More than the Middle East or Russia or Taiwan, the most likely place for an epic punch-up is the South China Sea. That’s the main thrust of this long piece in The Atlantic with the author, Tim McLaughlin, casting China as the primary instigator.
Mr McLaughlin begins by explaining why the odds are in favour of a big punch-up in what is basically the heart of the global manufacturing ecoystem “The South China Sea is perhaps the most contested waterway in the world. China, Vietnam, Malaysia, Brunei, the Philippines, and Taiwan all have competing claims there. But no actor has pursued those claims as belligerently as China. The Philippines complains that Chinese forces menace its sailors and fishermen on an almost daily basis, and the government of President Ferdinand “Bongbong” Marcos has taken to airing videos, photos, and eyewitness accounts of these encounters. In late October, officials released footage of Chinese vessels twice colliding with Philippines ships.
…The Philippines, a former U.S. colony, is America’s oldest ally in the Indo-Pacific, and the two countries have signed a mutual-defense treaty. In fact, of all the world’s conflicts…Chinese-Philippine tensions in the South China Sea may be the least remarked on but among the most potentially explosive. Earlier this year, a former high-ranking Chinese military official said that a conflict between the United States and China was more likely to occur in the South China Sea than around Taiwan.
“It is a simple math problem,” Greg Poling, the director of the Asia Maritime Transparency Initiative at the Center for Strategic and International Studies, told me. “There are so many locations where you have potential accidents … There is just a ton of potential surface area where something could go wrong.”
Where the Pacific curls into the coast of Southeast Asia and is bounded by the larger islands of the Philippines, Indonesia, and Taiwan, a deep basin studded with reefy shoals yields rich aquatic life and abundant energy resources. More than half of the fishing vessels in the world are believed to operate here, along with some of the world’s busiest shipping lanes and some $3 trillion in annual trade.” [Underlining is ours]
So what exactly is China’s problem? Why is it so keen to muscle into the South China Sea? Mr McLaughlin uses the narrative context provided by a cheeky Philippino manoeuvre (involving an 80-year old vessel called the Sierra Madre that the Americans had gifted to the Philippines) to explain what Beijing is trying to do here:
“Since May of 1999, the Sierra Madre has been a particular source of tension between the Philippines and China.
That month, the Sierra Madre ran aground at Second Thomas Shoal, a small reef in what was then disputed territory, about 120 miles off the coast of Palawan island. A second ship did the same at another shoal later that year. Beijing suspected that Manila was using the beached ships to create outposts.
Philippine officials initially played coy, saying that they meant to repair the Sierra Madre but were having trouble finding the materials, while the other ship was eventually towed away. Yet, more than two decades later, the Sierra Madre remains grounded…A small group of sailors crews it; they pick their way through its slightly listing steel skeleton as they monitor the area for incursions….
The Sierra Madre’s location falls within China’s “nine-dash line”—a cartographic fantasy that Beijing has used to claim nearly the entirety of the South China Sea. Back in 2016, however, the Permanent Court of Arbitration at The Hague struck down the nine-dash line and ruled that Second Thomas Shoal is part of the Philippines’ exclusive economic zone and continental shelf.
Beijing blatantly ignores this ruling. When the Philippines delivers supplies for the sailors on board the Sierra Madre via small boats escorted by coast-guard ships, Chinese ships attempt to block them. In early August, the Chinese coast guard used water cannons to prevent Philippine boats from reaching the outpost. A second attempt later that month was successful, as was one in September, when a U.S. reconnaissance aircraft flew overhead.”
So what happens next? How long before China turns the South China Sea into another battleground in its never ending quest for Asian domination? Here is a not-so-subtle trailer of what lies ahead: “In January 2023, President Marcos met with China’s leader, Xi Jinping. The following month, the Chinese coast guard shined what the Philippines described as a “military-grade laser” at one of its coast-guard ships near the Second Thomas Shoal, temporarily blinding crew members. According to a top-secret Pentagon document leaked on Discord, Marcos viewed the incident “as negating the goodwill generated during his trip to Beijing.” The document predicted that the Philippine leader would begin “strengthening the Philippines’ SCS posture.”
Marcos did exactly that. He invited the United States to expand its military presence in the Philippines and appeared at joint exercises earlier this year. In late November, the Philippines and United States launched three days of joint maritime and aerial patrols in the South China Sea.
China responded by accusing the Philippines of being an American pawn, a line Beijing regularly directs at small countries that act in a way it finds disagreeable. And it has kept up the pressure in the South China Sea. On a given day…about 400 Chinese vessels and another 100 Vietnamese boats come within the Philippines’ economic zone or territorial waters.” This sounds familiar to those who have kept up with Beijing’s activities on the Indo-China border.
If you want to read our other published material, please visit https://marcellus.in/blog/
Note: The above material is neither investment research, nor financial advice. Marcellus does not seek payment for or business from this publication in any shape or form. The information provided is intended for educational purposes only. Marcellus Investment Managers is regulated by the Securities and Exchange Board of India (SEBI) and is also an FME (Non-Retail) with the International Financial Services Centres Authority (IFSCA) as a provider of Portfolio Management Services. Additionally, Marcellus is also registered with US Securities and Exchange Commission (“US SEC”) as an Investment Advisor.
MORE FROM Dec WEEK 5
MORE FROM Dec WEEK 5
