The Strategic Role of Middle Powers in the South China Sea

Analysis presented at a recent South China Sea International Conference hosted by the Diplomatic Academy of Viet Nam (DAV) in Da Nang — suggests that this perception of calm is increasingly misleading. Experts warned that deep geopolitical uncertainties are reshaping the maritime security environment.

Current dynamics are characterised less by overt military confrontation and more by a complex mix of pressures that states are navigating simultaneously. Grey-zone tactics — such as assertive coast guard manoeuvres and the use of maritime militia — continue to shape daily interactions at sea. Militarisation framed as defensive modernisation, together with the expansion of infrastructure on disputed features, is altering the operational landscape. At the same time, regional and external actors are intensifying diplomatic activity, issuing notes verbales, and deepening political and military cooperation as part of their wider strategic positioning.

Crucially, amid US–China competition, a distinct strategic development is now taking shape: middle powers are no longer operating at the margins. From maritime exercises to economic engagement and legal diplomacy, they are increasingly asserting influence and helping shape the region’s long-term trajectory. Their growing involvement — deliberate, coordinated, and often multilateral — has become one of the most significant shifts in the South China Sea’s evolving strategic picture.

Maritime Cooperation and Freedom of Navigation

The strategic shift towards more active middle-power engagement is most visible at sea. According to the Diplomatic Academy of Viet Nam, ASEAN member states participated in 49 joint maritime exercises and patrols in the first 10 months of 2025 alone — already exceeding the total for the previous year. Alongside these, middle powers took part in 35 regional exercises, 17 of which were conducted directly in the South China Sea, illustrating how crowded and complex the maritime environment has become.

One of the most notable trends is the growth of Maritime Cooperative Activities (MCA), a series of joint exercises led by the Philippines and the United States with participation from partners such as New Zealand, Japan, Australia, Canada, and India. Since their inception in late 2023, 22 MCAs have been conducted, with 12 taking place in 2025. Significantly, two of the 2025 bilateral MCAs were held without US participation, signalling that some middle powers are now prepared to coordinate among themselves when it comes to maritime security.

This broader pattern of cooperation was underscored during Balikatan 2025, the annual US–Philippines exercise, which became the largest iteration in its history, involving 14,000 troops. Participation and observer status extended across New Zealand, Japan, South Korea, Australia, the United Kingdom, France, Germany, India, and the Netherlands.

A symbolic moment followed when two middle powers — the UK’s HMS Spey and Australia’s HMAS Sydney — carried out what was publicly described as the first joint Freedom of Navigation activity near the contested Spratly Islands. This was more than a naval manoeuvre; it was a signal that a broader group of states is willing to visibly support the principle that the South China Sea remains an international waterway.

New Zealand’s Expanding Defence Role

New Zealand’s growing defence engagement in Southeast Asia reflects a gradual adjustment in how Wellington approaches regional security, particularly as developments in the South China Sea increasingly intersect with its economic interests and long-standing support for international law.

In 2024, Prime Minister Christopher Luxon noted that New Zealand’s prosperity and security are closely linked to wider regional stability, stating that the country “can no longer be a bystander in what’s going on in the region.” His remarks signalled a recognition that developments in the Indo-Pacific — including those in the South China Sea — have direct implications for New Zealand as a trading nation.

This political framing provides context for the strengthening of defence cooperation between New Zealand and the Philippines in 2024 and 2025. Through the Mutual Logistics Supporting Arrangement (MLSA) and the Status of Visiting Forces Agreement (SOVFA), both countries established the legal and logistical groundwork for their personnel to conduct joint activities, including training and exercises, on each other’s territory.

These agreements move the relationship beyond diplomatic exchanges and into practical, structured cooperation, reflecting a shared interest in maintaining regional stability and improving interoperability.

