CHINA AGAIN RAISES RISK LEVELS IN SOUTH CHINA SEA

China's overreaching claim to the entire region

In the face of serious objections, on the part of both Vietnam and the Philippines, regarding the use of the "nine-dash line" territorial claims in new Chinese passports, China has now further inflamed its neighbors, and raised the stakes for Country Risk , directing  a provincial government to pass laws that give Chinese border authorities the right to search and "repel" foreign-flag vessels operating in the South China Sea, within 12 NM of any of the islands claimed by China.

In essence, this new law not only interferes with the established international right of Innocent Passage, in one of the world's busiest waterways, but seeks to legitimise China's disputed claims to the entire region. This will not go unchallenged, and the risk of incidents, with the resultant damage to civilian vessels, or even warships, and possible loss of life, will increase. Air combat operations would affect the entire South China Sea, and possibly draw in other nations, and result in a widening of the conflict.

Estimated range of Chinese fighter aircraft from Woody Island airfield

We have already seen the effect upon the Japanese economy of the boycott, by Chinese consumers, of Japanese goods, in the aftermath of Japan's unwise purchase of islands in the East China Sea that are obviously within the Chinese Sphere of Influence. Both South Korea and Japan would suffer severely, if their access to Middle Eastern Oil was interrupted. China's economy could collapse if its access to the US and European consumer markets was restricted due to a military conflict, no matter how small it was in scope.

All the countries that border the South China Sea all have long-standing claims to islands in the area; let us hope that China's recent rude and abrupt way of dealing with its neighbors does not result in a major increase in Country Risk assessments made upon them.