Investments in the South China Sea are at risk

There is a lot of fish, oil and gas in The South China Sea, but who are the real owner of the sea?

China has claimed for years that about 90% of the South China Sea is their own territory. A document from 1940 stated that the sea is China`s. China and The Association of Southeast Asian Nations (ASEAN) agreed to start negotiating with each other before any move in 2001.

China want the territory and have started to build islands on the sea and claiming them as their own. They can do that because they have one simple strategy; ignore the law. People with Asian trade interest doesn`t like that. Neither do Indonesia, Brunei, Philippines, Malaysia and Vietnam.

Investors in that area should consider to get out as soon as possible.



(Picture: South China Sea)
The South China Sea is a marginal sea that is part of the Pacific Ocean, encompassing an area from the Singapore and Malacca Straits to the Strait of Taiwan of around 3,500,000 square kilometers (1,400,000 sq mi).

The area`s importance largely results from one-third of the world`s shipping transiting through its waters, and that it is believed to hold oil and gas reserves beneath its seabed. The sea and its mostly uninhabited islands are subject to competing claims of sovereignty by several countries.

South China Sea is the dominant term used in English for the sea, and the name in most European languages is equivalent, but it is sometimes called by different names in China`s neighboring countries, often reflecting historical claims to hegemony over the sea.

The English name is a result of early European interest in the sea as a route from Europe and South Asia to the trading opportunities of China. In the sixteenth century Portuguese sailors called it the China Sea (Mar da China).

The majority of the sea came under Japanese naval control during World War II following the military acquisition of many surrounding South East Asian territories in 1941.

The South China Sea contains over 250 small islands, atolls, cays, shoals, reefs and sandbars. The region has proven oil reserves of around 1,2 km3 (7,7 billion barrels) with an estimate of 4,5 km 3 (28 billion barrels) in total.

Natural gas reserves are estimated to total around 7,500 km3 (266 trillion cubic feet). A 2013 report by the U.S Energy Information Administration raised the total estimated oil reserves to 11 billion barrels. In 2014 China began to drill for oil in waters disputed with Vietnam.

Several countries have made competing territorial claims over the South China Sea. Such disputes have been regarded as Asia`s most potentially dangerous point of conflict.

Both, People`s Republic of China (PRC) and the Republic of China (ROC, commonly known as Taiwan) claim almost the entire body as their own, demarcating their claims within what is known as the nine-dotted line, which claims overlap with virtually every other country in the region.



(Picture: Map of various coutries occupying the Spratly Islands)


China and Vietnam have both been vigorous in prosecuting their claims. China (various governments) and South Vietnam each controlled part of the Paracel Island before 1974. A brief conflict in 1974 resulted in 17 soldiers being killed, and China has controlled the whole of Paracel since then. Seventy Vietnamese sailors were killed just south of Chigua Reef in March 1988.

In July 2010, US Secretary of State Hillary Clinton called for the Peoples Republic of China to resolve the territorial dispute. China responded by demanding the US keep out of the issue. In January 2013, The Philippines government said it will take China to a UN tribunal under the auspices of the United Nations Convention on the Law of the Sea, to challenge its claims in the South China Sea.

In May 2014, China established an oil rig near the Paracel Islands, leading to multiple incidents between Vietnamese and Chinese ships. Now, China has started building two military air strips on Subi Reef and Fiery Cross Reef.

«China has convinced itself that it is the rightful owner of almost the entire sea» author Bill Hayton said, which is the author of the book The South China Sea.

China want to be the owners of the islands because that will be the first step of owning 1,4 million square miles of sea, which is full of fish, oil and gas. The value of the natural resources in the sea gives the potential for disagreement and a conflict over territory in the South China Sea.

International Law under the United Nations Convention of the Law of the Sea, says a country can only own an area of a sea if it owns the land adjacent to it. A country that owns an island can claims 12 nautical miles of seabed around it, and has the rights to the resources (but not the territory) up to 200 nautical miles around it.

The Bush administration didn`t do much, but Obama was forced to take a stronger stance on the contested territory last friday. The Pentagon is discussing sending warships in the region.

Investments in the South China Sea are at risk.


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Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication. UA-63539824-1.

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