Naval diplomacy has developed alongside these institutional arrangements. In October 2025, HMNZS Aotearoa undertook goodwill visits to Viet Nam and the Philippines. Such visits are a routine element of New Zealand’s defence engagement and offer opportunities for port calls, replenishment, and exchanges with regional counterparts.

On 31 October 2025, the Royal New Zealand Navy’s largest vessel, HMNZS Aotearoa, arrived in Manila for a port visit — marking another milestone in the New Zealand–Philippines maritime partnership. Photo: New Zealand Embassy - Manila/Facebook

However, while in the Philippines the New Zealand Defence Force also participated in the joint exercise in the Philippine Sea along with vessels from Australia, the Philippines, and the United States.

This demonstrates New Zealand’s intention to maintain a more consistent presence in Southeast Asia, mirroring similar outreach by other middle powers that are seeking to engage more closely with regional security dynamics.

Throughout these developments, New Zealand has framed its role in neutral and rules-based terms. Rather than positioning itself against any particular state, Wellington emphasises freedom of navigation, adherence to established international legal frameworks, and cooperation with regional partners. Within this context, New Zealand’s expanding defence activity is best understood as part of a broader pattern of middle-power responses to an increasingly contested maritime environment.

Trade, Prosperity, and the Rules-Based Order

While security considerations underpin New Zealand’s growing engagement, economic realities explain why the South China Sea has drawn heightened attention from a wider group of external actors. An estimated US$3.4 trillion in global trade passes through the waterway each year, making it one of the world’s most critical maritime routes. Any disruption — whether caused by confrontation, coercive manoeuvres, or prolonged stand-offs at sea — would be felt across global supply chains.

This economic exposure helps explain why European states, though geographically distant, have become more vocal about developments in the region.

Speaking at the Da Nang conference, European Union Ambassador to Viet Nam, H.E. Julien Guerrier, highlighted the extent of Europe’s reliance on these sea lanes. “Our economic health is at stake,” he said. “A quarter of the EU’s trade passes through the South China Sea. If navigation is disrupted, it affects the energy supply, access to resources… it affects, in short, the entire global economy.”

Guerrier also noted that “grey-zone” activities — including ramming, chasing, water cannon use, and land reclamation — have practical consequences for commercial shipping, not merely strategic ones.

These concerns have prompted the EU to advocate for a more open and rules-based regional security architecture, alongside efforts to improve coordination of naval deployments by EU member states in the Indo-Pacific. Guerrier stressed that this increased engagement is not symbolic but reflects the growing link between maritime security and economic resilience.

Support for International Law

At the centre of legal debates in the South China Sea is the United Nations Convention on the Law of the Sea (UNCLOS), often described as the “Constitution for the oceans”.

The treaty defines the rights and responsibilities of states in maritime zones — from territorial seas and Exclusive Economic Zones (EEZs) to the continental shelf and the high seas. It also provides mechanisms for peaceful dispute resolution, which have become central as maritime claims in the region have grown more assertive.

In the South China Sea, claimant states such as the Philippines, Viet Nam, Malaysia, Brunei, and Indonesia consistently refer to UNCLOS to delineate their maritime entitlements and to challenge expansive assertions that fall outside the treaty’s provisions. For these states, UNCLOS is not merely a legal framework but a tool that allows them to defend their rights through predictable rules rather than through military or economic competition.

New Zealand is likewise a strong supporter of UNCLOS as a cornerstone of the international rules-based order.

In an interview with the Asia Media Centre, New Zealand Ambassador to Viet Nam, H.E. Caroline Beresford, highlighted the country’s enduring commitment to international law and to the Convention itself. “We're extremely strong supporters of the international rule of law — and in particular UNCLOS, which New Zealand was very involved in negotiating. For countries like New Zealand, the important thing is to continue to join voices on the importance of maintaining the rule of law.”

