I.

On 22 January 2013, the Department of Foreign Affairs of the Republic of the Philippines presented
a note verbale to the Embassy of the People's Republic of China in the Philippines, stating that the
Philippines initiated compulsory arbitration proceedings with respect to the dispute with China over
"maritime jurisdiction" in the South China Sea. On 19 February 2013, the Chinese Government
rejected and returned the Philippines' note verbale together with the attached Notification and
Statement of Claim. The Chinese Government has subsequently reiterated that it will neither accept
nor participate in the arbitration thus initiated by the Philippines.

This Position Paper is intended to demonstrate that the arbitral tribunal established at the request of
the Philippines for the present arbitration ("Arbitral Tribunal") does not have jurisdiction over this
case. No acceptance by China is signified in this Position Paper of the views or claims advanced by
the Philippines. Nor shall this Position Paper be regarded as China's acceptance of or participation
in this arbitration.

II.

The essence of the subject-matter of the arbitration is the territorial sovereignty over several
maritime features in the South China Sea, which does not concern the interpretation or application of
the United Nations Convention on the Law of the Sea ("Convention").

China has indisputable sovereignty over the South China Sea Islands (the Dongsha Islands, the
Xisha Islands, the Zhongsha Islands and the Nansha Islands) and the adjacent waters. Since the
1970s, the Philippines has illegally occupied or laid claims to some maritime features of China in the
South China Sea. In addition, the Philippines has also illegally explored and exploited the resources
on those maritime features and in the adjacent maritime areas. The Philippines' activities mentioned
above have violated the Charter of the United Nations and international law, and seriously
encroached upon China's territorial sovereignty and maritime rights and interests. The Chinese
Government has always been firmly opposed to these actions of the Philippines, and consistently
made solemn representations and protests to the Philippines.

The Philippines has summarized its claims for arbitration in three categories:First, China's assertion
of the "historic rights" in the South China Sea is inconsistent with the Convention;Second, China's
claim to entitlements, based on certain rocks, low-tide elevations and submerged features in the
South China Sea, of 200 nautical miles and more, is inconsistent with the Convention. Third, China
has unlawfully interfered with the Philippines' enjoyment and exercise of its rights under the
Convention.

With regard to the first category of claims, it is obvious that the core of those claims is that China's
maritime claims in the South China Sea have exceeded the extend allowed under the Convention.
However, it is a general principle of international law that sovereignty over land territory is the basis
for the determination of maritime rights. Only after the extent of China's territorial sovereignty in the
South China Sea is determined can a decision be made on the extent of China's maritime claims in
the South China Sea. As to the second category of claims, China believes that the nature and
maritime entitlements of certain maritime features in the South China Sea cannot be considered in
isolation from the issue of sovereignty. Regarding the third category of claims, China maintains that,
based on its sovereignty over relevant maritime features and the maritime rights derived therefrom,
China's relevant activities in the South China Sea are both lawful and justified. The Philippines
claims that China's actions have encroached upon areas under its jurisdiction. Before this claim can
be decided upon, sovereignty over the relevant maritime features must be ascertained and maritime
delimitation completed.

By requesting the Arbitral Tribunal to apply the Convention to determine the extent of China's
maritime rights in the South China Sea, without first having ascertained sovereignty over the relevant
maritime features, and by formulating a series of claims for arbitration to that effect, the Philippines
contravenes the general principles of international law and international jurisprudence on the
settlement of international maritime disputes. To decide upon any of the Philippines' claims, the
Arbitral Tribunal would inevitably have to determine, directly or indirectly, the issue of territorial
sovereignty over both the maritime features in question and other maritime features in the South
China Sea. Besides, such a decision would unavoidably produce, in practical terms, the effect of a
maritime delimitation. The issue of territorial sovereignty falls beyond the purview of the Convention.
China maintains that the Arbitral Tribunal manifestly has no jurisdiction over the present case.

III.

There exists an agreement between China and the Philippines to settle their disputes in the South
China Sea through negotiation, and the Philippines is debarred from unilaterally initiating compulsory
arbitration.

With regard to disputes concerning territorial sovereignty and maritime rights, China has always
maintained that they should be peacefully resolved through negotiation between the countries
directly concerned. In the present case, there has been a long-standing agreement between China
and the Philippines on resolving their disputes in the South China Sea through friendly consultation
and negotiation.

A series of bilateral instruments between China and the Philippines make it clear that both sides
agree or undertake to resolve their disputes in the South China Sea by friendly consultation and
negotiation. And the Declaration on the Conduct of Parties in the South China Sea("DOC"), signed
by both China and the Philippines, explicitly states that territorial and jurisdictional disputes shall be
resolved peacefully by sovereign States directly concerned through friendly consultations and
negotiations.

The relevant provisions in those bilateral instruments and the DOC are mutually reinforcing and form
an agreement between China and the Philippines. On that basis, they have undertaken a mutual
obligation to settle their relevant disputes through negotiations and have excluded any other means
of settlement. In these circumstances, according to the provisions of Article 280, 281 and others of
the Convention, the relevant disputes between the two States shall be resolved through negotiations
and there shall be no recourse to arbitration or other compulsory procedures.

