Conflict looms in ‘Asia’s cauldron’; China’s disputes with neighbours are becoming dangerous

June 10, 2014 7:05 pm

Conflict looms in ‘Asia’s cauldron’

China’s disputes with neighbours are becoming dangerous

Maritime disputes between China and its neighbours have reached new levels of tension. The South China Sea, where Beijing has active disputes with both Hanoi and Manila, has become “Asia’s cauldron” in the phrase of Robert Kaplan. In the East China Sea, a stand-off with Japan over the Senkaku/Diaoyu islands has become especially poisonous. Thepotential for miscalculation is high. Japanese and Chinese aircraft regularly fly too close to each other for comfort. Last month, Vietnamese fishermen had to be rescued when their boat sank after clashing with a Chinese vessel.

Lives have already been lost. When Beijing moved an oil rig near the disputed Paracel islands in May, anti-Chinese riots swept Vietnam, killing four people. At a recent regional security dialogue, Shinzo Abe, Japan’s combative prime minister, said Tokyo stood ready to help nations facing threats to freedom of navigation. Chuck Hagel, US defence secretary, went one step further by directly accusing Beijing of “intimidation and coercion”. China hit back, saying Mr Hagel’s words were “full of hegemony”. The stakes are being ratcheted up.

How can tensions be cooled? International law could play a role, although it is no panacea. The Philippines has already sought arbitration under the UN Convention on the Law of the Sea over its dispute with China. Part of its case questions the scope and validity of the so-called nine-dash line by which Beijing appears to lay claim to virtually the entire sea. China has been unwilling to say precisely what the nine dashes mean. Any light that international arbitrators can shed on this issue would be welcome.

Vietnam is considering following the Philippines’ lead by lodging its own Unclos claim. Japan, Malaysia, Brunei and Taiwan might also usefully subject themselves to arbitration. Washington could help in this endeavour. If it ratified Unclos itself, it would be in a far stronger position to press China to submit to international rules.

Even then, arbitration can only go so far. For a start, it is not clear where historic claims end and international law begins. Unclos was only concluded in 1982. Some of China’s claims – and those of its adversaries – go back hundreds of years. Nor, strictly speaking, can Unclos arbitrate in sovereign disputes. Its job is to determine whether a maritime feature is an island or a rock, and thus whether it is entitled to a 200-mile exclusive economic zone.

It is important to recognise that such disputes are a symptom of bigger shifts. As China grows stronger, the postwar Pax Americana is coming under strain. There is a certain inevitability that, in the western Pacific, some new arrangement will eventually take its place. Of course, the US and other countries could try to contain China indefinitely. In the long run, though, that looks like a recipe for conflict. Accommodation need not entail ceding territorial sovereignty. But it will mean reassuring China that its interests are not threatened.

The best way of doing that would be to bind China along with others – including Japan, India and the US – into a regional framework. The East Asia Summit is one possibility. It now includes all the big Pacific powers. It also has a security remit. More effort should be made to beef up the summit’s role as a body. This could include region-wide confidence-building measures and co-operation in
disaster relief and anti-piracy. At the very least, it can help establish effective lines of communication – which failed in the China/Vietnam dispute – to prevent skirmishes from escalating. It will take years, maybe decades, to create anything like a pan-Asian security network. Without some sort of regional effort, however, the seas around China are only going to grow rougher.

 

Unknown's avatarAbout bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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