She stressed that New Zealand’s position is not about aligning with one major power over another, but about consistency in upholding established norms. “I believe that joining voices in support of the international order is a neutral — or perhaps slightly forward-leaning — position. The majority of countries created this order after two devastating world wars. That history may feel distant for newer generations, but the system was built to avoid future conflict — to provide a neutral, lawful basis for resolving disputes. The law, not force, is the way forward,” she added.

Her reflections capture a central theme of New Zealand’s approach: that rules-based processes, rather than coercive tactics, provide the most stable and equitable foundation for managing disputes in contested maritime regions.

New Zealand Ambassador to Viet Nam, H.E. Caroline Beresford, attended the Diplomatic Academy of Viet Nam’s 17th South China Sea Conference, joining 11 other heads of mission at the event. Photo: AMC

UNCLOS Arbitration vs China’s IOMed

A central question now facing the South China Sea is how maritime disputes should be resolved. Two contrasting approaches have emerged, each reflecting a different philosophy about the role of international law, diplomacy, and state consent in managing regional tensions.

The first is the arbitration mechanism under UNCLOS. This system allows states to bring disputes before an international tribunal even if the opposing party does not consent. The most significant test case came in 2013, when the Philippines initiated proceedings against China’s expansive claims - the “nine-dash line” that encompassed almost the entire South China Sea.

In 2016, the tribunal ruled in favour of Manila, determining that China’s historic-rights claims had no basis in international law and clarifying the maritime entitlements of both parties under UNCLOS. This year, on the Award’s ninth anniversary, it received statements of support from 15 countries and the European Union. Slovenia joined for the first time, bringing the total number of endorsing states to 28.

The strength of the UNCLOS arbitration system lies in its clarity and its promise of equality before the law. It applies a single set of rules to both major and smaller powers, and its decisions are legally binding. Yet this clarity can also make the process politically sensitive. Arbitration produces definitive outcomes — often perceived as creating winners and losers — and can therefore leave limited room for diplomatic flexibility or face-saving compromises, especially in disputes deeply tied to questions of national identity or sovereignty.

China, despite being a party to UNCLOS, has rejected the 2016 Award and maintains that the compulsory arbitration process is inappropriate for issues it considers to be “core interests”. At the Da Nang conference, Dr Yinan Bao of the Huayang Center for Maritime Cooperation and Ocean Governance in China reiterated this view, arguing that the arbitral process failed to address the underlying political realities. He described the 2016 ruling as one that “failed miserably” to resolve the conflict and reflected an approach that Beijing believes was neither neutral nor conducive to long-term stability.

In response to what it sees as the limitations of UNCLOS arbitration, Beijing has developed an alternative model for resolving disputes. In May 2025, China launched the International Organization for Mediation (IOMed), headquartered in Hong Kong, presenting it as a flexible, less adversarial mechanism compared with litigation or arbitration. Mediation under IOMed can begin only with the unanimous consent of all parties; proceedings are confidential and less formal, and any settlement becomes binding only if all participants agree to it.

IOMed currently has 38 signatories, including regional states such as Myanmar, Laos, Cambodia, and Indonesia.

Supporters of IOMed argue that this voluntary, consensus-based approach reduces political tension and avoids the zero-sum dynamic that can accompany binding rulings.

Critics, however, caution that such a model inherently favours more powerful states. Without compulsory jurisdiction or enforceable outcomes, smaller states may find themselves negotiating under asymmetrical political or economic pressure, risking the dilution of rights clearly outlined under UNCLOS.

In practice, the coexistence of UNCLOS arbitration and IOMed reflects a deeper contest over the future of the maritime order in the South China Sea. One vision emphasises binding legal norms set by the international community; the other prioritises negotiated outcomes shaped by state-to-state dialogue.

Should Middle Powers Intervene?

Against this backdrop, a further question arises: what role should middle powers and other non-claimant states play in the South China Sea? For Beijing, the answer is clear. China maintains that disputes should be handled exclusively by the directly affected coastal states and resolved through bilateral negotiations, without involvement from external actors. Russia broadly shares this view.

