Rising Tensions in the South China Sea Threaten Global Trade
- August 22, 2024
- Posted by: OptimizeIAS Team
- Category: DPN Topics
Rising Tensions in the South China Sea Threaten Global Trade
Sub: IR
Sec: Places in news
China’s escalating military standoffs in the South China Sea pose a significant risk to the seamless flow of global trade. This strategically located region, nestled between key nations like China, Taiwan, the Philippines, and Vietnam, is not just a geopolitical flashpoint but also a critical hub for international commerce.
Why It’s in the News: Global maritime trade is under increasing pressure due to ongoing Houthi attacks in the Red Sea. Over the past year, Iran-backed Houthi rebels have launched drone and missile strikes on commercial shipping, particularly in response to the Israel-Hamas conflict. These attacks have forced major shipping firms to reroute vessels away from the Red Sea and the Suez Canal, opting instead for the longer and costlier journey around the Cape of Good Hope. This diversion has added approximately 10 days to the typical Asia-to-Europe journey, driving up shipping costs due to increased insurance premiums and higher fuel prices. South China Sea Tensions Simultaneously, rising tensions in the South China Sea are further complicating global maritime trade. This critical trade route, essential for a significant portion of global commerce, is now threatened by China’s military posturing and territorial disputes with neighbouring countries. Any disruption in the South China Sea could have severe consequences for international trade, exacerbating the challenges already posed by the situation in the Middle East. Convergence of Global Trade Challenges The combined impact of these issues in the Middle East and the South China Sea is leading to a more unpredictable and expensive maritime trade environment. As global trade routes face increasing threats from geopolitical tensions, the cost and complexity of ensuring the smooth flow of goods worldwide continue to rise, posing significant risks to global economic stability. |
South China Sea
- It is an arm of western Pacific Ocean in Southeast Asia.
- It is connected by Taiwan Strait with the East China Sea and by Luzon Strait with the Philippine Sea.
- This sea holds tremendous strategic importance for its location as it is the connecting link between the Indian Ocean and the Pacific Ocean. (Strait of Malacca)
- According to the United Nations Conference on Trade and Development (UNCTAD) one-third of the global shipping passes through it, carrying trillions of trade which makes it a significant geopolitical water body.
Why are countries interested in these waters?
The South China Sea is a major shipping route. The United Nations Conference on Trade and Development estimates that over 21% of global trade, amounting to $3.37 trillion, transited through these waters in 2016.
It is also home to rich fishing grounds that provide for the livelihoods of millions of people across the region. More than half of the world’s fishing vessels operate in this area.
Although largely uninhabited, the Paracels and the Spratlys may have reserves of natural resources around them. There has been little detailed exploration of the area, so estimates are largely extrapolated from the mineral wealth of neighbouring areas.
The nine-dash line and other claims
China claims by far the largest portion of territory in an area demarcated by its so-called “nine-dash line”. The line comprises nine dashes which extends hundreds of miles south and east from its most southerly province of Hainan.
- In 1947, China issued a map, external detailing its claims, and insists history backs up its claims – Beijing says its right to the area goes back centuries to when the Paracel and Spratly island chains were regarded as integral parts of the Chinese nation.
- These claims are mirrored by Taiwan.
- However, critics say China has not been specific about what exactly its claim includes, and that the nine-dash line that appears on Chinese maps encompassing almost the entirety of the South China Sea includes no coordinates.
- It is also not clear whether China claims only land territory within the nine-dash line, or all the maritime space within it as well.
- Vietnam hotly disputes China’s historical account, saying China had never claimed sovereignty over the islands before the 1940s. Vietnam says it has actively ruled over both the Paracels and the Spratlys since the 17th Century – and has the documents to prove it.
- The other major claimant to the area is the Philippines, which invokes its geographical proximity to the Spratly Islands as the main basis of its claim for part of the grouping.
- Both the Philippines and China also lay claim to the Scarborough Shoal (known as Huangyan Island in China) – a little more than 100 miles (160km) from the Philippines and 500 miles from China.
- Malaysia and Brunei also lay claim to territory in the South China Sea that they say falls within their economic exclusion zones, as defined by the United Nations Convention on the Law of the Sea, or UNCLOS.
- Brunei does not claim any of the disputed islands, but Malaysia claims a small number of islands in the Spratlys