Sens. John McCain and Lindsey Graham, who had expressed serious reservations about Rex Tillerson, President Trump’s nominee to be Secretary of State, said Sunday afternoon they would vote for him, pretty much assuring his elevation. The most combustible part of Tillerson’s testimony was about how to handle a rising China’s actions in the South and East China Seas — comments which White House spokesman Sean Spicer seemed to echo — so I asked Dean Cheng, one of the top experts on the Chinese military, to parse Tillerson’s comments and give readers a sense of what should be done. Read on. The Editor.

During his confirmation hearings for Secretary of State, nominee Rex Tillerson compared Chinese island building to Russia’s annexation of Crimea and said the United States needed to send a “clear signal that first, the island-building stops, and second, your access to those islands also not going to be allowed.”

Not surprisingly, these comments aroused a heated response from Beijing, which reiterated its claims to the South China Sea. The People’s Republic of China (PRC) has ignored a legal finding by the Permanent Court of Arbitration at the Hague which found that China’s Nine Dash Line provides no legal basis for its claims in the South China Sea.

Chinese artificial island

If Tillerson meant to signal that the United States will blockade the various artificial islands, this would constitute a most serious threat. A blockade is an act of war under international law. But just as President Kennedy chose to invoke a “quarantine” during the Cuban Missile Crisis, rather than a blockade, there are presumably other means to affect Chinese efforts to secure the South China Sea short of ringing the islands with US Navy ships.

Financial and Economic Measures

It may be useful to keep in mind that Tillerson has spent all of his life in the private sector, and specifically at ExxonMobil Corporation. He possesses little experience with the vagaries of diplomatic language or convention, though he has operated around the world as a businessman. This suggests that he is apt to be thinking more in terms of economic and financial, rather than military, courses of action. Moreover, as head of a company with $270 billion in revenues, with global operations, and one that operates with long time-lines in the construction and operation of major infrastructure projects, it is quite likely that he is more familiar with economic and financial vulnerabilities.

With this in mind, then, it may well be that Tillerson’s first choice would be to focus efforts on discouraging companies that are part of China’s land reclamation efforts in the South China Sea — not on military intervention. If the United States were to deny any company that participates in Chinese artificial island building access to the American market, that could well prove a substantial deterrent to working for China. This would be even more true if the U.S. could persuade other states to impose comparable restrictions. One Chinese company, CCCC Dredging, for example, is reportedly extensively involved in Chinese land reclamation efforts. It is apparently also intent on establishing a worldwide presence in the dredging business. A concerted effort by the U.S., Japan, and Western Europe to deny the company access to their markets would compel CCCC Dredging to choose between South China Sea activities and its global ambitions.

Another means of influencing Chinese companies may be to deny them the ability to list on the American stock exchanges. Listing is not only a means of raising capital, but is also often seen as a stamp of approval, since it requires complying with American rules about financial stability and transparency. Limiting Chinese companies’ access to American (and Western) capital markets and denying them legitimacy could prove an effective instrument.

Similarly, the dozens of dredgers that have been photographed in the Spratlys are all complex pieces of equipment, involving equipment such as trailing suction hopper dredgers and the like. Some of these systems are imported, while others use parts and sub-systems supplied from a variety of commercial vendors, rather than specially fabricated by the People’s Liberation Army (PLA). If the United States and key allies (e.g., Japan, Western Europe) were to impose sanctions on any companies that were found to be providing support to Chinese reclamation efforts in the South China Sea, it would certainly affect China’s ability to sustain such activities in the future.

This would not prevent the PRC from manufacturing its own dredging equipment, but, again, the market for such items could be limited if Mr. Tillerson were to spearhead a global effort to deny Chinese companies market presence in Europe, Japan, North America, and Australia, or their use by Western companies in contracts abroad (e.g., the Middle East, South America).

Such efforts would likely find support from the U.S. Congress. Sen. Marco Rubio, for example, late last year introduced legislation that would require the president to impose an array of measures, including denying visas, on Chinese individuals and entities “who contribute to construction or development projects, and those who threaten the peace, security, or stability of the South China Sea (SCS) or East China Sea (ECS).” As Secretary of State, Tillerson might directly punish corporate entities that participate in South China Sea reclamation efforts, including providing equipment and other support, or who are financially involved, as a complement to the measures that Senator Rubio proposes.

Conversely, the United States could, in the coming years, help expand deep sea exploration by other claimants to the South China Sea region. As the head of ExxonMobil, Mr. Tillerson would be well aware that China has been striving to exclude all other states from engaging in oil exploration in this area, even as it pursues it. The 2014 incidents involving Chinese oil rig HY981 saw China deploy its deep sea oil rig to disputed waters off Vietnam. This move was supported by statements by senior Chinese officials that oil rigs are “mobile national territory.” American efforts to help local states develop their own “mobile national territory” could serve as a means of challenging China’s excessive claims—and not only in the South China Sea.

US Government Measures

Economic and financial actions are not a substitute for more traditional displays of American support for freedom of the seas. Even there, however, Tillerson may have a more expansive view of the available instruments to reinforce the message of American presence in the South China Sea as a counter to China’s excessive claims.

One would be to employ non-military US governmental assets, such as the United States Coast Guard, to challenge excessive Chinese claims. Even before Russia employed “little green men” to help seize Crimea, China was employing fishing boats and “little white ships,” maritime law enforcement vessels, to press its claims in the East and South China Sea. China now fields one of the world’s largest coast guard fleets, including the world’s largest coast guard cutters (displacing 10,000 tons, the size of World War II cruisers), which patrol its claimed waters and help enforce its claims through intensive patrolling and intimidation. By countering these Chinese forces with American Coast Guard ships, Washington can rebut Chinese claims while avoiding the charge of “militarizing” the problem. Moreover, deployed U.S. Coast Guard cutters can also train with local law enforcement vessels, enhancing their ability to engage in maritime law enforcement—and countering Chinese claims.

The Nine Dash Line

Backing any Coast Guard presence would be the United States Navy. It is likely that the Trump Administration will seek to reverse the pattern of its predecessor, who suspended FONOPS in the Spratlys area for three years, and then conducted only four publicly known FONOPS between 2015 and 2017. A more robust FONOPS schedule, especially one specifically undertaken around the Chinese artificial islands rather than in disputed territories with multiple claimants, would put Beijing on notice that its actions would at least face challenges.

To support this increase in FONOPS, the US Navy will likely need to be expanded to avoid prolonged deployments, which leads to neglected maintenance and eroded personnel morale. A key campaign promise of the Trump campaign was to support an expansion of the US Navy to 350 ships. Fulfilling this promise would provide a concrete signal of intent regarding support for forward deployments, including in the South and East China Seas.

Having been in office for less than a week, it is probably too early to tell exactly what policies the Trump Administration will pursue. Nonetheless, Tillerson’s testimony has raised both expectations and concerns. He clearly has the opportunity to reverse what has been a negative trend over the past four years.

Heritage Foundation’s Dean Cheng is one of top experts on the People’s Republic of China, and its military.