China Breaks Ground On School In Disputed South China Sea Territory

China is continuing to affirm its claims in the South China Sea by starting to build a school on the largest of the disputed Paracel Islands. Parts of the resource-rich area are claimed by China, Taiwan, Vietnam and the Philippines.

Chinese officials have announced they are building an elementary school for the dozens of children of their military and other personnel on the island. The Chinese settlement known as Sansha was built on the one-square-mile Yongxing Island two years ago, and now has a population of 1,443.

The Sansha administration announced that construction broke ground this weekend and should be completed in a year and a half. The school is the latest move by the Chinese to strengthen their presence in the disputed waters, further escalating tensions. The island, which lies more than 215 miles (350 km) from China’s southernmost province of Hainan, is within the nation’s self-described Nine-dash line, a maritime border that Chinese authorities use instead of the borders delineated by the United Nations Convention of the Law of the Sea.

The Philippines is not responding idly to China’s assertiveness in the South China Sea. Manila has already announced that it will be appealing the construction of the school to the Association of Southeast Asian Nations. In addition, it has moved forward with its own plans in other disputed territories.

Southeast of the Paracels lies another disputed area, the Reed Bank, a territory that the Philippines and China also both claim. According to a research note by the Eurasia Group, a political risk research and consulting firm, Manila approved a two-year gas drilling concession to British-based Forum Energy PLC (LON:FEP) for exploration in nearby gas fields. Earlier this year, Manila and Beijing pursued negotiations with China’s state-run oil conglomerate CNOOC, for drilling and exploration in the Sampaguita area of the Bank. The two parties were not able to come to an agreement over jurisdictions or how any gas that is produced should be used. Still, Manila pursued private partnerships in the area.

“The extension of the contract, which does not expire until August 2015, also reflects renewed effort by Manila to establish a joint partnership to develop the seabed in the Reed Bank over the medium term,” Ambika Ahuja, a Eurasia Group Asia analyst, said. “A joint venture would boost the Philippines’ technical capacity and counterbalance China’s influence in the area.”

Such deals will likely be seen by China as provocations, and could eventually exacerbate economic risks, mostly for the Philippines, which counts China as its third-largest trading partner. However, deals with non-Chinese companies would be essential for the Philippines in an attempt to diversify away from relying on the Chinese market, the Eurasia Group wrote.