After China’s Naval Modernization, It Seeks to Rewrite International Law and Exclude the U.S. from the South China Sea

Posted on February 22, 2018 by admin

Journal of Political Risk, Vol. 6, No. 2, February 2018

A PLAN Shenyang J-15 carrier-based fighter aircraft is preparing to land on Chinese aircraft carrier PLANS Liaoning (CV-16). The aircraft carrier is located in the middle of the ocean.

A PLAN Shenyang J-15 carrier-based fighter aircraft is preparing to land on Chinese aircraft carrier PLANS Liaoning (CV-16). Source: Wikimedia Commons.

James E. Fanell

(Capt., USN, Ret.)

The People’s Republic of China (PRC) Ministry of Defense representative reportedly stated at this week’s Munich Security Conference that the PRC now interprets the United Nations Convention on the Law of the Sea (UNCLOS) as stating that naval forces are forbidden to operate in a coastal state’s Exclusive Economic Zone (EEZ) without said state’s prior permission.

This raises the question of why Beijing has now come to this “enlightened” position? Where was the PRC since 1949 as US Navy warships peacefully sailed the waters of the South China Sea over the past 70 years? Or where was the PRC from 1972 to 1982 as China participated in the American-led effort to craft and ratify UNCLOS? More importantly, why did Beijing not complain of US Navy operations in the South China Sea in 1996 when the PRC ratified UNCLOS?

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We Need a New Approach to China Even if We don’t Care About Human Rights and Free Trade

Posted on February 21, 2018 by admin

Journal of Political Risk, Vol. 6, No. 2, February 2018

Graffiti image of Mao alongside the McDonalds logo, 2012. Source: Steve Wiley via Flickr.

Ho-fung Hung, Ph.D.

Johns Hopkins University

Obama era officials Kurt M. Campbell and Ely Ratner recently published “The China Reckoning: How Beijing Defied American Expectations” in Foreign Affairs, arguing US’ assumption underlying its China Policy over the past several decades has been wrong. They admit that China has not changed in the direction most China hands in the US had expected. Rather than becoming more liberal and democratic, it became more authoritarian; rather than more opening to trade, it became more protectionist. They call for a reorientation of Washington’s approach to China. This article has triggered some internal debate and soul searching in the China watchers’ community.

It is understandable that many who expect China to embrace liberal democracy and more economic openness have been disappointed. What is missing in the discussion is that even many realists and corporations who do not care too much about the ideals and principles of economic and political liberalism are frustrated with China too. Over the last few years, another China reckoning is that China is unable, or never intended, to deliver and keep its promises even on many economic and geopolitical issues that are unrelated to the sensitive areas of political reform and change.

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China’s Compromise of Duterte, the Selling of Philippine Sovereignty, and Risk to Western Market Share in Southeast Asia

Posted on February 21, 2018 by admin

Journal of Political Risk, Vol. 6, No. 2, February 2018

Presidents Rodrigo Duterte (L) and Xi Jinping (R) sit side-by-side at the FIBA opening ceremony. A crowd is visible in the background. Both are wearing suits.

Presidents Rodrigo Duterte (L) and Xi Jinping (R) sit side-by-side at the FIBA opening ceremony. Source: Presidential Communications.

Anders Corr, Ph.D.

Publisher of the Journal of Political Risk

In his visit to China in October 2016, President Duterte of the Philippines broke with the United States and all but pledged allegiance to China. In February 2018, he joked that China could make the Philippines into a Chinese province, “like Fujian.” This joke was made at an event for the Chinese Filipino Business Club Incorporated (CFBCI), members of which stand to benefit from closer China-Philippine ties. Ambassador from China to the Philippines Zhao Jianhua (趙鑒華) reportedly smiled at Duterte’s jokes. Duterte again brought up an unfounded fear of war with China, which serves to justify his negotiations with the country. Duterte’s actions are destabilizing the Philippines and regional stability, and could threaten the regional market share of western companies.

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China’s $60 Trillion Estimate Of Oil and Gas In The South China Sea: Strategic Implications

Posted on January 23, 2018 by admin

U.S. hydrocarbon estimates imply a maximum of $8 trillion worth of oil and gas in the region, explaining part of the strategic divergence of the two superpowers.

Journal of Political Risk, Vol. 6, No. 1, January 2018

A yellow oil rig is photographed in the middle of the ocean.

Oil rig. China’s largest offshore oil and gas producer CNOOC Ltd. announced on July 3, 2015 that its Xingwang deep-sea semi-submersible drilling platform started drilling at 1,300 meters underwater in Liwan 3-2 gas field in the South China Sea. Source: Pxhere.

Anders Corr, Ph.D.
Publisher of the Journal of Political Risk

China’s estimates of proved, probable and undiscovered oil and gas reserves in the South China Sea imply as much as 10 times the value of hydrocarbons compared with U.S. estimates, a differential that has likely contributed to destabilizing U.S. and Chinese interactions in the region. While China estimates a total of approximately 293 to 344 billion barrels of oil (BBL) and 30 to 72 trillion cubic meters (TCM) of natural gas, the U.S. only estimates 16 to 33 BBL and 7 to 14 TCM. Considering that the inflation-adjusted value of oil vacillated between approximately $50 and $100 per barrel (in 2017 prices) since the mid-1970s, U.S. estimates imply a hydrocarbon value in the South China Sea between $3 and $8 trillion, while Chinese estimates imply a value between $25 and $60 trillion. In addition to other factors, China’s greater dependence on oil imports and higher estimates of hydrocarbons in the South China Sea have driven it to invest more military resources in the region. An overly economistic approach by the Obama administration probably led the U.S. to allow China’s expansion in the South China Sea too easily.

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Protectionism Won’t Work: Four Alternatives to Canceling Trade Agreements

Posted on December 21, 2017 by admin

Journal of Political Risk, Vol. 5, No. 12, December 2017

A blue and red cargo ship is photographed at the Yangshan deepwater port.

Yangshan deepwater port. Source: Flickr.

Bhakti Mirchandani

Senior Vice President at An Alternative Investment Management Firm

It’s time to create jobs for displaced manufacturing workers and bolster American competitiveness in four ways: (i) invest in growing fields and tradable economies that draw upon a region’s endemic old industrial skills; (ii) fight the opioid epidemic to avoid further declines in labor force participation; (iii) align universities and local manufacturers to ensure that workers are sufficiently skilled to participate in the local tradable economy; and (iv) encourage–and protect–R&D and entrepreneurship in manufacturing.

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