The South China Sea

 The South China Sea

Tyler Casper

The South China Sea is a large body of water in Asia which borders several countries including China, Taiwan, the Philippines, Malaysia, and Brunei. The sea is heavily contested due to the large amount of resources under the depths, including oil, precious metals, and most importantly, fish, and is an excellent example of macroeconomics playing a large role in politics.

This map shows the large natural oil and gas reserves in the region, and illuminates why all the nations bordering the sea have staked claim to at least a portion of the region, with China claiming nearly the entire sea. Also, all of the nations bordering the territory have tried to enforce their claims to some degree, with China even constructing artificial islands and bases to secure their influence. Any of the nations bordering the sea would secure a massive boost to their supply of energy, precious metals, and fish if they could gain control of the region, likely resulting in a boost in GDP brought about by an increase in net exports.

Currently, according to journalist Adam Greer of the Diplomat, the South China Sea produces over 12% of all fish currently caught in the world. The region has extremely rich reefs which have been overexploited for years and still produce very large quantities of fish. According to journalist Peter Pham of Forbes, the Chinese fishing industry relies on this region for their annual catch, with the majority coming from the South China Sea. The Chinese rely on seafood for much of their food supply, and consume over 20% of the total annual catch across the world. If the Chinese fishermen were unable to secure their usual catch from the sea, China’s population growth would fall rapidly, the price of food across China would likely skyrocket, and the Chinese fishing industry would be deeply hurt, resulting in large numbers of unemployed workers, and a possible recession. As a result, the South China Sea and its reefs are extremely valuable to China.

In addition to containing many resources, the South China Sea is also the common route for many cargo ships, with 40% of Chinese trade and over 20% of American trade flowing across the waterway, according to Peter Pham of Forbes. Both nations are extremely concerned with the other preventing their trade from flowing through the area, and 2 US carrier groups were recently sent to do combat drills in the area. On the other hand, China has used its island construction program and air force to intimidate potential opposing nations, especially Taiwan. China and the US would both have their economies severely harmed if their trade couldn’t flow through the South China Sea, as ships would need to go through a longer route through Indonesia, resulting in less aggregate supply to fuel the growing aggregate demand of both nations. 

The South China Sea is a very clear example of how political action is influenced by Macroeconomics. The US and China have threatened one another for over 7 years in large part due to potential Macroeconomic consequences for both nations. Furthermore, the South China Sea shows that a singular macroeconomic concern can easily morph into other concerns, with the key example being the dominoes of the Chinese Fishing industry falling. What do you think the US and China will do in the future to keep their economies safe from one another? What would you do if you were in one of their positions? Why?

Works Cited

Greer, Adam. “The South China Sea Is Really a Fishery Dispute.” The Diplomat, The Diplomat, 

20 July 2016, thediplomat.com/2016/07/the-south-china-sea-is-really-a-fishery-dispute/. 

Pham, Peter. “Why Is Tension Rising In The South China Sea?” Forbes, Forbes Magazine, 19 

Dec. 2017, www.forbes.com/sites/peterpham/2017/12/19/why-is-tension-rising-in-the-south-china-sea/?sh=6ec833b21fa4. 

“South China Sea - What You Need to Know: DW: 11.08.2017.” Deutsche Welle, Deutsche 

Welle, 6 June 2020, www.dw.com/en/south-china-sea-what-you-need-to-know/a-40054470.