Two decades into the 21st century, China still faces a plethora of unsettled territorial and boundary disputes on its maritime frontier spanning from the Yellow Sea, East China Sea, and the South China Sea. These disputes cover strategically significant maritime space and involve U.S. treaty allies. As China’s power grows and it aspires to exert greater control over its periphery, how China handles local incidents arising from these disputes touches on the fundamental question of whether its rise will mean peace or instability for the region.
There is a growing number of incidents arising from these disputes over the past twenty years, but China’s way of handling these incidents has varied widely. It has not always adopted an assertive, escalatory posture as its power continues to grow, nor has it invariably taken an accommodating, deescalatory posture as its good neighborly diplomacy strategy would suggest. When will China escalate an incident arising from its maritime disputes and when will it opt for deescalation? Should it choose to escalate, how does China calibrate its escalatory measures in terms of their nature (nonmilitary or military) and strength (restrained or forceful)?
To account for the variation, this study develops a two-step theoretical framework to explain when, why, and how rising powers such as China choose to escalate or deescalate local incidents arising from unsettled maritime sovereignty and jurisdiction disputes. I argue that when deciding whether to escalate such incidents, leaders often simultaneously face two types of costs generated respectively by domestic and international audiences with oftentimes competing expectations, and thus a decision to escalate or deescalate entails a tradeoff between these two types of audience costs. Should China choose to escalate, it calibrates escalatory measures based on its assessment of one of the two criteria: the likelihood of being presented with a fait accompli by the adversary; or, should it have already been presented with a fait accompli during the crisis, the prospect of reversing it through negotiations.
Several key findings emerge from this study. First, China has not been invariably prone to taking an escalatory posture in maritime disputes as its power grows. Rather, its decision of escalation or deescalation is a function of the interplay between the pulling and hauling among its domestic parochial interests on the one hand and Beijing’s assessment of China’s geopolitical environment on the other.
Second, and counterintuitively, smaller countries can have substantial leverage over rising powers, contrasting the long-enshrined Thucydides dictum that “the strong do what they have the power to do and the weak accept what they have to accept.” China cares as much about its reputation for resolve as that for its image of nonbelligerency, suggesting that rising powers’ understanding of reputation is often two-pronged.
Third, China has demonstrated a high level of sensitivity to the prospect of the adversary engaging in a fait accompli tactic. A fait accompli that China views as irreversibly altering the status quo, be that physically or nonphysically, can create strong motivations for China to undertake highly risky military escalation to compel for a reversal or compensate for its perceived losses
