China has to date not acted aggressively against shipping within the South China Sea, however the very potential of motion poses a transparent threat to the economies of Japan and South Korea.
Kazuhiro Legs | AFP | Getty Images
The following commentary comes from Kevin Klowden, Milken Institute’s chief global strategist.
Press coverage of the weekend meetings of the Group of Seven focused on Ukraine, but China’s growing global presence was one other high-profile topic on the G7 agenda. Specifically, for the 2 largest economies in East Asia, the implications of this growth are extremely essential.
China desires to be the good military and political power of East Asia. Nowhere is that this more evident than in President Xi Jinping’s “nine strokes” declaration, through which Beijing claims sovereignty over almost your entire South China Sea. And of all of the countries that is perhaps concerned about this claim, perhaps none have more on the line than Japan and South Korea.
Much of the world’s focus is on the resources and military implications of China’s claims to islands within the region, and Beijing’s development of what’s becoming the world’s largest navy. Within the case of Japan and South Korea, the threat to their energy supply chains and imports is a way more real and topical issue.
Specifically, Japan and South Korea are alarmed by Chinese declarations invoking not only the fitting to examine cargo, but in addition the potential for restricting traffic. Neither Japan nor South Korea have any political interest in possessing the Spratly Islands or in China replacing the USA because the dominant naval power. Nevertheless, they’ve a robust economic interest in shifting energy imports and component production without fear of constraints. Even in a non-war situation, China has taken the position that the South China Sea is controlled territory, not open international waters under Chinese protection.
China has not acted aggressively against shipping to date, however the sheer potential of motion poses a transparent threat to the economies of Japan and South Korea. China would not even need to stop ships directly – it could only electronically track a selected cargo or perform inspections or detours. Such actions would raise the specter of unpredictability and significantly increasing costs.
For Japan and South Korea, the role of the US within the post-World War II period was much less disruptive, not only due to their alliance but more importantly since the US acted as a guarantor of free trade and protected traffic along the corridor.
Each countries’ ties to trading partners in Southeast Asia, India and beyond will increase fairly than decrease.
Kevin Klowden
Milken Institute
Few people outside of Japan and South Korea concentrate on or understand how essential the South China Sea is in relation to regional and even global energy supplies. Significantly, the ocean is estimated to hold 30% of the world’s oil, supplying China and providing vital life for the energy-dependent economies of South Korea and Japan.
Within the case of Japan, the 2011 Tohoku earthquake and the following Fukushima nuclear accident only exacerbated this relationship. The resulting reduction in Japan’s nuclear program has left the country depending on energy imports, with as much as 98% of Japan’s oil coming from the Middle East.
In some ways, South Korea is much more depending on energy imports than Japan, making oil and natural gas imports particularly essential.
The South China Sea is significant not only by way of energy. It also serves as a key gateway for the worldwide supply chains of Japan and South Korea. Estimates indicate that the ocean carries between 20% and 33% of world trade; within the case of Japan, this percentage is as high as 40%.
![Countries in the South China Sea are being pulled and pushed simultaneously in two directions by Beijing](https://image.cnbcfm.com/api/v1/image/107234428-16830745051683074501-29280247941-1080pnbcnews.jpg?v=1683077036&w=750&h=422&vtcrop=y)
With the regionalization of worldwide supply chains, the role of the South China Sea within the economies of Japan and South Korea will only grow. The linking of each countries with trading partners in Southeast Asia, India and beyond will increase fairly than diminish the importance.
Japan and South Korea have been capable of depend on the soundness of the South China Sea as a conduit for his or her economic growth, whilst the worldwide political landscape has modified over the many years. Significant changes, including the Vietnam War and the top of the Cold War, didn’t stop the growing importance of maritime trade.
While the US balances commitments in Europe, Asia and beyond, East Asia’s three strongest economies – including China – have a vested interest in ensuring the soundness of trade, supply chains and energy flows.
For South Korea and Japan, trade within the South China Sea stays stable for now. But as China increasingly desires to defend itself and change the established order in its favour, it’s important for each countries to ask themselves: How much are they willing and capable of concede to China within the region before it becomes untenable? And are they prepared for alternatives that can allow them to compete economically?
Knowing the answers to those questions and preparing for more Chinese dominance within the South China Sea is significant for all three countries – even when the established order holds for now.