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Australia, Japan And U.S.: The South China Sea Isn’t China’s Own Sea – Panos Mourdoukoutas | Forbes

09 August 2017

Panos Mourdoukoutas | Forbes – Australia, Japan and the U.S. have a clear and loud message for China: The South China Sea isn’t China’s own sea. It’s an international sea. That’s why the Association of South East Asian Nations (ASEAN) and Beijing must establish a set of rules that were “legally binding, meaningful, effective, and consistent with international law.”

China’s Foreign Minister Wang Yi (3rd R) arrives at Manila International Airport in Manila on August 5, 2017 to attend the 50th Association of Southeast Asian Nations (ASEAN) Foreign Ministers Meeting. (NOEL CELIS/AFP/Getty Images)

The message, which came at a recent gathering of the foreign ministers of the three countries in Manila, echoes a similar message America and its naval allies, France, Japan and Britain sent to Beijing six months ago stating that the South China Sea should be open to all military vessels.

That’s according to a recent Chinatopix.com report. “Japan and the United States are worried by China’s efforts to exercise unilateral control over the South China Sea, a concern shared by France, which controls several Pacific islands, including New Caledonia and French Polynesia.”

Financial markets in the region do not seem that concerned, at least for now, focusing on the economic fundamentals rather than the geopolitics of the region.

Fund 1-Month Performance 3-Month Performance
ishares MSCI China (FXI) 8.72% 14.22%
iShares MSCI Philippines (EPHE) 2.18 -1.99
Market Vectors Vietnam ETF (VNM) 1.37 5.79

Source: Finance.yahoo.com 8/8/2017

Meanwhile, Philippines President Rodrigo Duterte called himself a “humble” friend of America in Southeast Asia, suggesting that he is getting ready for another in a series of flip-flops in the South China Sea dispute.

China considers the waterway its own sea, and is building artificial islands, defying international tribunal rulings, though Philippines President Rodrigo Duterte isn’t prepared to stop Beijing — Philippines is the country that won an international tribunal ruling against China.

Nonetheless, the ruling fueled a wave of blunt messages and naval demonstrations between China on the one side and America’ and its close ally, Japan, on the other. Last August, for instance, China told Japan to stay away from its “own” South China Sea, as three China Coast Guard vessels entered Japanese waters around the disputed Senkaku Islands in the East China Sea, according to the Japan Coast Guard.

And there’s China’s warning to Japan a month earlier, when Beijing told Japan “not to send Self-Defense Forces to join U.S. operations that test the freedom of navigation in the disputed South China Sea,” according to a Japan Times editorial.

While it is still unclear whether America and its allies will manage to tame China’s South China Sea ambitions, investors should keep a close eye on the ongoing disputes in the region, as accidents can and do happen, taking financial markets for a wild ride.

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