Panos Mourdoukoutas ,
Contributor


South China Sea disputes are turning worse. Last week, Philippines’ President Rodrigo Duterte had a loud and clear message for China: Stay away from our territory or else it could be a “bloody” confrontation.

Philippines’s warning comes shortly before China hosts the G20 Leaders’ Summit in the eastern city of Hangzhou on 4-5 September, and one week after a Japan Times editorial revealed that China has set a “red line” for Japan in the South China Sea. China warned Japan “not send Self-Defense Forces to join U.S. operations that test the freedom of navigation in the disputed South China Sea.

Philippines and China’s “hardcore” diplomacy is bad news for the economic integration of the region and bad news for investors in the countries involved in the disputes. A military confrontation would disrupt the economic integration and growth of the region and hurt the global economy — most notably China, which needs a market frontier for its manufacturing products.

So far financial markets fixated on central bankers’ easy money have ignored the escalation of the South China disputes. The Philippines’ market is up double digits over the last twelve months, while the Japanese and the Chinese markets are roughly flat.

The South China Sea disputes began as a regional tug of war between China and several neighbors, but they soon turned into a showdown of economic and military might between China and the US, as each country tries to write its own navigation rules for the region.

Two years ago, China raised the tensions in the region by building artificial islands in the South China Sea. America countered China’s move by expanding its naval presence in disputed waters, and by advancing its missile capabilities in South Korea.

Then, China raised the stakes by announcing that it will send nuclear submarines into the area to “deter” US presence.

Last month came an international arbitration ruling, which found that China has no historic title over the waters of the South China Sea.

But China has been defiant of this ruling, reaffirming its determination to continue the artificial build up, setting “red lines” for any nation that seeks to restrain its South China Sea aspirations.

It may be time for financial markets to take notice.

Source:
www.forbes.com/sites/panosmourdoukoutas/2016/08/28/philippines-sends-a-stark-warning-to-china-over-south-china-sea-dispute/

- Ngườihiệuđính: dchph vào ngày Aug.29.2016, 07:52 am

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