U.S. Defense Secretary Ash Carter on Tuesday warned China against what he called "aggressive" actions in the South China Sea region, including the placement of surface-to-air missiles on a disputed island, and said they would have consequences.
"China must not pursue militarization in the South China Sea," Carter said in a wide-ranging speech at the Commonwealth Club in San Francisco. "Specific actions will have specific consequences."
He did not elaborate, but underscored the U.S. military's determination to safeguard maritime security around the world, and particularly in the South China Sea region, which sees about 30 percent of the world's trade transit its waters each year.
The U.S. defense chief also took aim at both Russia and China for their actions to limit Internet access, as well as state-sponsored cyber threats, cyber espionage and cyber crime.
The United States and China are risking a tit-for-tat escalation over the Paracel Islands as Beijing asserts its authority over one of its most tightly-held assets in the South China Sea and Washington challenges a growing military build-up.
Both Chinese and foreign security experts say Beijing won't compromise over the Paracels, and it views its 42-year grip over the entire archipelago as significantly different to the more fragmented situation further south in the contentious Spratly Islands.
China does not acknowledge the Paracels are disputed by neighboring Vietnam, repeatedly ignoring Hanoi's requests for talks on the Paracels as part of broader territorial discussions and attempting to force them off the regional diplomatic agenda.
"We're in for a difficult time...when it comes to the Paracels, China is not going to budge on what it sees as its absolute sovereign rights," said Zhang Baohui, a mainland security expert at Hong Kong's Lingnan University.
"We could see China acting more swiftly and decisively to anything it sees as a so-called provocation in the Paracels."
Since the U.S. navy dispatched a destroyer to sail close to the Paracels last month, China has established advanced surface-to-air missiles batteries and re-deployed fighter jets to the islands, prompting U.S.-led protests that Beijing is militarizing the South China Sea.
Foreign Ministry spokeswoman Hua Chunying last week reiterated China's insistence that the islands were not in dispute, so Beijing could deploy what it wanted on its territory without reproach.
The Paracels could not be considered part of the landmark declaration between China and Southeast Asian nations in 2002 that calls for peaceful resolution of disputes and self-restraint, she said.
"We have stressed many times that there is no dispute that the Xisha islands are China's sovereign territory," she said, using China's name for the Paracels.
Carl Thayer, a security scholar at the Australian Defence Force Academy, said he was "simply amazed" by the recent U.S. patrol in the Paracels, which could complicate actions to challenge the newer risks posed by China's work in the Spratlys.
"China's had effectively uncontested control of the Paracels since the 1970s, so they've been militarised for decades," he said. "I think China was really taken by surprise when they sent the Curtis Wilbur."
U.S. and Vietnamese officials protested China's deployment of HQ-9 surface-to-air missiles on Woody Island in the Paracels, fearing a similar move on the Spratlys.
China occupied Woody Island in 1956 and took the rest of the archipelago when it drove off the navy of the then-South Vietnam in 1974.
"The status quo in these two archipelagos is being changed," Vietnam foreign ministry spokesman Le Hai Binh said last week. "The more important and dangerous issue is the militarisation of the South China Sea and these are very serious issues."
In his prepared remarks, Carter drew a sharp contrast between such behavior by Russia and China and what he described as much healthier U.S. actions to preserve Internet freedom.
"We don't desire conflict with either country," he said. "But we also cannot blind ourselves to their apparent goals and actions."
He urged cooperation with U.S. technology companies to ensure data security and necessary encryption levels, despite growing controversy over the FBI's request to circumvent security features on an iPhone used by one of the San Bernardino, California, shooters.
Carter, on his third visit to the technology-heavy Silicon Valley since taking office a year ago, said he could not address the case specifically since it was under litigation, but made clear that the Defense Department viewed encryption as a necessary part of data security.
"It's important to take a step back here, because future policy shouldn't be driven by any one particular case," Carter said in what appeared to be a departure from the Justice Department's view.
Carter noted that the Defense Department is the largest user of encryption in the world and needed it to be as strong as possible.
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