Military Build-up in Southeast Asia and the South China Sea: How Relevant Are the Disputes with China?

O Crescimento Militar no Sudeste Asiático e no Mar do Sul da China: Quão Relevantes São os Conflitos com a China?

Abstract

Abstract: The South China Sea (SCS) is one of the regions with the most dynamic and intense military activity in the world. This is largely due to commercial and political interests linked to the region, which is crucial for global maritime trade and rich in natural resources. China is the most interested party in the SCS, claiming 90% of its entire area, a portion referred to by Beijing as the “nine-dash line.” The present article seeks to analyse both quantitatively and qualitatively the influence of China on the military spending of four Southeast (SE) Asian countries that are also interested in the SCS: Vietnam, Malaysia, the Philippines, and Indonesia. For quantitative analysis, we used the data for military expenditure, armaments acquisition, the frequency and type of incidents involving national navies and/or civilians. For qualitative analysis, we retrieved information from hemerographic sources and official documents from the United States, China, SE Asian countries, the United Nations Convention on the Law of the Sea (UNCLOS), and the World Bank (WB).

Keywords
South China Sea; Southeast Asia; China; military spending; military build-up.

Resumo

O Mar do Sul da China (MSC) é uma das regiões com as atividades militares mais dinâmicas e intensas do mundo. Isto se deve em grande parte aos interesses comerciais e políticos ligados à região, a qual é crucial para o comércio marítimo mundial e rica em recursos naturais. A China é a parte mais interessada na SCS, reivindicando 90% de toda a sua área, uma parte referida por Pequim como a “linha das nove faixas.” A presente pesquisa procura analisar quantitativa e qualitativamente a influência da China nos gastos militares de quatro países do sudeste asiático (SE) com interesses também na MSC: Vietnã, Malásia, Filipinas e Indonésia. Para a análise quantitativa, utilizamos os dados para gastos militares, aquisição de armamentos, frequência e tipo de incidentes envolvendo marinhas nacionais e/ou civis. Para análise qualitativa, recuperamos informações de fontes hemerográficas e documentos oficiais dos Estados Unidos, China, países do sudeste asiático, a Convenção das Nações Unidas sobre o Direito do Mar (CNUDM) e o Banco Mundial (BM).

Palavras-chave
Mar do Sul da China; Sudeste Asiático; China; gastos militares; acúmulo militar.

Introduction: the military build-up in Southeast Asia

There is a narrative among media outlets and experts that China’s role in the South China Sea (SCS) since the mid-2000s has been the catalyst of an arms race¹ in Southeast (SE) Asia, and countries in the region would arm themselves (or at least would seek to) in response to increasing Chinese prominence (Steinbock 2018; Yüksel 2017). However, in an area as complex as SE Asia, other factors could be at least as relevant as the “Chinese threat” in the regional military build-up over the last two decades.

First, we need to distinguish between the concepts of military build-up and arms race. While the former has diffuse causes, the latter can be defined as:

(...) a bilateral (dyadic) interaction in which both states consciously and observably increase their level of weapons stockpiles over an extended period of time against one another due to some underlying animosity over an issue/s. An arms race therefore involves reciprocal motive, increased arming, and time (Marin 2009: 7).

In Graph 1, which displays military spending in SE Asia since 2006, we can see that there is, indeed, an upward trend in absolute terms in all countries but one, Brunei. Even Cambodia had considerable relative growth in this period.

Graph 1
Military spending in SE Asia (USD billion)

However, this noteworthy increase in absolute terms must be considered in the context of regional prosperity – SE Asian economies have grown twice as fast as the world average in the last decade (Graph 2).

Graph 2
Average annual GDP growth (2010-2018)

Thus, military spending growth may have been a quasi-inertial process, mostly attributable to economic growth in the region. This is even more evident in the data obtained from SIPRI, as seen in Graph 3, which shows military spending as a GDP percentage. Apart from Cambodia and Brunei, there has been a stabilization or even a decline in military spending measured as a percentage of GDP.

Graph 3
Military spending as GDP percentage

A similar pattern can be observed in the ratio of military expenditure over total public spending. Apart from Singapore, which allocates 20-30%, all other countries had an average military spending of around 5% of their GDP (SIPRI 2019).

Table 1 summarizes military spending growth during the 2010-2019 period and military gross spending in 2019. It does reflect howmilitary spending in SE Asia grew significantly over the past decade, well above the world average (36.3% versus 6.9%). This difference, however, rather than owing to an arms race, seems related to regional economic growth, which was 5,5% vis-à-vis 3% of the world over the same period (SIPRI 2019).

Table 1
Military spending: 2010-2019 growth and gross spending in 2019

Region	2010-2019 growth	Gross spending in 2019 (USD bi)
World	6.9%	1917
Africa	16%	41.2
North America (United States)	-13% (-0.9%)	754 (731.7)
South America	3.9%	52.8
Europe	5.9%	356
Southeast Asia	36.3%	40.5
East Asia (China / Japan / South Korea)	55% (81.1% / -12.8% / 55.8%)	363 (261 / 47.6 / 43.8)
Oceania (Australia)	18.3% (16.6%)	29 (25.9)
South Asia (India)	39.6% (37.7%)	88.1 (71.1)

• Source: Created by the authors with data from SIPRI (2019).

Table 1 also shows us some other important aspects of military spending evolution in SE Asia:

1) In terms of relative growth between 2010 and 2019, SE Asia was considerably below China and South Korea in East Asia, and slightly below India in South Asia;

2) SE Asia´s gross military expenditure in 2019 was not particularly high relative to other regions. Considering that 90% of Oceania’s spending corresponds to Australia, that 71% of East Asia corresponds to China and that 80% of South Asia corresponds to India, SE Asian countries are located at a crossroads between three regions or even countries that arm themselves considerably more in relative as well as absolute terms;

3) Finally, despite the slight drop in US figures, its absolute spending is unmatched (almost three times higher than China, the second-ranked) and this can be seen as yet another external pressure on SE Asia.

