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2016/07/14

More on #SouthChinaSea; plus China's Trade Pivots



An international tribunal in The Hague rejected China’s claim to historic rights over 90 % of the South China Sea, and ruled that its reclaimed islands and outcrops in the Spratlys had no right to a 200 nautical mile exclusive economic zone (EEZ).
 
Vietnam was not party to the legal dispute, which was brought by the Philippines.Hanoi, however, will receive a major legal and diplomatic boost in its own efforts to resist China’s belligerence in the disputed waters. 
The main danger for Vietnam is that China will respond by stepping up its military presence, increasing the danger of hostilities, in an attempt to bolster its severely damaged territorial claims.

Indonesia has a moral high ground it can project without rubbing salt in Beijing’s wounds: a principled stand based on international law and not a rejection of China. 
Jakarta should not take a confrontational line, yet should still display diplomatic firmness over its right to exploit resources within its legitimate EEZ and to ensure access for international shipping and prevent the use of coercion in maritime claims.  
Despite occasional interdictions as to the extent of the “nine-dash line”, we must assume China does not want to pick a fight with a country of strategic significance such as Indonesia. China’s Foreign Ministry spokesperson Hong Lei has at least conceded, “The Chinese side has no objection to Indonesia’s sovereignty over the Natuna Islands.”
Indonesia can set itself up as an example of a responsible regional power — the way China wants to be seen by the world — by pointing to the painful experience of accepting the International Court of Justice’s decision to award the Sipadan and Ligitan Islands to Malaysia.

Analysts say Laos’ dependence on China and narrow industrial revenue base of hydropower and mining leaves the Lao economy vulnerable.
 
Asian Development Bank (ADB) senior country specialist, Shunsuke Bando, said Laos has to diversify especially amid rising competition from the ASEAN Economic Community (AEC)... growing regional competition, a weak industrial base and human resource skill shortages are undermining the Lao business sector.  
Faced with economic uncertainties, Lao Prime Minister Thongloun Sisolith has moved to strengthen regional business and economic ties, signing key trade agreements with Cambodia and Thailand during recent official visits.  
Pavida Pananond, a professor of international business at Thammasat University in Bangkok, said Thongloun’s strategy appears to be directed to building on Laos’ regional connectivity. 

While the West is still reluctant to finance deals with Iran out of fear of violating sanctions which remain in place, China has jumped at the opportunity to outperform its Western competitors. 
There are several reasons for China's pivot to the Middle East and most notably Iran. 
According to the scholar, Middle Eastern markets are essential for Beijing's New Silk Road initiative to create a network of manufacturing and logistics centers in Central Asia and Europe.


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