The 10th Anniversary of the PCA Award (2016) is not merely a legal landmark; it is a stark reminder of the mounting cost of its non-implementation. The failure to enforce the Award imposed enormous strategic and economic costs while emboldening China’s grey-zone coercion. Although its economic costs cannot be measured with mathematical precision, there is little doubt that they run into billions of dollars. Lost investment opportunities, abandoned offshore energy projects, declining fisheries, escalating defence expenditure and the growing risk to maritime commerce together represent one of the most significant yet underappreciated economic consequences of the non-implementation of the Award.
In the past decade, Beijing employed an integrated combination of propaganda, coast guard vessels, maritime militia, survey ships, oil rigs and fishing fleets, backed by the PLA Navy, systematically seeking to convert its illegal claim into de facto control. China’s acts involved water cannon and military-grade laser-beam attacks, cyber-attacks, ramming, bumping and sinking smaller vessels of other countries. It empowered its coast guards through domestic laws.
China’s naval patrols cover the areas in the “nine-dash” line aggressively for multiple objectives, including to deter rivals, assert its control and normalise its presence. China routinely encroaches EEZs of other neighbouring countries.
China’s actions leading to serious crises deserve attention. In March 2021, about 220 Chinese maritime militia massed at Whitsun Reef to establish its de facto control in the Filipino EEZ. There have been several incidents around the Second Thomas Shoal including blocking supply to the Philippines’ grounded BRP Sierra Madre, use of military-grade lasers and water cannons, boarding Filipino boats with knives and axes and damaging and injuring soldiers.
Beijing aggressively attacked and sank a Vietnamese fishing boat near the Paracels Islands (2020). In 2023, China placed the survey ship Haiyang Dizhi 4, escorted by coast guard vessels, on Vietnam’s EEZ. In 2024, the Vietnamese fishermen were beaten and their fishing gear was confiscated (Paracels). China opposed India’s offshore oil and gas exploration in Vietnam’s EEZ on multiple occasions over the past two decades, revealing China’s intent to use coercive measures to discourage foreign energy companies operating even in the EEZ’s of other countries.
China’s fishermen periodically entered the Indonesian EEZ and the Chinese militia prevented their arrest by the Indonesian authorities. In 2024, Chinese Coast Guard vessels twice disrupted an energy survey conducted for Pertamina (Indonesian oil corporation) near the Natuna Islands.
In 2020, during Malaysian offshore drilling at West Capella, China dispatched survey ship Haiyang Dizhi 8 with coast guard escorts to obstruct the process. When Australia and the US sent naval vessels around the region, the Chinese survey ship went back. China has maintained a near-continuous coast guard presence around the Luconia Shoals in Malaysia’s EEZ.
China routinely issues radio warnings to foreign military/civilian vessels and aircraft operating in the SCS. Indian, the US, Australian, Canadian, Philippine, Vietnamese, and Indonesian vessels received warnings that ‘they were in China’s waters and should leave’. This practice is part of Beijing’s broader grey-zone coercion, combining ‘legal’ assertions, coast guard patrols, maritime militia deployments, and persistent communications to strengthen its claims. China militarised the artificial islands to serve as forward military posts, significantly raising tension in the region. China’s “grey-zone coercion” strategy is vitiating the environment, adversely impacting economic development.
One of the clearest indicators of the cost of Chinese coercion is the sharp rise in defence expenditure across Southeast Asia. The Philippines, Vietnam, Indonesia and other regional states have diverted billions of dollars from economic development to maritime security, naval modernisation and coast guard expansion. While some expenditure could be justified on grounds of modernisation, much could have accelerated infrastructure, education, healthcare and industrial growth. Beijing transformed the SCS into a high-risk zone.
The economic consequences are severe. Traditional fishing grounds have become inaccessible, offshore hydrocarbon projects have been delayed or abandoned, private investors have become increasingly risk-averse, and coastal communities have suffered sustained livelihood losses. The cumulative economic burden extends well beyond claimant states, adversely affecting regional supply chains, investor confidence and the stability of one of the world’s busiest maritime trade routes. While Vietnam and the Philippines have become the upper-middle-class-countries, they could have achieved their targets almost a decade earlier, if the Award had been implemented. This could be true for other countries as well.
The regional countries have responded by filing diplomatic protests and UN submissions, using diplomacy to push for the acceptance of UNCLOS, cooperating with external powers to build their defence capabilities and participating in military exercises and pursuing the Code of Conduct (CoC) through ASEAN. The CoC was first proposed in 1996, but even after 30 years it has hardly made any progress mainly because of China’s strategy to gain time for changing the ground facts.
Today, the issue extends far beyond competing territorial claims in the SCS. It concerns whether legally binding international decisions can be ignored by powerful states without consequence, and whether international law based on UNCLOS can survive sustained challenges of coercion by a powerful state.
The implementation of the 2016 PCA Award is therefore not only a legal issue: it is a strategic necessity. China’s rejection of the Award is the chief impediment to establishing a rule-based order in the region.
Several countries have expressed the need for the implementation of the Award, rejecting China’s sweeping claims in the SCS. India and several other countries are pushing for the governance of the region by the rule of law based on UNCLOS. India highlights the importance of UNCLOS while considering the Award a significant milestone, and expresses serious concerns over coercion as well as militarisation of disputed features in its external engagements to build momentum. Regional countries like Vietnam, Indonesia, Malaysia and the Philippines emphatically demand compliance of the rule of law embodied in UNCLOS as mentioned in the Award.
Unless the international community collectively upholds the Award through sustained diplomatic, legal, economic and security measures, the cost of non-implementation will continue to rise, not only for the claimant states but for every nation that depends on secure sea lanes, freedom of navigation and a stable Indo-Pacific. The price of inaction has already been substantial.
Disclaimer
Views expressed above are the author’s own.
