Chairman Mao's "little red book" is no longer a fashion accessory in Beijing, but China's leaders seem to be drawing inspiration from one of its aphorisms: "There is great disorder under the Heavens and the situation is excellent."
Judging by the calculatedly risky steps they have taken -- like moving a gigantic drilling rig deep into Vietnam's Exclusive Economic Zone -- China seems to have concluded that, with the West preoccupied with Ukraine, Syria and Iraq, Southeast Asia divided over how to respond to its aggressive moves, and with Japan and the U.S. unsure as to how to respond to North Korea's saber rattling, the situation is indeed excellent.
CHINA vs. JAPAN
Across the Sea of Japan, though, Prime Minister Shinzo Abe appears to have concluded that only by shedding its inhibitions about fighting a war can Japan dissuade China from pushing further into the Senkakus and continuing to gradually take control of the South China Sea.
CHINA vs. VIETNAM
Meanwhile Vietnam, pushed into a corner by aggressive Chinese action and facing the wrath of its own incensed population, may also abandon restraint. Unable to stop the Chinese behemoth by military means, it may join the Philippines in challenging China in international court as well as strengthening security cooperation with the U.S.
The rise of a de facto alliance between U.S. allies like Japan, the Philippines and Vietnam could make real China's oft-cited fears of encirclement. The danger that such gamesmanship in East Asia could tear asunder the mesh of global interdependence and hurt all might be the only consideration preventing a slide towards wider conflict. But China seems to have found a well-calibrated approach that advances its agenda through limited steps without provoking sanctions.
EUROPE ON THE SIDELINES
Russia's absorption of Crimea, its threats to dismember Ukraine and its pledge to support ethnic Russians strewn about central Europe have so far brought a rather dismal response from the European Union. With France still committed to a lucrative arms sale to Moscow, British financial markets keen not to lose Russian clients and Germany dependent on Putin's gas and its exports, Europe does not have much stomach for resistance.
China may have abstained on the U.N. vote censoring Russia, but must have been heartened by the West's helplessness in the face of Moscow's aggression. It certainly was not intimidated by President Obama's indirect warning on the South China Sea dispute in which the U.S. president pointed to sanctions that Russia would incur.
Indeed, barely had Obama returned from Asia when China took its most openly aggressive move -- towing a gigantic oil drilling platform well inside Vietnam's Exclusive Economic Zone on grounds that it overlapped with the EEZ of the contested but Chinese-controlled Paracel Islands. It was not a typical oil drilling operation. A flotilla of 80 ships, helicopters and the occasional low-flying fighter aircraft were deployed to protect the rig from far outnumbered Vietnamese coastguard vessels, ramming them and spraying them with water cannons. The standoff continues as Vietnamese ships play cat and mouse in an effort to sneak through the veritable wall of Chinese vessels surrounding the rig. But there is no doubt about the outcome: China will prevail.
OIL RIG A 'MOBILE SOVEREIGNTY PLATFORM'
Of course, the deployment of a drilling rig, "a mobile sovereignty platform" as a Chinese official described it, was not recently inspired by Putin's grab for Crimea. It is merely the latest Chinese move in a decades-long game of chess. On a cold January morning exactly 40 years ago, in the waning days of the Vietnam War while Henry Kissinger was courting China for help on pressuring the truculent North Vietnamese, the Chinese navy mounted a surprise attack on a South Vietnamese garrison on the Paracel Islands. They took control of the island and captured dozens of South Vietnamese soldiers and an American adviser. Though South Vietnam was an ally, the U.S. Seventh Fleet turned a blind eye.
Since that 1974 attack, which afforded China its first foothold on the string of islands, reefs and shoals in the South China Sea, it has chosen opportune moments to advance its control. In April 1988, when Vietnam's ally Mikhail Gorbachev was seeking détente with China, the PLA Navy attacked Vietnamese ships and occupied six reefs in the Spratly chain. In 1995, three years after the Philippines expelled the U.S. from its bases there, the Chinese navy moved in to capture from the Philippines Mischief Reef, another contested feature of the South China Sea.
Chinese policy to realize its claim of nearly 80 percent of the South China Sea has since followed three parallel tracks: discreet incremental military advances; diplomatic efforts to propose a code of conduct and joint development of energy resources, and; building robust economic cooperation with ASEAN. In retrospect, the last two tracks seem to have been designed to develop China's economy enmeshing with the region while concealing its intention, in accordance with Deng Xiaoping's advice of tao-guang-yang-hui ("keep a low profile").
