Article 14 of the EEZ Law

On 26 June 1998, China officially promulgated the Law on the Exclusive Economic Zone
and the Continental Shelf in which Article 14 provides that “the provisions of this Law shall
not affect the historic rights enjoyed by the People’s Republic of China.”37 It is generally
agreed that this section is connected to China’s claim to the South China Sea within the
U-shaped line. However, instead of using the term “historic waters,” China wisely chose
the more softened term “historic rights.” The provision of the EEZ Law on historic rights
can be understood as follows: (1) it might be mean that the sea areas which are not part of
China’s EEZ and/or continental shelf should have the same legal status as the EEZ and/or
continental shelf; (2) it might mean that the sea areas which embody China’s historic rights
include undefined areas beyond the 200-nautical-mile limit; or (3) it might mean that the
sea areas that embody China’s historic rights which are within the 200-nautical-mile limit
can have an alternative management regime different from the EEZ and or continental shelf
regime.38
While China asserts its historic rights in the South China Sea, it is to be noted that since
such “historic rights” are contained in the 1998 Law on the EEZ and Continental Shelf, they
may not be treated as equivalent to “historic waters” as generally understood in international
law. Having said that, it is also to be noted that in other Chinese legislation the wording such
as “other sea areas within China’s jurisdiction” has been used in addition to the internalwaters, territorial sea, EEZ, and continental shelf. An example is the amended Law on
Marine Environmental Protection of 1999.39 Article 2 provides that “the Law shall apply
to internal waters, territorial sea, contiguous zone, exclusive economic zone, continental
shelf of the People’s Republic of China and other sea areas under the jurisdiction of the
People’s Republic of China” (emphasis added). The original 1982 Law contained the same
wording.40 It is unknown where “other sea areas within China’s jurisdiction” are located.
One possibility is that it might refer to the sea areas within the U-shaped line that China is
unable to claim as part of its territorial sea, EEZ, or continental shelf.
As early as April 1986, Liu Huaqing, the then commander of the Chinese Navy stated
that “the sea areas which should be under our jurisdiction are more than three million
square kilometres,”41 which may be based on the following calculation: in the Yellow Sea,
an equidistance line for delimitation with the Korean Peninsula; in the East China Sea, a
delimitation with Japan the middle line of the Okinawa Trough according to the principle
of natural prolongation; and, in the South China Sea, the sea areas within the U-shaped
line in addition to the EEZ east of Taiwan.42 According to a Chinese source, the areas in
the South China Sea encroached upon by other states are as follows: Vietnam, 1,170,000
square kilometers; the Philippines, 620,000 square kilometers; Malaysia, 170,000 square
kilometers; Brunei, 50,000 square kilometers; and Indonesia, 35,000 square kilometers.43
These estimations are based on the use of the U-shaped line.

Oil Exploration Lease in Vanguard Bank
While the fishery activities do not sufficiently explain the Chinese stance to the line, a
lease of an oil exploratory block in the South China Sea to a foreign oil company may have
profound significance for the line. In May 1992, Beijing granted a concession to the Crestone
Energy Corporation to explore oil in a 7,347 square-nautical-mile area between Vanguard
Bank (Wan’an Tan) and the Prince of Wales Bank (Guangya Tan), 160 nautical miles
from Vietnam’s coast.44 Since China had not declared its EEZ at that time, some scholars
assumed that the Crestone concession reflected China’s view that it was asserting sovereign
authority over the waters and resources within its “nine-interrupted-lines” historic claim.45
The assumption is plausible since the block is situated around a permanently submerged
bank that is difficult to claim unless it is claimed as being within the historic waters or
within China’s EEZ or continental shelf that could be generated from insular features in
the Spratly Islands.
When Vietnam protested China’s concession, the reason given by the spokesperson
from the Chinese Foreign Ministry was that China had “indisputable sovereignty” over the
Nansha and Xisha Islands and the contiguous waters and, as a result, that “[t]he exploitation
by China’s oil company is irreproachable.”46 There was no mention of the U-shaped line or
historic waters. On the other hand, China protested the Vietnamese concession to foreign
oil companies near Vanguard Bank. On 17 April 1996, a spokesperson from the Chinese
Foreign Ministry stated that Vietnam’s granting of rights to foreign petroleum companies
for oil exploration in the sea area of the Nansha Islands was “illegal and invalid” and “an
encroachment on China’s sovereignty and its maritime rights and interests.”47 The entire
area covered by the Vietnamese contract falls within the Wan’an Tan Bei-21 block licensed
by Beijing to Crestone Energy Corporation. In 1996, the contract for the Wan’an Tan Bei-
21 block was transferred to another U.S. oil company, Harvest Natural Resources, which continues to hold its interest with the license being extended to 31 May 2013.48
With the China Maritime Surveillance intensifying its patrols in the South China Sea,
more incidents have happened in and around Vanguard Bank. The recent incident involving the Vietnamese vessel Binh Minh No. 02 is an example. On 26 May 2011, three Chinese
law enforcement vessels tried to stop and finally did sever the seismic survey cable of the
Binh Minh No. 02 operating within Vietnam’s claimed EEZ on the Vanguard Bank.49 It
caused a spike in tension between the two countries. There have been other similar incidents
between China and Vietnam and between China and the Philippines.