Diplomatic options available

China has suffered a major embarrassment on its claims to territorial rights in the South China Sea.

An international tribunal in The Hague has come down overwhelmingly in favour of claims by the Philippines.

The judgement by the Permanent Court of Arbitration is likely to increase global diplomatic pressure on Beijing to scale back military expansion in the area.

By depriving certain outcrops of territorial-generating status, the ruling effectively dismisses China's all-encompassing "nine-dash line'' that stretches deep into the South China Sea.

Beijing claims 90% of the South China Sea and says it follows a historical precedent set by the nine-dash line Beijing drew in 1947 following the surrender of Japan.

Chinese President Xi Jinping said China's territorial sovereignty and marine rights in the seas will not be affected by the ruling and Chinese state media reacted angrily to the verdict.

In return, the Philippines welcomed the ruling and called for restraint and sobriety.

The United States State Department called on on both parties to comply with their obligations.

The ruling has divided global powers and may lead to New Zealand being dragged into the row through its major trading partner China and its "warm'' friendship with the US.

US vice-president Joe Biden is due to visit New Zealand soon and China has made it clear the US military presence in the Pacific has incensed Beijing.

New Zealand has a seat on the Security Council and former prime minister Helen Clark is seeking to top job at the United Nations.

The attitude New Zealand takes to the response by both Beijing and Washington to the ruling will need to be careful and considered.

Vietnam, Taiwan, Malaysia and Brunei also have competing claims in the disputed region, particularly over the Scarborough Shoal and Spratlys.

Although these islands are largely uninhabited, they may have reserves of natural resources around them.

There has been little detailed exploration of the area and estimates are largely extrapolated from the mineral wealth of neighbouring areas.

The sea is also a major shipping route and home to the fishing grounds that supply the livelihoods of people across the region.

The US and Japan have urged both sides to abide by the ruling but Taiwan has rejected the findings, saying the ruling has seriously damaged its rights.

The US sent an aircraft carrier and fighter jets to the region before the decision and the Chinese navy has been carrying out exercises near the disputed Paracel Islands.

Beijing's initial comments to the tribunal's demolition of its claims are being hailed as conciliatory.

The Chinese Government restated its has territorial sovereignty and marine rights in the area and the activities of its people there date back to more than 2000 years ago.

But it then goes on to talk about consultation with the states directly concerned and proposes joint development in relevant maritime reserves.

Airlines and shipping companies will be pleased to hear China has also restated it respects freedom of navigation and over-flights enjoyed by all states under international law in the South China Sea.

China stands ready to ensure unimpeded access to international shipping lanes.

This seems to point towards Beijing possibly seeking some sort of negotiated settlement, rather than ramping up pressure on the Philippines following the decision from The Hague.

New Zealand has a reputation of brokering diplomatic solutions, thanks to the efforts of people like former prime minister Mike Moore and former National MP Jim McLay.

Prime Minister John Key and Miss Clark are becoming a global brand through Miss Clark's bid for the top UN job.

It will be wise for the Government to send signals now to both China and the US it is prepared to help with any negotiated settlement in what may still remain a problematic territorial dispute.

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