China expansion could threaten freedom of shipping, says US
LONDON/SINGAPORE—China’s growing military presence in the South China Sea has drawn warnings from the United States that Beijing is seeking to exert control over one of the world’s most important sea-lanes, but so far the shipping industry seems less concerned.
Beijing has been increasingly assertive in staking its claim to almost the whole of the sea, through which trillions of dollars of trade passes each year.
This monthChina landed its first test flights on a new 3,000-meter runway it has built on a reef in the Spratly Islands, drawing protests from Vietnam and the Philippines which have overlapping claims in the area.
Despite the diplomatic tensions, merchant shipping says operations are, as yet, unaffected.
“For shipowners, it’s business as usual,” said Capt. Bjorn Hojgaard, chief executive officer at Anglo-Eastern Univan Group, one of the world’s biggest ship management companies.
“From our point of view, it’s just another military base. It’s only politics, commercially it makes no difference,” he added.
No viable option
The deep waters of the South China Basin between the Spratly and also-disputed Paracel Islands are the most direct shipping lane between northeast Asia’s industrial hubs of China, Japan, South Korea, Europe and the Middle East.
The geography of the region offers few economically viable alternative routes for large oil tankers, dry-bulk ships and container vessels.
Reuters shipping data shows that, counting just Very Large Crude Carrier (VLCCs) supertankers, some 25 VLCCs pass between the Spratly and Paracel Is- lands at any time, with enough capacity to carry the equivalent of about 11 days’ worth of Japanese demand.
The US military, which remains by far the most powerful naval force in the region, has warned that Beijing is seeking to establish a level of de facto control over the South China Sea that threatens freedom of navigation for international shipping.
Speaking to reporters aboard a US aircraft carrier in Japan last week, Vice Adm. Joseph Aucoin, commander of the US Seventh Fleet, said that already “we are kind of using China national rules for international (navigation)” in the sea.
Adm. Scott Swift, commander of the US Pacific Fleet, said last December that ships nearby these islands were now “subject to superfluous warnings that threaten routine commercial and military operations.”
Chinese President Xi Jinping said November last year that freedom of navigation for shipping would never be a problem in the South China Sea.
Saber-rattling
Tensions in the South China Sea have risen over the last year as China has stepped up construction and reclamation to create man-made islands on reefs and atolls it controls.
“It seems that the new strategically located islands reportedly constructed by China would give China more security leeway in the disputed waters and make it difficult for other forces to assert sea control,” said Jonathan Moss, head of transport at law firm DWF, who acts for insurers and shipping companies.
Michael Frodl, of the US-based consultancy C-Level Global Risks, said China’s goal was to use “air power to project into the waters” around the artificial islands.
So far, however, there are few signs that commercial shipping is being affected.
“Ships have the right of free passage ... and even if China does eventually take over the South China Sea, this shouldn’t affect the passage of merchant ships,” said Arthur Bowring, managing director of the Hong Kong Shipowners’ Association, whose members operate or manage about 8 percent of the global merchant fleet.
Khalid Hashim, managing director of Precious Shipping, one of Thailand’s largest dry cargo shipowners, said that “despite all the saber-rattling by the USA” shipping activity in the South China Sea remained normal.
“I don’t think the current tensions will escalate any further,” he said, adding that the region’s shipping lanes were too important for China’s economy to be disrupted.
Ship insurers also said there had been no impact on the region’s trading.
Simon Lockwood, deputy managing director of marine at leading global insurance broker Willis Towers Watson, said the South China Sea area was not listed as a highrisk area by the industry’s influential Lloyd’s Joint War Committee, which underwriters follow closely.
“And as such insurers will not (and cannot) charge additional premiums for vessels operating in the region,” Lockwood said.
The 2014 “Sailing Directions” for the South China Sea produced by the US National Geospatial-Intelligence Agency gives extensive details on the Spratlys.
It declares some 135,000 square kilometers as “dangerous ground” due to inadequate surveys and bad weather. It also notes that sovereignty in the area is “subject to competing claims which may be supported by a force of arms.”