Thus, be it due to the “inertia” of high economic growth or indirect pressure from neighbouring countries and an outsider superpower (the US), the expansion of military spending in SE Asia can be seen as an expected, yet not less relevant, process. These factors being significant, they might not be sufficient to explain the full extent of armed forces build-up in most SE Asian countries over the last two decades. An argument could be made of a “Chinese factor” being involved as well, which is precisely the main question of this article: has China been an actual factor in a regional arms race or military build-up in the region? The universe of countries studied is limited to those having formal or de facto disputes with China in the SCS (Vietnam, the Philippines, Malaysia, and Indonesia). Brunei was left out because, although it has a formal territorial disagreement with China, the disputed area is very small and there is no record of friction between the forces of both countries.

Our hypothesis is that there is no arms race between China and SE Asian countries, because the theoretical and conceptual elements do not apply. That is, the combination of a bilateral relationship with mutual perceptions of threat, an increase in the stockpile of weapons aimed at the opponent and an extended time are not present.

The article has two main parts. The first one explores the methodology and the analytical criteria, as well as the dialogue with previously mentioned sources. The second part concerns the results obtained in terms of possible correlations with modernisation, stagnation, and tensions among countries in the SCS. Finally, a general conclusion is drawn.

Methodology: analysis criteria

Instead of looking at the ten countries in the region, we selected only those that have territorial disputes with China in the SCS (the Philippines, Indonesia, Malaysia, and Vietnam) for two reasons. First, because the SCS is the “Cauldron of Asia” according to some analysts (Kaplan 2014). By that, the SCS is meant to be a zone of multiple antagonistic interests and one of the main stages of the conspicuous military rise of China (Breslin 2013), whose forces have been operating in the self-proclaimed nine-dash line, overlapping the 200 miles Exclusive Economic Zones of SE Asian countries. Second, because China does not have, or has already solved, any land border disputes with SE Asian countries (Myanmar, Laos and even Vietnam, with whom it has maritime disputes) (Chan 2016).

To address our working hypothesis, we examined four variables which, together, may demonstrate the two sides of said hypothesis, namely, whether: a) there is a process of military build-up in certain SE Asian countries; and b) if yes, whether this process is caused by the Chinese factor in the SCS. The four variables are:

1) The recurrence of “incidents” in the SCS (more than one per year since 2010). In this case, we use the ChinaPower database, which not only quantifies, but also qualifies the clashes between navies and fishermen from neighbouring countries, classifying actions as ramming, arrest, harassment, standoff, death, official protest (after the incident), shootings, and water cannon use.

2) Increase in military spending² in absolute figures of at least 100% between 2006 and 2018-2019 (according to the SIPRI database information).

3) Increase in military spending over GDP (also according to the SIPRI database information).

4) Investment in USD millions/billions of current 2017 dollars in armaments that fit in the SCS scenario, especially warships. These data were obtained from different sources, depending on the country.

In addition to these variables, we took into account a criterion of attenuation to better assess the potential weight of the Chinese factor. This criterion refers to other circumstances that could stimulate governments to invest in the military sector, whether of domestic or regional characteristics.

We use the comparative method to propose a graduation parameter of zero (when the variable is absent) or 0.25 (when it is present). Similarly, the attenuation variable also weighs 0.25, but is negative, decreasing the weight of the Chinese factor. Thus, the closer to 1 (in the sum of the four variables), the greater the weight of China in the military thinking of the selected countries.

Map 1 shows the main litigation zones in the SCS until 2009, which have changed very little since then.

Map 1
Litigation zones in the South China Sea from 1969 to 2009

Review by country

Vietnam

Relations between Vietnam and China are marked by a history of land border clashes and Hanoi’s proximity to Moscow (during and after the Cold War) as a means of counterbalancing Chinese projection in Southeast Asia. Moreover, Brantly Womack (2006) and Raul Pedrozo (2014) argue that the very existence of Vietnam as a nation resulted from a millennium-long interplay of Chinese cultural influence and invasions and Vietnamese resistance. This resulted in a stable but asymmetrical relationship marked by mutual distrust since the 1979 Sino-Vietnamese War.

Such a long history conflict and distrust, however, is not enough to explain Hanoi’s rise in military expenditure in the past fifteen years. Vietnam is the country with the largest area of territorial dispute with China in the SCS and the recent history of clashes in this area is what can be assumed to be shaping Vietnamese military efforts. Vietnam was the first country in SE Asia to engage in a military confrontation with China over the SCS land rises, which occurred in 1974 in Paracel and 1988 in Spratly. The second incident was more serious and culminated in the sinking of three ships and the deaths of 74 Vietnamese sailors and fishermen, triggering a race to occupy several reefs, sandbars, and islets in the region (BBC 2019; Grossman 2018: 116).

Since the 1990s, occasional frictions between China and Vietnam have been recorded, gaining intensity in the late 2000s in various cases: Chinese pressure to veto Exxon Mobil’s activity off the Vietnamese coast in 2008; Hanoi’s claim that Chinese fishing boats had damaged cables of a PetroVietnam tanker in 2011 and 2012 (BBC 2012); the construction of a China National Petroleum Corporation (CNPC) oil extraction platform within Vietnam’s Exclusive Economic Zone (EEZ) in 2014, generating anti-China popular demonstrations in the country and culminating in the withdrawal of this platform two months later (Michael Green 2017; Grossman 2018); and the frequent clashes between the Chinese Navy and Vietnamese fishermen. In the latter case, there was a change in the Chinese approach, previously limited to manoeuvring to “expel” foreigners: from 2013 onwards, the country also went on to sink boats and arrest fishermen from neighbouring countries. The most recent case in record is from April 2020, the second in less than a year (Vu 2020).

The ChinaPower database records 74 incidents in the SCS from 2010 to 2020. Of these, 63 involved China, and 44 Vietnam. Of the total number of incidents involving Vietnam, 36 were with China (81.8%), four with Indonesia (9%), two with Thailand (4,5%), and one with Taiwan (2.25%) and the Philippines (2.25%). Interestingly, Vietnam is the “second country involved” in 100% of cases, i.e., there are no recorded cases of Vietnamese forces being the perpetrators or initiators of an incident.

China is involved in four out of five incidents in Vietnam and Graph IV shows the historical evolution and type of confrontation that occurred. Half of the incidents (18 out of 36) involved at least some kind of direct aggression (shots fired, water cannon or collision between ships). The total amount of data points exceeds 36 because incidents often consist of more than one action (for example, a chase followed by collision between ships and the subsequent official protest by government authorities).

Graph 4
. Incidents between Vietnam and China in the South China Sea between 2010 and 2020

Table 2 shows Vietnam’s annual incidents with China, with an annual average of 3.2 between 2010 and 2020 – the highest among SE Asian countries, as shown below.

