Paracel Islands a flashpoint in regional tensions between China and Vietnam

A largely unpopulated archipelago administered by China but claimed by Vietnam, the Paracel Islands have become the flashpoint in an increasingly aggressive territorial dispute between the two neighbours, ideological allies as fellow communists but with stark divisions.

China’s Haiyang Shiyou 981 oil rig is drilling between the Paracels. Vietnam says the vessel is within its 200-nautical mile exclusive economic zone and on its continental shelf. China says it is operating within its waters.

A classic stand-off ensues. The oil rig's deployment set off anti-Chinese riots in Vietnam last month in which at least four people were killed, with attacks on Chinese companies, most of them from self-ruled Taiwan.

The dispute is the most serious collapse of relations between the Communist states and traditional rivals since a brief war in 1979 following Vietnam's invasion of Cambodia. They are rapidly becoming the South China Sea equivalent of the equally uninhabited chain of islands in the East China Sea, known as the Senkaku islands in Japan and the Diaoyu islands to the Chinese.

China claims 90 per cent of the 3.5 million sq km South China Sea. The Philippines, Malaysia and Brunei all claim some of the Spratlys, while China, Taiwan and Vietnam claim the whole chain.

China’s island disputes with its neighbours are emblematic of China’s growing regional clout. This week it accused Vietnam of ramming its ships more than 1,000 times in a part of the sea and said while it wanted good relations with Vietnam, it would not abandon principles to achieve that.

This new-found self-confidence saw China denounce Vietnam and the Philippines for collaborating on a disputed island in the South China Sea to play soccer and volleyball, calling it "a clumsy farce" and demanding both countries stop causing trouble. "Don't you think this small move together by Vietnam and the Philippines is at most a clumsy farce?" China's foreign ministry spokeswoman Hua Chunying told a daily news briefing.

“China has irrefutable sovereignty over the Spratly Islands and the seas nearby. We demand that Vietnam and the Philippines stop any behaviour that picks quarrels and causes trouble . . . and not do anything to complicate or magnify the dispute.”

Even though China is generally perceived as the aggressor, Vietnam’s violent reaction to China’s moves has not won it any friends among the foreign investors the country needs to keep the economy on track.

“The riots in the cities were understandable, but the attacks on the factories were frightening and damaged Vietnam’s reputation,” said one European chief executive active in both markets, who requested anonymity.

Now, in a highly unusual move, China is taking the situation to the United Nations. Deputy ambassador Wang Min sent a "position paper" on the rig's operation in the South China Sea to secretary-general Ban Ki-moon on Monday and asked the United Nations chief to circulate it to the 193 members of the General Assembly.

Zhang Jie, a foreign affairs expert at the Chinese Academy of Social Sciences, said China was handling the situation appropriately and Vietnam was behaving in a provocative way. "China has clearly explained everything, using historical documents, law and territorial statements," Mr Zhang said. "We have proof to rely on and undisputed sovereignty. Vietnam's renegade behaviour cannot establish a foothold in the international arena. The sooner we let the international community know, the better it is. If one day the two sides are to negotiate, all of these are the legal basis for asserting our sovereignty," he added.

Xu Liping, an expert on China's relations in Southeast Asia at the National Institute of International Strategy at the Chinese Academy of Social Sciences, said Beijing may be trying to put economic pressure on Vietnam's government.

"Any measure to enhance China's investment in Vietnam is inappropriate with the current political tension," said Mr Xu. "This is a sign that China is playing the economic card. How effective will it be? We will have to wait and see."