South China Sea: a ticking time bomb for global trade

Territorial confrontations in the South China Sea, pitting several Asian countries against China, have entered a dangerous phase that could potentially lead to a war involving the US, experts say.

China has claimed virtually the entire South China Sea for decades, but the country’s assertiveness in the region has steadily increased in recent years, leading to heightened tensions with countries such as the Philippines, Vietnam, Taiwan and Brunei.

Krista Wiegand, a professor at the University of Tennessee, said the US has no direct claims to sovereignty or unique maritime rights in the South China Sea, but the waterway is nevertheless a place where war could break out between the US and China.

Wiegand is director of the Center for National Security and Foreign Affairs at the university’s Howard J. Baker School of Public Policy and Public Affairs. She is a specialist in territorial and maritime disputes, maritime law and East Asian security.

“If the US were to get involved in any war with China, it would most likely be over Taiwan,” Wiegand told FreightWaves in an interview. “But at the same time, there is a possibility that there could be an accident or some kind of crisis in the South China Sea. For example, if an American ship had a collision with a Chinese naval vessel or a missile was fired at an American destroyer ship or frigate, it would certainly lead to some kind of crisis that could escalate. Obviously no one wants a war, not even China, but they definitely want the South China Sea, and there is a possibility that the war will happen.”

The 1.3 million square kilometer sea in the western Pacific Ocean contains some of the busiest trade routes in the world.

The South China Sea stretches from Singapore and the Strait of Malacca in the southwest to the Taiwan Strait in the northeast and lies between China, Taiwan, the Philippines, Indonesia, Vietnam, Thailand, Brunei, Cambodia and Malaysia.

Researchers at Duke University calculated that the total trade through both the South China Sea and the East China Sea – which lies between China, North and South Korea and Japan – is worth it. $7.4 trillion per year.

About 24% of global maritime trade would pass through the South China Sea in 2023, the Chinese newspaper said United Nations 2024 Maritime Transport Assessment.

The South China Sea’s share of global seaborne trade volume by commodity in 2023 included crude oil (45%), propane (42%), automotive (26%) and dry bulk (23%).

China’s exports to both the US and Mexico have shown strong growth over the past five years. The trade route for goods from China to North America runs via the South China or East China Seas.

As of Thursday, twenty-foot equivalent units moving from China to the U.S. are about 10% lower year-over-year compared to 2023, but more than 40% higher year-over-year compared to 2022, according to the SONAR Inbound Ocean TEUs Volume Index.

SONAR’s Inbound Ocean TEUs Volume Index (IOTI.CHNUSA) shows that container movements from China to North America have increased steadily in recent years.

According to the US Energy Information Administration (EIA), the South China Sea may also contain valuable undiscovered resources such as oil and natural gas.

In 2023, the American Geological Survey According to a recent EIA report, the South China Sea could contain up to 9.2 billion barrels of untapped petroleum and other liquids, and up to 216 trillion cubic feet of natural gas.

China’s disputes in the South China Sea include areas that fall within a country’s economic exclusion zones (EEZ), such as the Philippines. According to the United Nations, an EEZ is a maritime area where a coastal state has the right to explore, exploit, conserve and manage natural resources.

In 2016, the Permanent Court of Arbitration in The Hague ruled in favor of the Philippines in a case against China opened in 2013. The court of arbitration said that China’s claims in the South China Sea there was no legal basis.

Wiegand said the Permanent Court of Arbitration and other international organizations have made it clear that China does not have any solid claim to own the entire South China Sea.

“There are some historical claims that may have legitimacy, but at the same time the United Nations Convention on the Law of the Sea, which China has signed and ratified, along with most other countries in the world, except the U.S. and a few others, is very clear about the maritime boundaries of countries,” Wiegand said. “China’s claims or maritime features over islands under its control in the waters of countries like Vietnam and the Philippines… are completely unlawful.”

Hasim Turker, an international security expert based in Istanbul, said if the US gets involved in the South China Sea conflict, it will most likely do so through its treaty with the Philippines or to help Taiwan or other countries.

“The U.S. has substantial strategic interests in the South China Sea focused on preserving freedom of navigation and enforcing international maritime standards,” Turker told FreightWaves in an email. “This is not only about economic interests, but also about strengthening the rules-based international order. Regular Freedom of Navigation Operations (FONOPs) are a clear expression of Washington’s intention to challenge China’s expansive claims. These operations are intended to assert that the waters in question remain open to all nations, under the United Nations Convention on the Law of the Sea (UNCLOS) – even though the US itself has not formally ratified the treaty.”