Table 2
Incidents between China and Vietnam in the last 10 years

2020	1
2019	3
2018	2
2017	1
2016	4
2015	13
2014	5
2013	2
2012	2
2011	3
2010	0
Annual average	3.3

• Source: Created by the authors with data from ChinaPower Raw Incident Data (2020).

It is worth remarking that, of the 36 incidents with China, 28 (77.8%) were in the Paracel region and the rest in the Gulf of Tonkin (three), Spratly (two) and indefinite locations (three). Another interesting detail is that Vietnam is the second most involved nation in SCS incidents, but always as the “second involved party”, i.e., the target of an action, including the four incidents with Indonesia in Natuna Island and the other four with the Philippines, Taiwan, and Thailand. In other words, the Vietnamese Navy has never initiated any aggression or “law enforcement” action, the language used to label the event depending on each side’s point of view. Vietnamese fishermen have always been the target in these incidents (mostly, but not exclusively with China) in which Vietnamese forces responded only later to support or rescue their fishermen.

The modernisation of the Vietnamese armed forces is the other variable that we took into account, both in terms of gross expenditure and type of armaments. Since 2007, the “Maritime Strategy for the Year 2020” includes an increase in the number of naval assets in addition to the air force and coast guard (Grossman 2018: 118). Vietnam stands out in SE Asia, not so much for its discreet increase in military spending as a share of GDP, from 1.9% in 2006 to 2.3% in 2018, but for its remarkable rise in absolute figures, more than quadrupling from US$1.2 billion to US$5.4 billion in this period.

Table 3
Vietnamese military investments as a share of GDP and total in USD millions

	2006	2007	2008	2009	2010	2011	2012	2013	2014	2015	2016	2017	2018
GDP share	1.9%	2.3%	2.2%	2.3%	2.3%	2.0%	2.2%	2.2%	2.3%	2.4%	2.4%	2.3%	2.3%
USD millions	1 286	1 784	2 137	2 401	2 672	2 686	3 765	3 937	4 337	4 729	5 089	5 074	5 451

• Source: Created by the authors with data from SIPRI Military Expenditure Database (2019).

Russia remains Vietnam’s major arms supplier, followed by Israel, Ukraine, Belarus, and South Korea. Despite recent diversification with the United States, India, and European countries, these still do not make it into the top five suppliers, according to SIPRI’s 2019 report. However, in 2016, the United States lifted its 1975 veto on arms exports to Vietnam, thus expanding Hanoi’s market for arms suppliers (Wezeman 2019). Qualitative aspects of the arms trade are also gaining importance and deserve attention because most imports have been focusing on naval capacity, especially submarines, frigates, and destroyers (Wezeman 2019).

According to SIPRI’s “Transfers of Major Weapons” data, trade between Russia and Vietnam between the years 2009-2019 comprised: 64 T-90S model tanks, 170 KH-35 Uran/SS-N-25 missiles and TEST-71 torpedoes, both used to equip Gepard model frigates; four Gepard-3 category frigates; two K-300P Bastion-P type coast guard mobile defence missile systems; 36 Sukhoi-30MKK multipurpose jets and 250 R-73/AA-11 air-ground missiles to equip the Su-30MKK. Finally, one of Vietnam’s most important purchases has been six Kilo-class submarines, translating into the most up-to-date fleet of submarines among SE Asian countries (SIPRI 2019).

Among Vietnam’s purchases from Israel, Belarus, South Korea and Ukraine during the same period, the following stand out: two South Korean Tarantul V second-hand corvettes; six ST-68/Tin Shield and Kolchuga type airborne radars and eight Sukhoi-22 fighters, all from Ukraine; 200 EL/M-2022 guided missiles and EL/M-2288 airborne radar systems from Israel; 9 Vostok-E type radars and 5 S-125-T ground-to-air missiles from Belarus (SIPRI 2019).

The percentage represented by each weapon³, especially among those analysed, is described in Table 4.

Table 4
Vietnam’s arms imports from 2009 to 2018, by category, in percentage.

Weapons by categories	1999–2003	2004–2008	2009–13	2014–18	1999–2018
Aircraft	6.9	43.7	47.2	16.9	28.4
Air defence systems	–	12.5	–	8.8	6.1
Armoured	–	1.6	0.3	2.9	1.8
Engines	6.0	1.7	0.8	1.5	1.5
Missiles	17.2	24.0	13.8	13.8	15.0
Sensors	–	–	3.9	2.7	2.7
Ships and others	69.8	16.7	34.1	53.3	44.6

• Source: Created by the authors with data from SIPRI Military Expenditure Database (2019).

The attenuation variable does not occur in the case of Vietnam. The country has no “hot” rivalries with its neighbours, even though occasional frictions have occurred between the Vietnamese navy and fishermen and Filipino fishermen (all promptly resolved through institutional channels). Nor are there any major geopolitical issues such as a siege by hostile neighbours or any move to project power and deny access to the area by a regional opponent. Therefore, it is not possible to pinpoint any specific regional tension or rivalry to explain Vietnam’s military spending.

Domestic motivations cannot be much relevant either because this is a stable and autocratic regime, under the hegemony of the Communist Party of Vietnam (PCV), despite its various internal currents. Compared with the rest of SE Asia, Vietnam is ethnically homogeneous and does not face a major threat of separatism or political insurrection. In parallel with Deng Xiaoping’s China, the country underwent economic reforms since 1986, known as Doi Moi. Since then, in Vietnam, the state has exhibited such strength that increased military spending would be difficult to understand in terms of domestic threats, even though the armed forces are crucial in securing PCV’s monopoly of power (Thanh 2013; Visentini 2008).

The weight of each variable in Vietnam’s military spending is shown in Table 5.

Table 5
The Chinese factor and Vietnam’s military modernisation

	SCS disputes (more than one per year)	Increase in military spending in absolute figures (over 100% between 2006 and 2018)	Increase in military spending as % of GDP	SCS-oriented military spending (Navy)	Regional or domestic conflicts	Total
Vietnam	0.25	0.25	0	0.25	0	0.75

• Source: Created by the authors.

