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The findings of the<\/span> South China Sea Arbitration<\/span><\/a> conducted at The Hague refutes China claim of<\/span> indisputable sovereignty<\/span><\/a>, and invalidates the \u2018nine-dash line\u2019 as a mechanism to delineate that claim\u2014a heavy<\/span> defeat<\/span><\/a> for China. As expected, China has<\/span> rejected<\/span><\/a> the ruling. So what\u2019s Beijing\u2019s next likely move?<\/span><\/p>\n This dispute is one aspect of a broader Chinese ambition towards rejuvenation under a<\/span> China Dream<\/span><\/a> and restoration to \u2018middle kingdom\u2019 status that would see its neighbours in Southeast Asia relegated to<\/span> tributary<\/span><\/a> powers. That new Chinese hegemony would challenge US strategic primacy in Asia. The crisis feeds into a Chinese narrative of a \u2018Century of Humiliation\u2019 promoted by the Chinese Communist Party (CCP) to sustain its political legitimacy. So suddenly backing down on a critical Chinese interest would be an intolerable blow to CCP legitimacy, and in particular the reputation of Xi Jinping.<\/span><\/p>\n China will use soft power and<\/span> diplomacy<\/span><\/a> to counter global responses against Beijing\u2019s repudiation of a rules-based international order, but its steady challenge to that order won\u2019t waver, and Beijing won\u2019t back down in the South China Sea.<\/span><\/p>\n From a military perspective, Chinese control of the South China Sea allows the extension of a PLA anti-access and area denial (<\/span>A2AD<\/span><\/a>) \u2018bubble\u2019 (<\/span>here<\/span><\/a>,<\/span> here<\/span><\/a>, and<\/span> here<\/span><\/a>) further to the south and east. That allows the<\/span> PLA<\/span><\/a> to fully<\/span> employ<\/span><\/a> more advanced submarine and naval surface combatants, longer-ranged strike warfare, and more sophisticated air power to delay or deter US military intervention in any future regional crisis, such as over Taiwan, and support People\u2019s Liberation Army Navy (PLAN) power<\/span> projection<\/span><\/a> into the Indian Ocean. The South China Sea is also a<\/span> bastion<\/span><\/a> for China\u2019s <\/span>Jin<\/span><\/i> class SSBNs and the follow-on Type 096 <\/span>Tang<\/span><\/i> class SSBNs, particularly in the in the China Sea Basin south of China\u2019s main SSBN base at Hainan Island, which has a maximum depth of<\/span> 6,000 metres<\/span><\/a>.<\/span><\/p>\n Beijing has already made it extremely difficult for ASEAN to reach a<\/span> unified position<\/span><\/a> on the rival claims to the South China Sea and is sure to continue to coerce the organisation, particularly at the ASEAN Foreign Minister\u2019s meeting in<\/span> Laos<\/span><\/a> from the 21\u201326 July. It\u2019ll try to do a deal with unpredictable Philippines\u2019 President Rodrigo<\/span> Duterte<\/span><\/a>, who has suggested<\/span> bilateral<\/span><\/a> negotiations with Beijing. It may walk away from long-running negotiations over a multilateral \u2018<\/span>Code of Conduct<\/span><\/a>\u2019. It\u2019ll continue to use both diplomatic pressure and bilateral economic inducements to buy off individual states.<\/span><\/p>\n China may also choose to go hard and press claims through military power. That would allow Beijing to demonstrate to the US, Japan and the region\u2014as well as its domestic population\u2014that it won\u2019t be cowed. China has employed \u2018grey zone\u2019<\/span> actions<\/span><\/a> that keep the use of coercive power below a level that would generate a retaliatory response from the US. Were China to shift above that level, the potential for miscalculation on either side could generate a rapid escalation of events, leading to a military conflict that China simply couldn\u2019t afford to lose, but ultimately may not have the means to win.<\/span><\/p>\n There <\/span>are<\/span><\/i> some clear military<\/span> steps<\/span><\/a> (and<\/span> here<\/span><\/a>) that China could contemplate. It has already militarised disputed islands in the Paracels, so extending this to the Spratly Islands is a logical next step. That could include deploying combat aircraft, ground-based missile systems for air defence and anti-surface warfare, and naval forces to artificially created structures on Fiery Cross Reef, Mischief Reef, and Cuarteron Reef. China may contemplate fortifying<\/span> Scarborough<\/span><\/a> Shoal\u2014a mere 150nm from Manila\u2014or seizing<\/span> Second Thomas Shoal<\/span><\/a> and ejecting Philippines Marine forces there. Beijing could declare an Air Defence Identification Zone (<\/span>ADIZ<\/span><\/a>) over parts or all of the South China Sea\u2014and rigorously enforce such an ADIZ using air capabilities deployed forward to artificial structures in the Spratly Islands. Finally, China could use its Coast Guard and \u2018strategic fishing fleets\u2019 even more assertively to challenge the interests of other claimants, and allow these \u2018<\/span>white hulls\u2019<\/span><\/a> and \u2018<\/span>little blue men<\/span><\/a>\u2019 (and<\/span> here<\/span><\/a>) to be supported more directly by PLAN \u2018grey hulls\u2019 in a manner that forces China\u2019s opponents to back down.<\/span><\/p>\n The Arbitral Tribunal ruling has thrown down a gauntlet to Beijing that it must respond to. At the moment, a strong US<\/span> naval<\/span><\/a> force in the South China Sea centred on the aircraft carrier USS <\/span>Ronald Reagan, <\/span><\/i>constrains China\u2019s freedom to act. Absent that forward US military presence, China could calculate a window of opportunity exists in the last months of an Obama Administration, which prefers<\/span> leading from behind<\/span><\/a>. That could prompt it to act while the US is distracted with a presidential election and seek to present a fait accompli to an incoming administration. Importantly, China probably calculates a tougher<\/span> ride<\/span><\/a> with a President Clinton, and an entirely unpredictable situation with a President Trump. So from Beijing\u2019s vantage point it may be better to act now rather than risk being deterred in the near future.<\/span><\/p>\n