China’s Belt and Road Initiative and the South China Sea Disputes: Toward a New Mutual Deterrence Equilibrium

Abstract

As a measure to countervail the US strategy toward Asia and to take a bigger role in global affairs, China’s Belt and Road Initiative (BRI) is bound to evolve into, and to be decided by, a number of geopolitical games. In this paper a three-player, non-cooperative game is constructed for policymakers to handle the South China Sea disputes. Four cases—including (i) the Scarborough Shoal standoff (2012), (ii) the HYSY 981 drilling rig crisis (2014), and (iii) the US navigation incidents (2015–)—are briefly narrated and quantitatively tested. This chapter focuses the political and economic incentives for all the players involved in each case of the South China Sea disputes to reach a new mutual deterrence (subgame perfect) equilibrium.