 bombers through the zone without notifying China, thus demonstrating that Chinese control of its ADIZ is hollow. On November 29, the US military revealed that it had been sending daily flights through the disputed area.

Implications Of China's New ADIZ

1: China is becoming increasingly assertive in its territorial dispute with Japan. The timing of the creation of the ADIZ has raised questions, but there are several possible answers. Firstly, the announcement came shortly after the Communist Party of China (CPC) concluded the third plenum of the current Central Committee, in which President Xi Jinping outlined future economic reforms and created a national security council. The ADIZ may thus be designed to placate hardline nationalists and the military establishment, and perhaps even distract public attention away from potentially painful economic restructuring. Secondly, Japan also recently established a security council and is currently preparing new 10-year defence guidelines for publication in December, and China may have wanted to change the 'facts in the air' to pre-empt any new measures by Tokyo. More broadly, the ADIZ is a practical way of increasing pressure on Japan in the dispute. Earlier, in May 2013, Chinese media carried articles questioning Japan's sovereignty over the Ryukyu Islands, which were vassal states of China before being annexed by Japan in the 1870s ( see May 13, 2013, 'China's Okinawa 'Claim' To Increase Regional Tensions'). The Ryukyu archipelago includes Okinawa, an island of 1.5mn people and host to most of the 50,000 American troops in Japan. Although China was not formally claiming these islands, it was most probably seeking to up the psychological pressure on Japan.

2. The risks of an 'incident' between Chinese and Japanese aircraft or ships are rising. Both China and Japan have been increasing their air and naval activities in the disputed region, and as a result, we would not be surprised to see a collision between fighter jets or naval vessels, or even some sort of skirmish between them ( see November 15, 2013, 'Sino-Japanese Conflict Scenarios: Geopolitical And Economic Implications'). An 'incident' could take the form of a 'dogfight', or maritime stand-off. Tensions would increase dramatically if fatalities occurred on either side. The worst-case scenario would involve a civilian airliner getting caught up in an incident in the ADIZ, resulting in a forced or emergency landing, or even a shoot-down. There are precedents for this: In 1978, a Korean Airlines flight made an emergency landing in the USSR after being struck by Soviet fighter jets, and in 1983 a separate Korean Airlines flight was downed with the loss of 269 lives. Both flights violated Soviet airspace and were apparently mistaken for military aircraft. Later, in 1988, the US mistakenly shot down an Iranian airliner in the Persian Gulf, with the loss of 290 lives. Given that Japanese and South Korean airliners are not complying with China's ADIZ, a deadly incident cannot be ruled out.

3: China's ADIZ will boost defence-focused nationalists in Japan. Defence 'hawks' have been on a gradual ascendance since the late 1990s, mainly because of the threat posed by North Korea, but in more recent years due to Japanese concerns about the rise of China. Japanese Prime Minister Shinzo Abe is one of his country's leading defence-oriented politicians, and he favours amending the country's constitution to reduce restrictions on the use of the Self-Defence Forces (SDF, Japan's armed forces). So far, Abe has chosen to prioritise his 'Abenomics' programme to revive the economy through looser monetary and fiscal policies and structural reform, but the challenge posed by China's assertiveness could encourage him to turn his focus back to defence issues. This could detract political capital away from the reform programme.

4: China has unintentionally raised tensions with South Korea, too. China's ADIZ covers a submerged rock known internationally as Socotra Rock (not to be confused with Socotra Island, Yemen), Iedo in Korean, and Suyan in Chinese, that is controlled by Seoul but claimed by Beijing. South Korea has protested against the Chinese ADIZ, but China has refused to redraw it to exclude Korean claims. Therefore, South Korea is now planning to expand its own ADIZ to cover its southernmost possessions. The disagreement with Seoul is unfortunate for Beijing, because it could tip South Korea closer to the US. China typically likes to drive a wedge between the two countries, to undermine the Washington-Tokyo-Seoul tripartite alliance. China also finds it geopolitically useful to be on good terms with South Korea, since both countries' populations have strong anti-Japanese sentiment, due to atrocities committed against them by Imperial Japan in the early twentieth century.

5: China may be planning more ADIZs. There is speculation that China may be planning additional ADIZs to cover areas it disputes with Vietnam and the Philippines in the South China Sea. Beijing claims most of the body of water as its own, and in recent years has become more assertive on this front, thus raising tensions with Hanoi and Manila. The result is that both governments have been strengthening their ties with Washington as a potential counterbalance. Furthermore, China may be tempted to expand its ADIZ to cover areas disputed with India in the Himalayas. If all of these zones are set up, Beijing is certain to strain relations with its neighbours, and encourage them to seek closer ties with the US, which would be to China's disadvantage.

6: US support for Japan cannot be guaranteed. Although the US is committed to Japan's defence, including the Senkaku Islands, and although Washington has rejected China's new ADIZ, their approach has differed slightly. Japan has ordered its airlines not to comply with the ADIZ (as they had initially done), while airlines from the US, Australia, Hong Kong, Singapore, and Taiwan, are complying with the zone. The US has stated that its actions do not signal acceptance of the zone, but Japan may be uncomfortable with America's compliance with the ADIZ. More broadly, if China were to seize the Senkaku/Diaoyu Islands by force, then we doubt that the US would directly assist Japan in retaking the archipelago. Washington would probably provide diplomatic and logistical support, as it did for the United Kingdom in its successful war to recapture the Falkland Islands from Argentina in 1982, but would not risk armed hostilities with China over such small and uninhabited islands.

7: Most Asian states will continue to favour the US as a counterweight to China. China's new ADIZ is most probably aimed at expanding its military reach in the Asia-Pacific region. More broadly, Beijing wishes to project military power, which is why it is developing aircraft carriers and has been cultivating the use of port facilities in Bangladesh, Myanmar, Pakistan, and Sri Lanka. This is not necessarily aggressive. As China's overseas interests have increased in tandem with its economic expansion, it is natural for Beijing to wish to develop the means to protect its citizens and investments abroad. Nonetheless, it is evident that Japan, Vietnam, the Philippines, and India, at the very least, are very concerned about China's perceived military expansion, and may increasingly cooperate with one another and the US to counterbalance Beijing. The continued significance of the US as an Asian power was evident in November 2013, when an American aircraft carrier was dispatched to the Philippines to assist in disaster relief operations after the latter country suffered the devastating effects of Typhoon Haiyan. Japan, too, sent a naval force and contributed aid. By contrast, China's minimal assistance to the Philippines was believed to have been constrained by their territorial dispute, and critics suggested that Beijing is not always adept at exercising 'soft power'.

Conclusion: Asia-Pacific To See Increased Tensions

Overall, the Sino-Japanese dispute over the Senkaku/Diaoyu Islands represents one of the world's biggest geopolitical risks at the present time, especially given that the West and Iran are currently attempting a rapprochement, and the civil war in Syria appears to have reached a manageable deadlock. Although we do not expect to see a full-scale war between China and Japan, we reiterate that the risk of an 'incident' that leads to a limited skirmish at sea or in the air is significant. Beyond the near term, we expect both China and Japan to continue to vie for supremacy in the Asia-Pacific region, with the US assisting Japan in this regard, and most Asian countries relying on Washington as a counterweight to Beijing ( see October 21, 2011, 'Sino-US Power Struggle To Intensify Over The Coming Decade').

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