Trouble off the coast of China

My colleague pedro Videla wrote a terrific blog this week about how the President of a country needs different skills than a typical CEO and he was talking about the economy. If we talk about global security, I think we can make the same point and just to give an example, this post will go into some depth on the current tensions off the coast of China.

What is known as the South China Sea is actually the part of the Pacific Ocean. It is bordered to East by the Philippines which separate it form the rest of the Ocean, China and Taiwan to the North, Vietnam to the Wast and Brunei and Malaysia to the South.

imgresAt issue is if one applies the 200 Nautical Mile limit as stipulated in the United Nation’s law of the Sea all of these countries have overlapping claims. To make matters more complex, there are a number of islands and reefs in the South China Sea and the different countries claim some of them as their own, thus pushing even further into each others’ territories.

A similar issue exists in the East China Sea which is defined by China to the West, South Korea to the North, Japan to the North East and Taiwan to the South – South West. Again there is a small group of islands who’s sovereignty is contested by Japan, China, and Taiwan.

While one might think this is an issue for geographers. lawyers, and diplomats, the issue is that approximately $1.2 Trillion of trade passes through the area every year and there are enormous deposits of oil and gas underneath the sea. To make matters more complex, there have been over 80 military incidents in the area since 1956 including conflicts between Taiwan and Japan, China and most of its neighbors including Vietnam, the Philippines, Japan, Malaysia and South Korea.

The incidents range from armed fishing boats shooting at or being shot at by naval patrol boats to seizure and sinking of ships with the deaths of fishermen and naval personal. A number of incidents also involve oil exploration and the Chinese have cut the seismic survey cables of vietnamese ships and in, 1994, placed an oil rig for several months in what Vietnam considers its own economic zone.

One of the tactics is to place permanent naval outposts on the tiny islands in the Spratlys, Parcels, and the Senkakus/Diayous which are the japans and Chinese name for the islands in the East China Sea.

Triton Island
Triton Island

At the time of this writing the latest wrinkle in the conflict is the Chinese improvement of a number of reefs in the area turning them into artificial islands. The issue appears to be that by calling the reefs islands, China could potentially claim that they extend her sovereignty well beyond the coastline.

The United States as ordered its naval ships and military planes into the South China in order to underline that it views the sea as international waters and protects the right of free navigation through it. In January, 2016, for example, the US Navy sent one of its destroyers within 12 Miles of Triton Island to deliberately demonstrate the right of passage for such ships when not engaged in naval operations or what is legally called “innocent Passage”.

While the situation is largely ignored by business interests, military planners sees real possibilities, or what they call contingencies, of conflict between China and the U.S., the Philippines, or Vietnam as a result of the tensions over freedom of passage or oil and gas exploration.

Both China and Vietnam, for example, have been investing billions in upgrading their naval fleets with China commissioning its first Air Craft carrier and Vietnam buying ships, submarines and planes from Russia, Japan, the Netherlands and even the United States.

Greater Mekong Sub-Region
Greater Mekong Sub-Region

What is at stake is the ongoing and connoting economic integration of the region. China and Vietnam, for example, have bilateral trade on the order of over $ 40 billion per year and about three quarters of that are Chinese exports to Vietnam. Another example of increased regional integration is the Greater Mekong Subregion which compromises China’s southernmost regions of Yunnan and Guanxi Zuang with Vietnam, Cambodia, The Lao People’s Republic, Myanmar and Thailand. Currently there a a number of projects in place to integrate the sub-region including an ambitious new highway network linking all of the countries and regions together.

War, of course, would have a devastating impact on trade but even heightened tensions and the kind of back and forth economic sanctions as seen in the example of Ukraine and Crimea would have a major impact and place billions of foreign investment in China at risk.

While one might find this talk of war and sanctions as extreme, China and Vietnam did go to war in 1979 after Vietnam’s invasion and occupation of Cambodia. Chinese forces routed their vietnamese opponents and withdrew a few months after the invasion apparently having demonstrated their ability to conquer Vietnam and sending a message to the Soviet Union who China felt has orchestrated the move into Cambodia.

If we talk about the current political situation in the U.S. and other countries, I believe that we need to find leaders who can manage their way through these types of situations and both protect and project their country’s power.