Key Judgments

Escalating tensions in the South China Sea, driven by territorial disputes, military build-up, and strategic competition among regional and global powers, pose significant risks to regional stability and global trade. These tensions are likely to result in increased military confrontations, disruption of critical maritime routes, and heightened geopolitical instability, impacting global economic and security interests.

Supporting Evidence

The South China Sea is a critical maritime region, through which approximately 30% of the world’s maritime trade passes, valued at over $3 trillion annually. It is also rich in natural resources, including oil and natural gas reserves, making it a highly contested area among regional powers such as China, the Philippines, Vietnam, Malaysia, and Brunei.

China has been assertively advancing its territorial claims in the South China Sea, building artificial islands and militarizing them with airstrips, ports, and advanced weaponry. According to the Asia Maritime Transparency Initiative, China has constructed over 3,200 acres of new land in the Spratly Islands since 2013, establishing a significant military presence in the region.

The United States, along with allies such as Japan and Australia, has increased its military patrols and freedom of navigation operations (FONOPs) in response to China’s activities. These operations are intended to challenge China’s territorial claims and ensure open access to international waters. In 2023 alone, the U.S. conducted multiple FONOPs in the South China Sea, leading to several close encounters with Chinese naval forces.

Territorial disputes in the South China Sea have led to numerous confrontations between regional navies and coast guards. Incidents such as the 2020 collision between a Chinese vessel and a Vietnamese fishing boat, and the 2021 standoff between Chinese and Philippine vessels at Whitsun Reef, underscore the potential for these disputes to escalate into military conflicts.

The strategic importance of the South China Sea extends beyond regional powers. The European Union and other global stakeholders have expressed concerns about the stability of this maritime region. The EU has increased its diplomatic engagement and naval presence in the Indo-Pacific to support freedom of navigation and uphold international law.

Implications

The escalating tensions in the South China Sea are likely to result in increased military confrontations, which could inadvertently lead to larger conflicts. The risk of miscalculation or accidental engagements between military forces is high, potentially drawing in external powers and escalating into broader regional or even global conflicts.

Global trade is at significant risk due to the potential disruption of critical maritime routes. Any military conflict or blockade in the South China Sea could severely impact the flow of goods, leading to substantial economic losses for countries reliant on these shipping lanes, including major economies such as the United States, China, Japan, and South Korea.

The heightened geopolitical instability in the South China Sea could undermine regional cooperation and development. ASEAN’s efforts to maintain peace and stability in the region could be hampered by increasing military tensions and divergent national interests.

The strategic competition in the South China Sea is likely to lead to an arms race in the region. Countries may increase their defense spending and seek advanced military capabilities to counter perceived threats, further exacerbating tensions and instability.

Recommendations

Enhance diplomatic efforts to resolve territorial disputes through multilateral frameworks. Engaging ASEAN and other regional stakeholders in dialogue and negotiations can help de-escalate tensions and promote peaceful resolutions.

Strengthen international legal mechanisms to uphold maritime laws and norms. Supporting the United Nations Convention on the Law of the Sea (UNCLOS) and related legal processes can provide a basis for resolving disputes and ensuring freedom of navigation.

Increase transparency and communication between military forces operating in the South China Sea to prevent miscalculations and accidental conflicts. Establishing hotlines and protocols for incident management can reduce the risk of unintended military engagements.

Promote regional confidence-building measures and cooperative security arrangements. Joint naval exercises, humanitarian assistance, and disaster relief operations can build trust and enhance cooperation among regional powers.

Support initiatives for sustainable development and resource sharing in the South China Sea. Collaborative efforts in areas such as fisheries management, environmental protection, and scientific research can foster regional cooperation and reduce the incentive for conflict.