At the conference, Dr Yanna Leksyutinna, Deputy Director of the Institute of China and Contemporary Asia at the Russian Academy of Sciences, delivered a pointed critique of non-regional engagement, particularly by G7 countries.

She argued that freedom of navigation operations and the strengthening of the militaries of “claimant countries except China” are ultimately “counterproductive”. According to her analysis, these actions do not deter Beijing but instead contribute to what she described as a “vicious circle of regional militarisation”. The increased presence of foreign forces, she noted, heightens China’s sense of insecurity, prompting it to reinforce its military posture. Neighbouring states then respond in kind, creating an escalatory dynamic that becomes increasingly difficult to reverse.

Dr Leksyutinna also challenged the often-cited economic rationale for external involvement. She observed that trade flows through the South China Sea have remained robust since the early 2000s, and argued that the noticeable rise in non-regional participation since the 2016 Arbitration Award is rooted more in strategic competition than in concerns about commercial disruption. In her framing, “China is viewed not as a partner, but rather as a competitor, a systemic rival against which the rising containment policy must be implemented.” From this perspective, middle and major powers are not simply safeguarding global maritime commons but are actively participating in a broader geopolitical contest that risks heightening tensions further.

Dr Yanna Leksyutinna explained that Russia will not take sides in the South China Sea dispute and aims to keep good relations with China and other claimant countries through economic ties. Photo: AMC

A contrasting view emerged from Dr Tang Siew Mun, Senior Fellow at the ISEAS–Yusof Ishak Institute in Singapore. While acknowledging that Southeast Asian states recognise China’s economic significance, he stressed that this does not eliminate concerns about how such power may be used. “China is powerful, but if that power is used on us [ASEAN], we have grounds to be concerned,” he said.

For Dr Tang, the South China Sea is not solely a regional issue but an international waterway that all states depend on. In that context, the involvement of external actors is not inherently unwelcome. Instead, he argued, it can provide Southeast Asian countries with much-needed strategic balance in an otherwise asymmetric environment. He captured ASEAN’s dilemma through a well-known metaphor: “When two elephants fight, the grass gets trampled. And when two elephants make love, the grass gets trampled as well. And that grass is ASEAN.”

He emphasised that the region seeks neither heightened confrontation nor strategic paralysis. “We don’t want relations between China and the US to be too hot or too cold,” he said. “There should be a balance, and this is where ASEAN comes in. Regardless of whether it’s too hot or too cold, ASEAN remains open for the US and China to work with each other.” In his view, the key question is not whether external actors should be present, but how they choose to engage — in ways that reinforce ASEAN centrality, preserve regional stability, and avoid forcing Southeast Asian states into binary choices.

A Crowded but Critical Maritime Future

The South China Sea is entering a more complex and crowded era. Once viewed primarily through the lens of US–China rivalry, it is increasingly shaped by the actions and choices of middle powers, both inside and outside the region.

Through expanded maritime cooperation, defence diplomacy, economic engagement, and support for international law, these states are helping to define the norms and practices that will govern one of the world’s most strategically important waterways. Yet key questions remain unresolved. It is still unclear whether binding legal mechanisms such as UNCLOS arbitration and voluntary initiatives like IOMed will ultimately complement each other or compete for legitimacy.

It is equally uncertain whether increased middle-power involvement will help deter coercive behaviour and stabilise the region, or whether it will add new layers to an already dense web of military and political competition.

For ASEAN, the challenge will be to maintain its role as a central convenor and stabilising force amid overlapping interests and pressures. What is clear, however, is that the South China Sea is no longer merely a stage on which great powers act and smaller states react. Middle powers—including New Zealand—are now active participants in shaping its future. Their task will be to support stability, uphold international law, and work with regional partners to ensure that this vital maritime space remains open, peaceful, and governed by rules rather than coercion.

-Asia Media Centre