Collector Mai Hong (L) hands over an official map printed in China in 1094 to the Vietnam National Museum of History on July 25. It shows Hainan Island as being China's southernmost point, which means China's modern claim of sovereignty over Vietnam's Hoang Sa (Paracel) and Truong Sa (Spratly) is hollow."
The long-simmering East Sea dispute is bound to escalate and even lead to armed conflict if the countries contesting its waters fail to take urgent steps to reduce tensions, an international think tank warned Tuesday.
The extent and vagueness of China's claims to the East Sea, also known as the South China Sea, along with its assertive approach, have rattled other claimants, the International Crisis Group (ICG) said.
"Without a consensus on resolution mechanisms, tensions in the South China Sea can easily spill over into armed conflict," Paul Quinn-Judge, acting Asia program director of the Brussels-based organization, said in a statement.
"As long as ASEAN fails to produce a cohesive South China Sea policy, a binding set of rules on the handling of disputed claims cannot be enforced," he said.
China claims sovereignty over nearly all of the sea, which is believed to hold vast amounts of oil and gas and is one of the region's most important fishing grounds and is home to shipping lanes that are vital to global trade.
The Philippines and fellow Association of Southeast Asian Nations (ASEAN) members Brunei, Malaysia and Vietnam, as well as Taiwan, claim parts of the sea.
Tensions began to escalate last year with China becoming increasingly aggressive in staking its claims.
China this week announced it was planning to build a military garrison on the Hoang Sa (Paracel) Islands. Vietnam has protested this move, saying it has sufficient legal and historical evidence to affirm its sovereignty over both Hoang Sa and Truong Sa (Spratly) archipelagos.
As the battle for hydrocarbon reserves and fishing grounds intensifies, claimants are expanding their military and law enforcement capabilities, raising the risk of maritime skirmishes, ICG said.
"The failure of the recent ASEAN foreign ministers' meeting to reduce tensions and issue a joint statement shows how deeply South East Asian nations have been divided by China's growing dominance", said Stephanie Kleine-Ahlbrandt, Crisis Group's North East Asia Project Director and China Advisor.
"Lacking a strong ASEAN position, claimant countries are seeking security ties with the US, which Beijing is strongly opposing," she said.
The report said the increasing number of Chinese civilian vessels patrolling disputed waters presents the greatest potential for conflict.
"While the likelihood of major conflict remains low, all of the trends are in the wrong direction, and prospects of resolution are diminishing," it said.
Bonnie Glaser of the Washington-based Center for Strategic and International Studies (CSIS), said for more than a decade, China has pursued a strategy in Southeast Asia that has relied heavily on "economic carrots" to influence Southeast Asian countries.
She said China pressured the ASEAN 2012 chair Cambodia to keep any mention of the East Sea out of the final statement at a recent summit of the bloc.
"Beijing has provided over $10 billion in aid to Cambodia. In 2011 alone the amount of foreign investment pledged to Phnom Penh by China was 10 times greater than that promised by the US," she said.
Meanwhile, she said, China has recently taken economic measures against the Philippines and Japan recently due to maritime conflicts.
Incensed by Manila's unwillingness to withdraw from the Scarborough Shoal, Chinese quarantine authorities reportedly blocked hundreds of container vans of Philippine bananas from entering Chinese ports, claiming that the fruit contained pests.
Philippines exports more than 30 percent of its bananas to China.
Glaser said other measures by China included slowing inspections of papayas, mangoes, coconuts, and pineapples from the Philippines. Chinese mainland travel agencies stopped sending tour groups to the Philippines.
Regarding the disputes over Sensaku Islands between China and Japan, she said China in September 2010 blocked shipments of rare earth minerals to Japan.
The action was taken in retaliation for Japan's detention of the captain of a Chinese fishing trawler in an incident near the Senkaku Islands, which are under Japanese control but are also claimed by China and Taiwan.
According to Glaser, it is increasingly clear that economic cooperation with China has inherent risks.
"Countries should be mindful of Beijing's increasing propensity to use economic means to compel target nations to alter their policies in line with Chinese interests. Excessive dependence on China may increase countries' vulnerability to such pressure," Glaser said.
"[They] will have to push back against China's growing willingness to employ economic leverage to coerce countries to modify their policies in accordance with Beijing's wishes."
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