At present, in order to maintain stability in the region and create conditions for peaceful resolution of
the disputes in the South China Sea, China and the ASEAN member States have established
working mechanisms to effectively implement the DOC, and have been engaged in consultations
regarding the "Code of Conduct in the South China Sea". By initiating compulsory arbitration at this
moment, the Philippines is running counter to the common wish and joint efforts of China and the
ASEAN member States. Its underlying goal is not, as the Philippines has proclaimed, to seek
peaceful settlement of the South China Sea issue, but rather, by resorting to arbitration, to put
political pressure on China, so as to deny China's lawful rights in the South China Sea through the
so-called "interpretation or application" of the Convention, and to pursue a resolution of the South
China Sea issue on its own terms. This is certainly unacceptable to China.

IV.

Even assuming, arguendo, that the subject-matter of the arbitration were concerned with the
interpretation or application of the Convention, the subject-matter would still be an integral part of
maritime delimitation and, having been excluded by the 2006 Declaration filed by China from the
compulsory dispute settlement procedures, could not be submitted for arbitration.

On 25 August 2006, China deposited, pursuant to Article 298 of the Convention, with Secretary-
General of the United Nations a declaration stating that the Government of the People's Republic of
China does not accept any of the compulsory settlement procedures provided for in the Convention
with respect to disputes concerning maritime delimitation, among others.

Maritime delimitation is an integral, systematic process. The international law applicable to maritime
delimitation includes both the Convention and general international law. Maritime delimitation
involves a consideration of not only entitlements, effect of maritime features, and principles and
methods of delimitation, but also all relevant factors that must be taken into account, in order to
attain an equitable solution.

The subject-matter of the arbitration initiated by the Philippines constitutes an integral part of
maritime delimitation between China and the Philippines, and, as such, can only be considered
under the overarching framework of maritime delimitation between China and the Philippines, and in
conjunction with all the relevant rights and interests the parties concerned enjoy in accordance with
the convention, general international law, and historical or long-standing practice in the region for
overall consideration.

Ostensibly, the Philippines is not seeking from the Arbitral Tribunal a ruling regarding maritime
delimitation, but instead a decision, inter alia, that certain maritime features are part of the
Philippines' EEZ and continental shelf, and that China has unlawfully interfered with the enjoyment
and exercise by the Philippines of sovereign rights in its EEZ and continental shelf. The Philippines'
claims have in effect covered the main aspects and steps in maritime delimitation. Should the
Arbitral Tribunal address substantively the Philippines' claims, it would amount to a de facto maritime
delimitation.

The exclusionary declarations filed by the States Parties to the Convention under Article 298 of the
Convention must be respected. By initiating the present compulsory arbitration as an attempt to
circumvent China's 2006 declaration, the Philippines is abusing the dispute settlement procedures
under the Convention.

V.

China's right to freely choose the means of dispute settlement must be fully respected, and its
rejection of and non-participation in the present arbitration is solidly grounded in international law.

Under international law, every State is free to choose the means of dispute settlement. In exercise of
its power to decide on its jurisdiction, any judicial or arbitral body should respect the right of the
States Parties to the Convention to freely choose the means of settlement.
While being fully aware that its claims essentially deal with territorial sovereignty, that China has
never accepted the compulsory procedures in respect of those disputes, and that there has been an
agreement existing between the two States to settle their relevant disputes by negotiation, the
Philippines has nevertheless initiated, by unilateral action, compulsory procedures of arbitration. This
surely contravenes the relevant provisions of the Convention, and undermines the peaceful process
for the settlement of the disputes.

In view of what is stated above and in light of the manifest lack of jurisdiction on the part of the
Arbitral Tribunal, the Chinese Government has decided not to accept or participate in the present
arbitration, in order to preserve China's sovereign right to choose the means of peaceful settlement
of its own free will and the effectiveness of its 2006 declaration, and to maintain the authority and
solemnity of the international legal regime for the oceans.

VI.

The issue of the South China Sea involves a number of States, and is compounded by complex
historical background and sensitive political factors. Its final resolution demands patience and
political wisdom from all parties concerned. China always maintains that the parties concerned shall
seek proper ways and means of settlement through consultation and negotiation on the basis of
respect for history and international law. Pending its final settlement, all parties concerned should
engage in dialogue and cooperation to preserve peace and stability of the South China Sea,
enhance mutual trust, clear up doubts, and create conditions for the eventual resolution of the issue.

The unilateral initiation of the present arbitration by the Philippines will not change the history and
fact of China's sovereignty over the South China Sea Islands and the adjacent waters; nor will it
shake China's resolve and determination to safeguard its sovereignty and relevant maritime rights
and interests; nor will it affect China's policy and position of resolving the disputes in the South China
Sea by direct negotiation and working together with other States in the region to maintain peace and
stability in the South China Sea.