China wants to control the entire South China Sea. Every inch of it. That’s why will lose all of it, one day.
In the South China Sea game, China is one player playing against all the rest: The Philippines, Brunei, Malaysia, Taiwan, and Vietnam. China is also playing against the navies of US, Japan, France, the UK, and Australia. These navies seek to enforce the freedom of navigation in the vast trade waterway. Close to $5 trillion in merchandise moves through every year.
Why is China playing against everyone else? For a couple of reasons. One of them is that the waterway is very important to its vision — becoming the next global economic leader.
It’s the beginning of China’s maritime silk road.
“Insofar as China is concerned, its maritime silk road begins from the South China Sea,” says Vijay Eswaran, Malaysian entrepreneur and Chairman of QI Group of Companies.“It sees itself playing a more significant role in maritime trade in the future.”
Another reason is that China sees the South China Sea as its own property. “Historically, China has always viewed the South China Sea (SCS) as its own,“ adds Vijay. All of it, and the resources that are hidden beneath, which China wants to exploit. That’s why it is building artificial islands.
And that feeds Chinese nationalism, needed to support and reinforce the political status quo.
What about the overlapping claims from neighboring countries? “China does not see any of the other overlapping claims from the neighboring countries to the South China Sea as a threat,” adds Vijay.
And it uses intimidation to make sure that this won’t happen. When China lost a United Nations-linked tribunal international arbitration to the Philippines on the South China Sea disputes a year and a half ago, Beijing took a couple of steps to make sure that Duterte wouldn’t do anything with it.
The first step was to threaten Duterte with war should he dare to enforce the ruling. The second step was to promise a generous investment to help the Philippines deal with its many problems.
And it worked. Duterte quickly flip-flopped, and forgot all about the ruling, as was written in previous pieces here.
More recently, China applied “Duterte’s model” to intimidate Vietnam. Last July Vietnam announced that it will stop its oil exploration efforts, following a stark warning by Beijing that it will attack Vietnamese oil and gas bases.
Still, there are multiple navies that are prepared to challenge China’s ambitious mission. “It is the potential Western influence, i.e the US, France and the UK and their navies, that are having more of an impact on Chinese policy in the region.“
Is China prepared to fend off this challenge? It’s hard to say.
What isn’t hard to say is that countries that play a game against all end up losing.
That’s what happened in neighboring Japan in the past, and it could happen to China in the future.
Meanwhile, investors in the financial markets of the region should closely watch any developments that will bring China closer to an open confrontation with America and its allies.