Analysts believe that any escalation in this region may lead to disruption Global supply chainswhich results in an increase Shipping costs Delay in delivery of goods. There are also threats of closure Sea lanes Or impose restrictions on movement Ships It can lead to significant price fluctuations Goods and services, which has a negative impact on global economies, especially those that depend on trade with China.
In this context, a report by the American “CNBC” network, viewed by the “Sky News Arabia” website, quoted experts warning that some of the most common methods shipping The world’s busiest is at risk due to escalating tensions in South China Sea.
According to the report, in recent months, clashes have escalated in the highly disputed South China Sea, an important sea west of China. Pacific Ocean It represents a vital trade route for China, Japan and India, which are among the world’s largest economies.
With Beijing claiming almost all of the sea, while a few other countries have overlapping claims, several clashes have erupted between China And the Philippines And Vietnamwhich raised fears of an accident that might hinder Global trade.
The report quoted global strategist at BCA Research, Marko Babić, as saying:
- These developments in the South China Sea should be on the radar of global markets and supply chains because of the importance of these waterways to international trade.
- The South China Sea is the most valuable shipping route in the world In terms of value commerce Which passes through it.. and the conflict there poses clear risks to shipping Global.
- this Sea passage It is particularly essential for basic goods and raw materials that pass through it to reach China, as goods manufactured in China are then transported via this route to other parts of the world.
Conflicts in the region have become of interest to governments around the world, including the United States, which has a mutual defense treaty with the Philippines.
While there is no accurate data on the volume of trade that passes through the South China Sea, the project is a strength China The Center for Strategic and International Studies estimates that $3.4 trillion in trade passed through the South China Sea in 2016, making up 21 percent of global trade.
At the same time, I appreciated the conference United Nations Trade and Development estimates that 60 percent of maritime trade passed through Asia in the same year, with the South China Sea estimated to carry about a third of global shipping.
Strategic importance
Director of the Roya Center for Economic Studies, Bilal Shuaib, told the “Eqtisad Sky News Arabia” website that the United States seeks to make the South China Sea a hotbed of tension and disputes in light of… Economic war The ferocity between it and China, especially since this sea, which has an area of about 3.5 million square kilometers, is a vital corridor for global trade with a trade volume of about 5 trillion dollars annually.
He added: The China Sea is considered a strategic point of contact between the Indian and Pacific Oceans, and has great economic importance because it contains rich natural resources, including 12 percent of the total global fish catch, and huge oil reserves amounting to 11 billion barrels of oil, in addition to 190 trillion cubic feet. From natural gas.
“These enormous fortunes have been made South China Sea An arena of intense international conflict, where you are trying US Exerting pressure on China through military alliances and joint agreements, most notably with the Philippines. There are also other countries allied in this confrontation, such as Malaysia, Taiwan, and Vietnam, all of which seek to protect their interests in the face of China, which continues its efforts to control the sea, which threatens to transform the region. To an arena of long-term conflict, according to Shuaib.
He pointed out that “any escalation in this region will greatly affect the global trade movement, as nearly $5 trillion in maritime trade passes through the South China Sea, which reflects the importance of this strategic corridor for countries.” Asia Africa and Europe. If tensions escalate, he may be affected Global economy “directly, leading to new inflationary pressures at a time when global debt is approaching $315 trillion, with approximately a third of this debt in the United States.”
Shuaib concluded his statement by saying: “The world today needs the language of reason and diplomatic solutions instead of relying on military tools. The escalation of conflicts in the South China Sea will lead to more economic tensions, at a time when the focus must be on economic recovery and alleviating global inflation.”
Constant skirmishes
Earlier this month, the Philippines accused Chinese missile boats of pursuing Philippine ships and aiming lasers at aircraft patrolling near a disputed area. This comes after other clashes that included collisions between boats, the use of water cannons, and injuries among Filipino sailors, according to Philippine officials.
The Philippine president pushed the issue at a regional summit on Thursday, demanding the acceleration of negotiations on a code of conduct for the South China Sea, accusing Beijing of harassment and intimidation.
At the same time, the Vietnamese Foreign Ministry also recently condemned China’s actions in the South China Sea, accusing Chinese boats of launching a “violent attack” on Vietnamese fishing boats.
According to what the American Network report quoted from political consultant and prominent lecturer in international affairs at the University of the Philippines, Richard Hedarian, we have seen in the past few weeks that tensions are rising not only between China and the Philippines, but also with Vietnam, adding: “I think it is only a matter of time before “More ASEAN countries are speaking out, and it is only a matter of time before we see more problematic clashes.”
Tensions escalate
In addition, the economic expert, Ali Al-Idrissi, told the “Eqtisad Sky News Arabia” website that “the escalation of tensions in the South China Sea could have broad impacts on global trade, given the importance of this vital sea corridor and China’s role as a major exporter of goods globally. It is considered a sea South China is one of the most important sea lanes through which about a third of global maritime trade passes.
Al-Idrissi explained that one of the main expected effects is the disruption of supply chains, as any escalation in tensions or the outbreak of a military conflict in the region may lead to the disruption of movement. Merchant shipswhich causes delays in the delivery of goods and negatively affects the global economy. Well, you may have to Shipping companies To change their routes to avoid the region, which will increase transportation and shipping costs, and thus be reflected in higher prices for goods and services globally.
Al-Idrissi added: “The South China Sea is also a major route for transporting oil from the Middle East to Asia, and any disruption in oil supplies due to these tensions may lead to a significant increase in its prices, which in turn will affect global economies. In addition, the security risks that Military escalation may result in higher insurance requirements for ships and cargo, which will add additional costs to maritime trade.”
Al-Idrissi pointed out that “neighboring countries, such as Japan and South Korea, depend heavily on this sea corridor for their trade, and therefore they may face major economic disruptions if tensions escalate. In addition, any escalation in the conflict may lead to the imposition of sanctions or Economic restrictions on China or other conflicting countries, which will change global trade policies and affect the flow of goods and investments.”
Al-Idrissi concluded his statement by saying: “The escalation of tensions in the South China Sea, along with geopolitical tensions in the Arab region, could cause comprehensive disruptions in global trade. As the global economy continues to suffer from instability as a result of successive shocks, it becomes necessary to intensify international efforts.” To prevent any escalation that might affect the stability of the global economy.”
Avoid escalation
There are still many reasons for all parties involved to avoid further escalation of the dispute, although experts say the geopolitical risks in the South China Sea are increasing.
In this context, a report by chinadaily stated that conflicts in the South China Sea are still “manageable,” citing a report issued by the Beijing-based South China Sea Strategic Situation Exploration Initiative Research Center, which showed last month that the South China Sea is the most seas in the world. Crowded, prosperous and open, it guarantees complete freedom of navigation and flight for ships and aircraft.
According to the report, which cited general statistics, about 500,000 commercial ships pass through the South China Sea annually, with about 40 percent of global trade passing through the region and its adjacent straits. In addition, more than one million civil flights operate over the South China Sea annually.
The report indicated that US In recent years, it has been promoting a strategy to contain China by highlighting the South China Sea issue, which has exacerbated some of the conflicts in the region. However, the report stressed that the current disputes have not affected the freedom of navigation and overflight enjoyed by other countries in the South China Sea.
It showed that interactions and meetings between the Chinese and American militaries in the South China Sea were generally professional and safe, adding that the impact of geopolitical tensions on freedom of navigation and overflight in the region remains within a “manageable range.”