Philippines

In a democratic regime, as in the Philippines, the alternation of governments has a significant impact on the country’s foreign policy. As argued elsewhere, Sino-Philippine relations alternated from cordiality and cooperation with President Gloria Arroyo (2001-2010) to escalating tensions with President Benigno Aquino (2010-2016) and returning to cordiality with Duterte (since 2016) (Hendler 2019). SCS frictions have been frequent over the past two decades, depending on political alternation.

In 1984, the Philippines ratified the third United Nations Convention on the Law of the Sea (UNCLOS), declaring itself an archipelago state (United Nations 1997), claiming sovereignty over Spratly, as well as the surrounding reefs, especially the lower Scarborough, which are within its 200-mile EEZ. During the mandates of Arroyo (in the Philippines) and Hu Jintao (in China) in the 2000s, bilateral relations were defined as a “golden age of partnership.” The active presidential diplomacy of both resulted in memoranda of understanding, 83 bilateral cooperation agreements, growth of foreign trade with a positive balance on the Philippine side, increased Chinese investment in the Philippines, and even joint military exercises.

Under the Aquino government, tensions started to escalate, which can be divided into four stages: first, there was a series of occasional clashes between the navies and fishermen of the two countries in 2011; then a naval “stand-off” occurred, that is, a face-to-face encounter of both national navies around Scarborough, which almost culminated in confrontation in 2012; third, the withdrawal of the Philippine navy, followed by the occupation of the bank by Chinese forces – who control them to this day; and finally, the activation of the Visiting Forces Agreement (VFA) (Robles 1998), which provides for the free movement of aircraft and other United States forces in the Philippines.

Furthermore, in January 2013 the Philippines contested , under Annex 7 of the UNCLOS text, among other things, the legality of the Chinese nine-dash line, making legal claims with UNCLOS regarding its right to navigate (freedom to navigate) and exploit the natural resources of its 200 nautical miles EEZ in the SCS (Lai 2019). The Chinese Embassy in the Philippines issued an official communiqué on 19 February 2013 alleging that they would not participate in this arbitration, considering it illegitimate (China 2013) even though China is a member of the UNCLOS convention since 1996 (Ma 2019).

In July 2016, the Permanent Court of Arbitration ruled in favour of the Philippines (Perlez 2016), deciding that China does not have any rights (historical or geographical) over the region comprising the Chinese nine-dash line. However, that decision in favour of the Philippines, won by Aquino’s administration, is not being acted upon by Rodrigo Duterte, elected in June 2016. This can be read in light of the Philippines’ accession to the Chinese Belt and Road initiative on 18 November 2018. Having both countries signed the corresponding memorandum of understanding for cooperation (Ranada 2018), they strengthened narratives calling for closer relations between Manila and Beijing, leaving aside the court’s decision.

The Philippines was involved in 22 incidents in the SCS between 2010 and 2020, 18 with China (81.8%), always as the target country, never the initiator. There was also one incident with Malaysia, again as the target country, and three incidents as an initiator (two with Taiwan and one with Vietnam).

As in Vietnam’s case, China was involved in four out of five incidents in the Philippines and the graph below shows the historical evolution and types of incidents that took place. Moreover, as in the previous case, half of the incidents (nine out of 18) involved at least some kind of direct aggression (shots fired, water cannon, or collision between ships).

Graph 5
Incidents between the Philippines and China in the South China Sea between 2010 and 2020

The question remains whether, and to what extent, the ups and downs of bilateral relations, mainly determined by the transition between Aquino and Duterte, in a context of increased tensions in the SCS, had any impact on Philippine military spending. Data from SIPRI (2019) show that, in quantitative terms, the frictions between Beijing and Manila do not seem to have had a significant impact on the growth of military expenditure in the Philippines. In this country, military spending as a share of GDP fell from 1.3% to 1.0% between 2006 and 2019, while the absolute figures only doubled throughout this period. There was indeed an increase during the Aquino administration, from USD 2.4 billion to USD 3.3 billion, but putting it into a historical perspective, this evolution was linear and even stabilized between 2013 and 2016, when one might have expected significant military spending increases in response to the tensions in Spratly and the 2012 Scarborough stand-off.

While military spending in the Philippines has not risen considerably as in Vietnam, the types of armaments purchased and the supplier countries are quite meaningful. The United States remains the main arms supplier to the country, followed by South Korea, Indonesia, Israel, and Italy – all historically aligned with the Americans, except Indonesia, whose foreign policy is more focused on the Global South.

Table 6
Spending in USD million as a share of GDP between 2006 and 2019

	2006	2007	2008	2009	2010	2011	2012	2013	2014	2015	2016	2017	2018	2019
GDP share	1.3%	1.3%	1.3%	1.3%	1.2%	1.2%	1.2%	1.2%	1.1%	1.1%	1.1%	1.3%	0.9%	1%
USD millions	1 607	2 014.4	2 270.9	2 115.8	2 438.2	2 701.5	2 898.7	3 377	3 103.1	3 335.6	3 331.5	4 096.3	2 842.6	3 471.6

• Source: Created by the authors with data from SIPRI Military Expenditure Database (2019).

Data from SIPRI (2019) show that the Philippines’ main acquisition has been aircraft. Ships, armoured vehicles, and anti-radar systems still account for a good part of the expenditure but appear to be secondary. Thus, the types of armament purchased have changed from 2009 to 2019, according to the “Philippine Armed Forces Modernisation Act.” The Act was drafted in 2013 and initially divided into three stages: 2013-17, 2018-22 and 2023-27.

Between 2009 and 2019, the Philippines purchased the following armaments from the United States: 29 combat helicopters of models BELL-205, BELL-412 and S-70/UH-60L; 140 armoured vehicles, models M-133 and HMMWV Up-Armoured; an extensive list of missiles, of which 75 AGM-65 Maverick (air-to-ground) stand out; and various radar systems such as ScanEagle and TPS-79 MMSR (SIPRI 2019). Israel, the country’s second-largest partner, supplied 12 combat radars, used to equip FA-50 aircraft; four UT-25/UT30, armour upgrade equipment; 12 155mm M-68/M-71 artillery pieces; 100 SPIKE-ER/anti-tank class missiles; and six HERMES-450 and HERMES-900 drones (SIPRI 2019).