When the 1997 economic crisis hit Asia, the West's unsympathetic stance towards Asian "crony capitalism" opened the door for China to emerge as the sympathetic supporter, offering aid and developing economic ties. In the 15 years since, China's rise as the world's factory has been accomplished through a concerted effort to better integrate with the ASEAN economies.
The region provides raw materials and agricultural goods and contributes to the vast supply chain that feeds China's export juggernaut. Countries like Laos, Cambodia and Myanmar -- beneficiaries of Chinese aid -- often side with Beijing. With the China-ASEAN trade expected to reach $500 billion (60 percent of it meant for export to third countries) the region's fate is intertwined. The policy of economically tying the region with Chinese economy even extended to historical enemy Vietnam, where Chinese FDI reached over $2.3 billion.
CHINA'S HONEYMOON WITH EAST ASIA IS OVER
That particular honeymoon ended last week, when rioting Vietnamese gutted some of the Chinese owned factories, forcing the evacuation of wounded and frightened workers back to China.
To reassure the region that despite its expansive claims it was willing to show mutual restraint, China signed the Declaration on the Conduct of the Parties in the South China Sea in 2002. The following year, the Chinese and Philippine national oil companies signed a letter of intent to jointly develop petroleum. In 2005, China, the Philippines and Vietnam signed a tripartite agreement on joint seismic surveying activities in the South China Sea. Even Vietnam signed a joint exploration agreement with China in the undisputed Gulf of Tonkin.
The period during which China felt it expedient to follow Deng's advice ended with the 2007 financial crisis that brought the U.S. and other Western economies to the brink of disaster. China, relatively unaffected by the turmoil and flush with a 3 trillion dollar reserve and a fledgling armed forces, concluded that the time had come for it to turn its paper claims into effective control.
The first major clash came in September 2010, when the Japanese coast guard arrested the Chinese captain of a fishing trawler in the waters of the disputed Senkaku ("Diaoyu" in Chinese) Islands. Two years later, the Japanese government's decision to buy the privately-held island to defuse public protest raised the conflict to a new level. The situation escalated rapidly from there: in September 2012, China sent six surveillance ships to the Senkakus to assert its territorial claims; Chinese and Japanese coastguard vessels have played cat and mouse, and China has flown reconnaissance flights over the island and unilaterally declared an air defense identification zone (ADIZ) requiring all flights over the area to submit prior notice to Chinese air traffic control.
China's naval might has grown apace to allow China to carry a big stick while raising its voice. In August 2011, China launched its first aircraft carrier (a modified Russian hull) and announced the launch of a larger, domestically built carrier in 2020.
More significantly, China has built a formidable fleet of five law enforcement agencies in the water, from Coast Guards to Customs, operating a force of over a thousand vessels -- armed cutters, frigates, hovercraft, patrol boats, aircrafts and helicopters. While keeping its large naval assets over the horizon, China has used these "civilian" vessels to enforce Chinese claims -- from Scarborough Shoal near the Philippines to James Shoal near Malaysia -- by arresting fishermen, disrupting attempts to drill for oil. Eighty such vessels now surround the giant drilling rig, protecting against the Vietnamese vessel challenging Chinese presence in the contested water.
CONQUEST BY 'LAWFARE'
China is well on its way to dominating the South China Sea, whether in the shoals that it has already occupied or the waters where civilian vessels armed with water cannons are enforcing Chinese law in contested areas -- "lawfare," as one Harvard lawyer defined it, "the use of law as a weapon of war."
China's soothing talk of a peaceful resolution of the dispute, respecting a code of conduct and joint development of energy, now seems a thing of the past.
But when China has bared its fangs, the countries contesting its claims have to live with the changed reality on the ground -- or, rather, on the water.
China is too close and too powerful for ASEAN countries to stand up to its challenge. As the Philippines found out when Chinese tourists stopped visiting and when Vietnamese riots threatened Chinese and other investment, their economic fates are so closely tied with China's that resistance is not merely futile, but self-defeating.
Meanwhile, Washington's admonitions of restraint to China (followed by Beijing's sneering responses) do not inspire confidence when defense budgets are being slashed and American public opinion is leaning towards isolationism.
It is against this background that some of Japan's traditional pacifists are stirring and considering dropping the nation's taboo of fighting abroad. The only realistic resistance that Southeast Asian neighbors can mount is to join the Philippines in taking China to the international court, whose jurisdiction China does not recognize.
As far as Xi Jinping can see, the situation is indeed an excellent one in which to establish Chinese hegemony over the South China Sea.