In August 2023, ships from China and the Philippines accused each other of causing collisions in a disputed area of ​​the South China Sea.

Philippine authorities said a Chinese coast guard ship performed “dangerous blocking maneuvers,” causing it to collide with a Philippine ship carrying supplies for the troops. CNN.

In June, China and the Philippines blamed each other for causing a collision in the South China Sea near the disputed Second Thomas Shoal, with the Philippines saying its forces would oppose Beijing’s actions in the disputed waters. Reuters.

U.S. Ambassador to the Philippines MaryKay Carlson condemned China’s “aggressive, dangerous” maneuvers near the Second Thomas Shoal in a post on X in June.

In September, authorities in China and the Philippines agreed to a temporary agreement after the countries had repeated clashes near the shoal. However, the Philippines said the deal may not be permanent.

The US and the Philippines have a long history of cooperation, which officially began in 1951 with the US-Philippines Mutual Defense Treaty. The treaty requires both countries to support each other if another party attacks either country.

“The potential for armed conflict in the South China Sea remains significant due to ongoing tensions, frequent confrontations and increased militarization,” Turker said. “Incidents such as August 2023 underline the continued risk of military escalation. These confrontations reflect a broader pattern of assertive behavior by China, deploying coast guard ships, maritime militias and military assets to enforce its claims over disputed waters.”

Turker, a former commander in the Turkish Navy, is the author of ‘European Security and Defense Policy’ (2007) and ‘Towards the New Cold War: Rising China, the US, and NATO’ (2019). He also served as academic coordinator and senior researcher at the Bosphorus Center for Asian Studies, an independent think tank based in Ankara, Turkey.

“Regular incidents demonstrate how easily low-intensity confrontations can occur, especially given the dense presence of military, coast guard and civilian vessels in disputed waters, which increases the likelihood of accidental or deliberate escalation,” Turker said. “This risk is further exacerbated by China’s militarization of artificial islands, where airstrips, missile systems and surveillance infrastructure have been built. These steps have prompted other plaintiffs to strengthen their defenses, creating a more volatile environment.”

Turker said US involvement would significantly escalate the situation in the South China Sea, especially if military assets are deployed.

“This would not only increase tensions in the region, but could also lead to a direct military confrontation with China – a scenario neither side wants given the stakes involved. A conflict between the US and China would have global ramifications, impacting trade, regional alliances and the geopolitical balance of power. The specter of a broader war looms if such an incident escalates beyond a controlled, local response, especially if U.S. allies like Japan or Australia are drawn in to support collective security efforts in the Indo-Pacific,” Turker said.

While the outbreak of war in the South China Sea is a strong possibility, every country also has reasons to maintain peace, he added.

“Several factors are preventing the escalation of limited skirmishes into full-scale war in the South China Sea. The economic costs of a major conflict are significant because a war would disrupt crucial trade routes, affecting global supply chains and harming regional economies, including China, which is heavily dependent on maritime trade,” Turker said. “Regional stability remains a priority for Southeast Asian countries, which, despite their assertive territorial claims, generally prefer diplomatic solutions to maintain economic stability and avoid the risks associated with protracted conflict. The possibility of a broader confrontation involving major powers such as the US and its allies is another important deterrent. A full-scale war could draw these external actors into the conflict, raising the stakes to a regional or even global level, a scenario that all parties would like to avoid.”

Wiegand said that while she hopes there is a diplomatic solution to the territorial disputes in the South China Sea, it will be difficult to quell China’s rising ambitions.

“The problem is that the Philippines tried a diplomatic solution through the arbitration case, and China refused to even appear in court; they didn’t even send representatives,” Wiegand said. “Vietnam has tried to negotiate several times, and China simply refuses to back down, and they keep repeating the same claim: these are our territories, these are our waters. There’s only so much you can do diplomatically. For the other countries, they are a bit stuck until China makes a move. Things are really at a standstill right now, and unfortunately I think the status quo will just be a continuation of China asserting its claims, maintaining control of the islands, and controlling the waters. It’s really up to the other disputed countries whether they really want to put further pressure on China to try to overturn that status quo. That is very difficult from a diplomatic point of view.”

By Noi Mahoney from Freight waves via Zerohedge.com

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