South Korea was the third biggest partner of the Philippines during the same period, and supplied: two frigates, class HHI-2600, which are part of the “Deep Water Patrol Vessel programme”; 25 torpedoes and anti-vessel missiles K-745 and C-STAR; one corvette, Pohang class, and one “landing craft utility” used for landing amphibious troops; eight amphibious armoured vehicles, class AAV-7ª1; and 12 FA-50PH fighters. Italy and Indonesia, the last two, supplied: 13 A-109K marine rescue helicopters; two 76mm naval guns and two RTN-25X radars, both used to equip the HHI-2600 frigate; and two Makassar-class landing craft (SIPRI 2019).

These data show how modernisation efforts during 2018-2022 have so far been less ambitious than during 2013-2017. However, the list of orders for the second period is extensive, and it is expected that the country will spend 300 billion Philippine pesos over the four years (USD 5.6 billion) (Wezeman 2019). The relative drop in growth in 2018 in comparison with 2016-17 was followed by some recovery in 2019, but this doesn’t mean that the Duterte targets are being met. No data were obtained for 2020, which prevents us from seeing whether Manila’s targets are being met. Among the items to be purchased are submarines (Evangelista 2020) and urban battle tactics (DND 2017). It is important to bear in mind that all Philippine purchase figures mentioned here were just planned, many not having yet materialized. As Table 7 demonstrates, there is an average stabilising trend regarding the number of equipment purchased (except for those relating to the navy). Even if these objectives are not yet fully met, and despite aircraft being the main acquisition, the increasing relevance of naval forces from 2009 onwards is noticeable.

Table 7
Philippine arms imports from 1999 to 2018, by category, in percentage

Weapons by category	1999–2003	2004–2008	2009–13	2014–18	1999–2018
Aircraft	100.0	76.0	27.3	48.9	49.1
Air defence systems	–	5.2	1.9	2.3	2.4
Armoured	–	–	–	0.6	0.4
Engines	–	<0.05	<0.05	4.9	3.5
Missiles	–	–	<0.05	2.4	1.8
Sensors	–	–	3.7	5.7	4.7
Ships and others	–	8.8	67.1	35.1	37.9
Other	–	–	–	0.3	0.2

• Source: Created by the authors with data from SIPRI Military Expenditure Database (2019).

Unlike Vietnam, the distortion variable applies for the Philippines. The country is not involved in any major regional rivalry, but the domestic variable is key to understand its military spending. Two factors are contributing to this: the war on drugs and the intensification of the fight against separatist groups in the southern region of the country. The war on drugs was one of Duterte’s campaign promises (De Castro 2016; Johnson and Giles 2020) and, since taking office, the president has waged an aggressive campaign of persecution and summary execution of individuals allegedly involved in drug trafficking. It is estimated that some 12 000 people have died in this process (Human Rights Watch 2020) and that police and extermination groups have systematically violated the country’s human rights and due process. Although it is impossible to provide exact figures, the militarisation of the police in the war on drugs is an indication that the domestic sphere is relevant to the country’s military spending.

The confrontation against the guerrillas in the south of the country is another factor to be considered, constituting a typical case of irregular warfare. For decades the Philippines coexisted with an array of guerrilla groups of varying hues: Marxists, separatists, ethnic and religious. The issue has become more serious in recent years with the influence of the Islamic State of Abu Sayyaf, the Muslim Wahhabist group that has been active in the country since 1989. In May 2017, the city of Marawi experienced the longest urban battle in the country’s modern history (Inquirer 2020), and although the conflict cooled down in the following years, an outcome seems remote in the face of the group’s ongoing kidnappings and murders.

In this context, Russia and China donated 8 000 rifles to the Philippines, which also signed with Beijing a USD 500 million contract around such weapons. It is speculated that the agreement came about because European countries and the United States started to veto arms sales to the Philippines on charges of human rights violations in the war on drugs (Wezeman 2019).

Table 8 shows the weight of the variables concerning military spending by Manila. Like Vietnam, the Philippines show a recurrence of disputes with China in the SCS, an increase in gross military spending, but not in relation to GDP, and a qualitative attribute of maritime-oriented armaments. However, the existence of domestic conflicts reduces the weight of the Chinese factor in the outcome.

Table 8
The Chinese factor and the military modernisation of the Philippines

	SCS disputes (more than one per year)	Increase in military spending in absolute figures (over 100% between 2006 and 2018)	Increase in military spending as % of GDP	SCS-oriented military spending (Navy) scenario	Regional or domestic conflicts	Total
Philippines	0.25	0.25	0	0.25	-0.25	0.5

• Source: Created by the authors.

Malaysia

Whereas pragmatism tended to prevail and guide Malaysia’s decisions on the SCS (Kuik 2013; Lai 2019), in recent years this started to change considerably. The country rejects China’s nine-dash line claim, which overlaps with its EEZ. This is systematically ignored by China in both legal and military rhetoric, but unlike the two previously examined countries, there is a smaller record of friction between China’s and Malaysia’s navies and fishermen.

Since 2009, Malaysia’s participation in UNCLOS and the Association of Southeast Asian Nations (ASEAN) has become more useful than bilateral negotiations to resolve disputes with the Chinese over the SCS. On 6 May of that year, the joint submission⁴ of Vietnam and Malaysia to UNCLOS presented the legal reasons why China should not impinge on their respective EEZs. In the joint paper, the two countries make sovereign claims to parts of the Spratly and Paracels islands. The next day, China issued its first publication concerning its neighbours’ challenge (United Nations 2009), ignoring their narrative about EEZ extension. The more active stance of the Chinese seems to have had some effect, since in the following month, Malaysian Prime Minister Najib Razak (2009-2018) visited Beijing (Xinhua 2020), establishing from then on bilateral talks (Lai 2019).

The fact that the Chinese ignored Malaysia’s claims at UNCLOS created the conditions for more resolute bilateral dialogues between the countries (Kuik 2013; Lai 2019). Malaysia began to participate more actively in the writing of the Declaration on the Conduct of the Parties in the South China Sea and the drafting⁵ of a more effective and applicable Formal Code of Conduct (COC), which was welcomed by China (Lai 2019).

Looking at the historical series from 2009 to 2018, Malaysia can be regarded as another outlier, compared to Vietnam’s significant military spending. In absolute figures, the trend was stagnant at around USD 4.1 billion, with slight growth between 2011 and 2015, followed by a fall in the following years. Relative to GDP, spending fell from 2% in 2009 to 1% in 2019, in a gradual and steady decline. This behaviour stems from the dialogue channel established with China through the COC, the almost non-existent incidents in the SCS involving Malaysia, and also the economic crisis, which affected the country’s budget (Malaysiakini 2020) and made it impossible to acquire large quantities of new and more sophisticated armaments (Wezeman 2019).

