Sanctioning South China Sea

September, 7, 2020

The Beijing Swift - By Prof. Samitha Hettige ©

China’s ancient maritime Silk Road reached South Asia, Africa and the Middle East through the South China Sea (SCS). The Suez Canal was not in existence in 1403 AD and therefore, the voyages of Chinese Admiral Zhen Ho ended in the Middle East. Since the Emperor recalled the Chinese naval fleet by around 1460 AD trade supply chains in Europe were affected. As China never maintained any colonies anywhere in the world the western traders had to sail towards Asia and the Far East through the SCS to get Chinese and other Asian products. During those journeys they started colonization. The global trade operations introduced by China during 1400s AD (the only naval and economic super power during the time) were reinitiated by the western powers using the maritime routes of China passing through the SCS. It is now estimated approx USD 3.5 trillion annually and most of world’s busiest sea routes also pass through SCS. There are many islands in the SCS which were occupied by the Chinese, Japanese, French, British, Dutch and the Portuguese from time to time and there have also been many disputes about occupations. Before World War II most of the islands were occupied by France as they were closer to the French Indochina which consisted of Cambodia, Vietnam and French occupied areas of imperial China. During WW II Japan occupied some of these islands and there were no issues about the occupation. During the cold war at the end of the Vietnam War the Peoples Republic of China (PRC) occupied some of the islands against Russian interests with an understanding with USA.

China has three ocean fronts. They are the North China Sea (NCS), the East China Sea (ECS) and the SCS. The PRC was established in 1949 and had grown to become the 2nd largest economy in the world. During these seven decades there have been many disputes about the resources in these ocean territories among the countries in the region. In 1995 when China discovered a large natural gas deposit in ECS Japan had issues with China. On another occasion India send a ship to SCS to support Vietnam’s oil drilling efforts and China objected. When China launched the 21st century Silk Road (Belt and Road Initiative - BRI) few countries lead by USA including Japan offered an alternative to the BRI and influenced BRI partners to join. It gave more options to the BRI partner countries to benefit from the BRI and the alternative. So far the alternative doesn’t seem to be practical as BRI seems to be attracting more partners including European powers such as Germany and Italy. Around 2013 China started strengthening some small islands in the SCS which they claimed will be used to support BRI maritime operations. At a time when USA falls under the spot light with the upcoming Presidential vote, racial conflicts and post COVID recovery management, USA has imposed sanctions on some Chinese companies quoting their involvement in constructing the islands in SCS and related bad environmental practices. At the moment USA has pulled out of most of international environmental protection agreements and China is still a committed partner to those. It raises concerns as to why sudden sanctions.

All the sanctioned companies are legally established listed companies with very high turnover figures. Most leading non Chinese investors have investment interests in these entities. It will be interesting for partners of BRI and its alternative to observe the impact on return on investments of the non Chinese investors.

The writer is an Academic and a Broadcaster. Views expressed are personal and may not necessarily be the views of his affiliations.