Does Reputation Matter? Explaining China's Evolving Strategy in South China Sea Disputes

What drives China's approach to disputes in the South China Sea? While conventional wisdom often attributes Beijing's actions primarily to material interests, this overlooks the possible influence of non-material factors such as China's desire to uphold its national reputation. Contrary to the assumptions of traditional prospect theory, China's behavior is not driven solely by calculations of gains and losses but also by considerations for its international reputation. Beijing may temper its assertiveness when its reputation is declining but still manageable, as demonstrated by its increased willingness to resolve disputes multilaterally after its global image was tarnished following the outbreak of the COVID-19 pandemic. Contrarily, China may resort to more assertive actions when these do not significantly hurt its reputation or when the damage seems irreversible, as seen in its unwavering stance during the 2012 Scarborough Shoal standoff with the Philippines.