Table 9
Malaysia’s military spending as GDP percentage and in USD million between 2006 -2019

	2006	2007	2008	2009	2010	2011	2012	2013	2014	2015	2016	2017	2018	2019
GDP share	2.0%	2.1%	1.9%	2.0%	1.5%	1.6%	1.4%	1.5%	1.5%	1.5%	1.4%	1.1%	1.0%	1.0%
US$ millions	3 266.2	3 970.5	4 411.8	3 964.8	3 854.3	4 692.5	4 507.3	4 915.7	4 919.2	4 532.1	4 169.4	3 494.8	3 469.8	3 769.0

• Source: Created by the authors with data from SIPRI Military Expenditure Database (2019).

In 2017, China and Malaysia signed the 1.1 billion Malaysian Ringgit agreement, expanding arms trade between the countries. In that same year, four Chinese Offshore Patrol Vessels, LMS-68 category, were purchased (Wezeman 2019). The Europeans are still the main trading partners of Kuala Lumpur. France, the main one, sold the following military equipment to Malaysia between 2009 and 2019: six Ground Master radars – 400 and 200 TRML-3D (air-sea); eight DSQS-24 and TSM-2022 marine sonars; 18 MICA missiles for SGVP-LCS Malaysian frigates; three EC-120 Colibri light helicopters and, one of Malaysia’s main purchases, six Gowind-2500 frigates, complementing the six frigates of the same class purchased from Germany between 2006-2010. The list goes on to include one Spanish Scorpene-class submarine; 18 Russian Su-30MK fighters, plus 400 R-27 and R-73 missiles for the Su-30MK aircraft; 120 Starstreak missiles and one ForceShield missile system from England (SIPRI 2019).

Malaysia’s weapon typology differs from most of its neighbours, as Table 10 shows. The focus on the first four categories, as well as the relatively smaller fraction for the navy, reveals weapons that are not exclusively useful in SCS, but also useful for direct combat between regular troops. It is worth noting that in the last cut-off (2014-2018) the category “ships and others” fell from 19.5% to only 2.4%.

Table 10
Malaysia’s arms imports from 2009 to 2018, by category, in percentage

Weapons by category	1999–2003	2004–2008	2009–13	2014–18	1999–2018
Aircraft	57.2	1.0	36.7	42.8	33.7
Air defence system	–	51.4	2.0	27.6	18.2
Armoured Vehicles	4.1	11.9	26.7	7.5	15.6
Artillery	5.4	10.6	1.8	–	3.8
Engines	1.4	–	0.5	3.4	1.3
Missiles	5.2	23.2	11.8	8.7	12.5
Naval weapons	2.5	1.0	0.1	1.0	0.8
Sensors	7.2	1.0	0.8	6.3	3.1
Ships and others	17.0	–	19.5	2.4	10.9

• Source: Created by the authors with data from SIPRI Military Expenditure Database (2019).

As for the distortion variable, regional dynamics are relevant. Irregular conflicts have made the Malaysian province of Sabah a hotspotfor the deployment of weapons and military resources. The high point of the conflicts occurred when 200 Philippine militants of the self-proclaimed “Royal Security Forces of the Sultanate of Sulu and North Borneo,” led by Jamalul Kiram III, supported by the Moro National Liberation Front, invaded the state of Sabah in a failed attempt to take control of the region from February to March 2013. Although the group had no official support from the then Philippine president, this was the greatest friction between the two nations since 1962. These events consequently impacted the militarisation of the state of Sabah, contributing to the increase of military spending in the country.

This is likely one of the reasons why the country is so different from its neighbours regarding the purchase of certain types of armaments and troop movements. There was the purchase of six attack helicopters of the MD 530G type, delivered in 2017 (Vertical 2016), the creation of support bases for the deployment of heavy artillery, such as the ten M109A5 model artillery launchers, purchased from the United States (Flaps 2015) in 2016, and the deployment of heavy tanks after the 2013 attacks in the Eastern Sabah Security Zone (or ESSZONE) (Awani 2013).

Finally, at the domestic level, Malaysia is facing a renaissance of separatist movements in the two states of Borneo (Sarawak and Sabah), where multi-ethnic parties and Christian groups coexist with a moderate version of Islam and there is some resentment that only 5% of oil revenues remains in the region (Chin 2019). However, a debate on oil revenues and the very status of the region has been taking place in Parliament, in the realm of politics, without degenerating into repression or civil war.

Table 11 shows the weight of the variables for Malaysian military spending. Unlike the previous cases, the Chinese factor is irrelevant because Malaysia has not had any litigation around the SCS, no increase in military spending (in absolute figures and relative to GDP), and no qualitative investment aimed at the SCS scenario. On the contrary, the distortion variable shows that such investments have focused on the protection of the national territory, especially the province of Sabah, as a result of the dispute with the Philippines over the ownership of the region since 1962 (Tregonning 2014; Soomro 2014).

Table 11
The Chinese factor and military modernisation of Malaysia

	SCS disputes (more than one per year)	Increase in military spending in absolute figures (over 100% between 2006 and 2018)	Increase in military spending as % of GDP	SCS-oriented military spending (Navy) scenario	Regional or domestic conflicts	Total
Malaysia	0	0	0	0	-0.25	-0.25

• Source: Created by the authors.

Indonesia

Unlike Malaysia, Indonesia will not accept negotiations with the Chinese if there is no compliance with international law under the 1982 UNCLOS Convention, which implies non-recognition of the Chinese nine-dash line. Although no dispute with the Chinese has yet been formally declared, the conflicting relations between the countries are mainly due to the recurrent reports of Chinese ships sailing through the Natuna Island region, which is located within the 200 nautical miles EEZ of Indonesia and is, in fact, controlled by that country. Unlike low-tide elevations in the SCS, there is no dispute about Natuna’s status, which is considered by all an island – a naturally formed area of land, surrounded by water that remains above water even at high tide and is capable of sustaining human life (sheltering about 90 000 inhabitants on 2 000 square kilometres) (Keating 2018). The island is strategic due to its biodiversity, fishing activities, potential mineral wealth (oil and natural gas), tourism, and because it extends Indonesia’s EEZ into the SCS, also serving as a symbol of national pride (Darmawan 2020; Surydinata and Mustafa 2016).

According to ChinaPower, Indonesia has been involved in 10 incidents in the region, six with China and four with Vietnam. The pattern of incidents with both has been the same: 1) fishermen from these countries operate near Natuna, thus within the Indonesian EEZ; 2) the Indonesian Navy or Coast Guard arrests the fishermen (sometimes using force, involving ship collisions or shootings); and 3) the Chinese or Vietnamese Navy attacks (or threatens to attack) the Indonesian counterpart, which releases the prisoners and/or fishing boats.

The graph below shows the incidents between Indonesia and China in the SCS. In total, there were two in 2010 and one in 2013 (involving only chasing and imprisonment) and three more serious ones in 2016 (with collisions, gunfire, and official protests). In March 2016, Indonesian frigates were challenged by Chinese ships with warning shots and escorted out of the contested area. In the same month, Ryamizard Ryacudu, Indonesia’s Defence Minister between 2014 and 2019, deployed three frigates, five F-16 fighters (Brummitt and Rahadiana 2016) and an army battalion to Ranai, a village located in the Natuna Islands region (Connelly 2016). The most serious incident occurred in July 2016, when Indonesian ships opened fire on Chinese fishing boats in the vicinity of Natuna, leaving one injured person (Executive 2016). The current President Joko Widodo’s administration has reinforced unilateral and military measures to protect Indonesian interests in the Natuna Islands (Connelly 2016)⁶.

Graph 6
Incidents between Indonesia and China in the South China Sea between 2010 and 2020

Elected in 2014, President Joko Widodo enacted militarising policies that seem to be one of the reasons for incidents having become relatively more serious and frequent in recent years (Connelly 2016). However, in relative terms, military spending remained practically stable, ranging from 0.6% to 0.9% of the GDP, as shown in Table 12.

Table 12
Indonesia’s military expenditure as a share of GDP and total in USD million

	2006	2007	2008	2009	2010	2011	2012	2013	2014	2015	2016	2017	2018	2019
GDP share	0.7%	0.7%	0.6%	0.6%	0.6%	0.7%	0.7%	0.9%	0.8%	0.9%	0.8%	0.9%	0.7%	0.7%
USD millions	2 611.9	3 348.8	3 232.2	3 304.5	4 663.4	5 838.0	6 531.1	8 384.0	6 929.2	7 595.0	7 396.6	8 797.5	7 556.8	7 664.9

• Source: Created by the authors with data from SIPRI Military Expenditure Database (2019).

The main suppliers of arms to Indonesia are the USA, Russia, South Korea, the Netherlands, and the UK. It is important to note that one of the country’s major interests is to expand its military presence to the Natuna archipelago (Wezeman 2019), expanding its bases around the SCS. This is mainly due to the frequent clashes mentioned before (Connelly 2016). Despite the stabilisation of military spending relative to its GDP, Indonesia resembles Vietnam in its extensive shopping list trying to modernise its military assets.

Indonesia acquired the following from the United States: 24 F-16C fighter jets; 48 combat helicopters, including 34 BELL-412, eight AH-64E Apache Guardian, four APG-78 Longbow and two Model-300; 14 drones for Maritime Security Initiative Aid and 50 AAQ-33 Sniper and AIM-120C fighter upgrade systems, used for aircraft such as the F-16 fighters (SIPRI 2019).

Indonesia also purchased from Russia: 11 Sukhois-35, in a deal worth 570 USD millions in commodities and 385 million in offsets; six Sukhois-30MK, in a deal valued at $470 million; six Mi-8MT/Mi-17 military transport helicopters; and 80 BMP-3 and BT-3F class armoured vehicles.

From South Korea, Indonesia purchased: 16 T-50 Golden Eagle fighters; 80 KFX fighters, in a $1.6 USD billions delivery plan with a 2025 deadline; 90 KH-178 and 179 105 and 155mm artillery pieces, plus 80 Chiron portable surface-to-air missile launchers; six TYPE-209/1400 submarines and an LPD-122m amphibious landing platform (Wezeman 2019).

The most important naval acquisitions were from the Netherlands and the United Kingdom. These included: four SIGMA-105 model frigates, three SCOUT sea search radars and three Bung Tomo-class corvettes, which were initially sold to Brunei, and five Forceshield system radars (SIPRI 2019).

Table 13 summarises all these significantly increased military imports of weapons well suited for deterrence and response in the SCS. The significant increase in the number of aircraft and vessels also needs be regarded as part of Indonesia’s recent efforts to modernise the country’s outdated arsenal.

Table 13
Indonesia’s arms imports from 2009 to 2018, by category, in percentage

Weapons by category	1999–2003	2004–2008	2009–13	2014–18	1999–2018
Aircraft	62.1	14.1	57.0	29.5	38.1
Defence systems area	–	0.3	4.3	4.6	3.4
Armoured	4.7	1.2	2.5	9.8	6.1
Artillery	0.1	0.2	2.0	2.8	1.9
Engines	6.8	8.7	3.5	1.8	3.7
Missiles	0.3	4.5	7.7	7.4	6.3
Naval weapons	1.0	1.1	0.4	1.5	1.1
Sensors	5.7	6.6	4.1	4.8	4.9
Ships	19.3	63.5	17.9	37.5	34.1
Other	–	–	0.7	<0.05	0.2

• Source: Created by the authors with data from SIPRI Military Expenditure Database (2019).

Like Malaysia and the Philippines, and unlike Vietnam, the distorting variable is present in the case of Indonesia because the country faces a series of separatist and fundamentalist movements stemming from its multi-ethnic composition and its highly fragmented and dispersed island territory. However, while separatisms in Malaysia are being expressed in the political arena, some of the movements in Indonesia have resorted to armed struggle, whether it consists of jihadist bombings (as in Bali in 2002) or guerrilla warfare, the case of the Movement for the Liberation of Papua, still active today. In addition, geography itself means that concern for national security is linked to “Maritime Domain Awareness”, i.e., the surveillance of coastal areas, to curb the activities of pirates and the smuggling of illegal products. These factors, together with the weight of the armed forces in the development of Indonesia’s state and society since its independence, tend to “dilute” the relevance of the Chinese factor in the country’s military spending.

Table 14 shows the weight of the variables analysed. The “recurrence of litigation in the SCS” tested negative, with caveats. Despite the record of only six incidents with China since 2010, with an average of less than one per year, the issue of the Natuna archipelago is special because it is a very different territory from most other disputed SCS locations. In addition to all the proven natural wealth already exploited by sectors such as fishing and tourism, there is an expectation of mineral resources exploitation. There is also a process of militarisation of the area due to incidents with Chinese – as well as Vietnamese – fishermen and out of nationalist feelings that tend to be inflamed around this archipelago, which is quite inhabited and large. All in all, however, compared to Vietnam and the Philippines, the level of friction with China remains low.

Table 14
The Chinese factor and Indonesia’s military modernisation

	Recurrence of SCS incidents (more than one per year)	Increase in military spending in absolute figures (over 100% between 2006 and 2018)	Increase in military spending as % of GDP	SCS-oriented military spending (Navy) scenario	Regional or domestic conflicts	Total
Indonesia	0	0.25	0	0.25	-0.25	0.25

• Source: Created by the authors with data obtained from different databases.

To recapitulate, Indonesian military spending has risen considerably since 2010 and the qualitative fraction of the arsenal suiting the SCS theatre is remarkable, even though the figures have stabilised relative to GDP. Finally, we have seen that domestic conflicts are a relevant variable, diluting the Chinese factor.

Conclusions

Our results have allowed us to assess the Chinese factor weight in military spending for each of the countries involved in the SCS territorial waters disputes, as summarised in Table 15 below.

Table 15
The Chinese factor and the military modernisation of Southeast Asian countries

	SCS incidents (more than one per year)	Increase in military spending in absolute figures (over 100% between 2006 and 2018)	Increase in military spending as % of GDP	SCS-oriented military spending (Navy) scenario	Regional or domestic conflicts	Total
Vietnam	0.25	0.25	0	0.25	0	0.75
Philippines	0.25	0.25	0	0.25	-0.25	0.5
Indonesia	0	0.25	0	0.25	-0.25	0.25
Malaysia	0	0	0	0	-0.25	-0.25

• Source: Created by the authors with data obtained from different databases.

As explained in the introduction, SE Asia cannot be said to experience an arms race driven by Chinese ascension. On the contrary, military spending in the region has grown above the world average, but well below adjacent areas, both in relative and absolute terms.

Analysing the four countries most impacted by China’s performance in the SCS, a foremost finding has been that the military sector has not been gaining any particular relevance in public spending, remaining stable or even reducing its share of the GDP. However, three of the four countries (Vietnam, the Philippines and Indonesia) did show: a) a pattern of steady increases in absolute figures of military spending, reaching at least double their initial values between 2006 and 2019; and b) an increasing emphasis on imports of weapons suiting potential military conflict areas such as the SCS, especially for naval and air forces.

These trends can be explained by the recurrence of incidents with China in the SCS – experienced by Vietnam in Paracel, the Philippines in Spratly, and Indonesia in Natuna. The frequency of incidents for Indonesia turns out to have been relatively low (only six in ten years), accounting zero weight for its Chinese factor. However, this variable seems quite likely to become nonzero in the near future, given the militarisation of the Natuna islands and their relevance for Indonesia in terms of national security and pride. Finally, the attenuation variable has turned out to be at play in all cases except Vietnam, thus “diluting” the weight of the Chinese factor.

This article’s goal was twofold. First, to propose a hierarchy of countries whose military spending was most affected by China´s posture in the SCS (top-down in Table 15). Second, to examine the potential occurrence of an arms race or significant military build-up in SE Asia in response to China, which turned out not to be the case due to the variables presented in the research.

Notes

• 1
  There is a vast literature that differentiates between an arms race and the acquisition, development, or expansion of military capabilities. On this, see Marin 2009: 7.
• 2
  We adopted SIPRI’s methodology regarding military expenditure, which includes: the armed forces, including peacekeeping forces; defence ministries and government agencies engaged in defence projects; paramilitary forces, military space activities, which includes: personnel (salaries of military and civil personnel; retirement pensions of military personnel); operations and maintenance; procurement; military research and development; military infrastructure spending, including military bases and military aid. See more in SIPRI 2021.
• 3
  SIPRI’s definition of ‘transfer’ includes sales, manufacturing licences, aid, gifts and most loans or leases. The transferred item must have a military purpose, and the recipient must be the armed forces, paramilitary forces or the intelligence agency of another country, a non-state armed (rebel) group or an international organization. The SIPRI Arms Transfers Database only includes ‘major arms’, which are defined as (a) most aircraft (including unmanned); (b) most armoured vehicles; (c) artillery over 100 millimetres in calibre; (d) sensors (radars, sonars and many passive electronic sensors); (e) air defence missile systems and larger air defence guns; (f) guided missiles, torpedoes, bombs and shells; (g) most ships; (h) engines for combat-capable aircraft and other larger aircraft, combat ships and larger support ships, and armoured vehicles; (i) naval weapons: naval guns, missile launch systems and anti-submarine weapons; (j) reconnaissance satellites; (k) most gun or missile-armed turrets for armoured vehicles; and (l) air refuelling systems (the last two are listed as ‘other’ in the tables in this article). (SIPRI 2019: 9-10)
• 4
  The joint submission of the two countries also defined the limits involving other countries interested in territorial extensions, reefs and islands, among which it is worth noting Indonesia and Brunei. In the case of the first country, it should be noted that the agreement between the government of Malaysia and the government of Indonesia on the delimitation of continental shelves between the two countries of 27 October 1969 is one of the texts that guide the extension limits of each. This rationale is available in the official document of UNCLOS, cited above.
• 5
  The Declaration on the conduct of parties in the South China Sea was drafted in 2002 to reaffirm the legal commitment of all parties in the SCS region to promote good relations, recognising the United Nations Charter and the 1982 UN Convention on the Law of the Seas.
• 6
  Although terrorist groups such as Jamaah Ansharut Daulah carried out solitary attacks between 2018 and 2019, this did not cause much change in the country’s military budget according to the authors. It is nevertheless important to highlight these events to better understand domestic security variables that may have influenced Indonesia’s security rationale.

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Publication Dates

• Publication in this collection
  01 Dec 2021
• Date of issue
  Sep-Dec 2021

History

• Received
  24 Aug 2020
• Accepted
  29 July 2021