Chinese Aggressions

Indonesia And America Draw New 'Red Lines' In South China Sea
By Panos Mourdoukoutas

Indonesia and America drew their own ‘red lines’ for Beijing in the South China Sea last week.
On Friday, Indonesia decided to rename its maritime region in the southwest part of the South China Sea as the “North Natuna Sea,” asserting its own sovereignty in the area.
Meanwhile, America announced that it will step up patrols in disputed South China Sea waters, asserting its willingness to keep the waterway an open sea to all commercial and military vessels.
Indonesia’s and America’s moves come a year after Philippines and its close ally, the U.S., won an international arbitration ruling that China has no historic title over the waters of the South China Sea.
But China continues to think otherwise. 

It considers the body of water its own sea. 

All of it, including the artificial islands it has been building in disputed waters, in defiance of international tribunal rulings.
Worse, Beijing has been using softcore and hardcore diplomacy to intimidate anyone who dares to challenge its position. 

Like threatening Philippines with war should it try to enforce the international ruling. 

Or like telling Vietnam and India to stop searching for oil in the region, or else it will attack the oil and gas bases.

It has also told America’s close Asian ally, Japan, to stay away from its “own” South China Sea.
So far, financial markets in the region have been discounting these developments as “noise,” rather than something more serious, focusing instead on the economic fundamentals of each country. 

Except the Bitcoin market, which has emerged as the new hedge against global uncertainties.
Still, investors should keep a close eye on the rising tensions in the region, especially as North Korea escalates the testing of new missiles.

South China Sea: Red Lines And Propaganda Wars Flare Up Tensions

By Panos Mourdoukoutas

Investors seem to be spending too much time these days analyzing the Fed's next interest rate move and Washington's next fiscal and deregulation measures, and not enough time watching the gathering of geopolitical storms that may take a toll on their global investment holdings.
One of those storms is gathering over the South China Sea, and it’s threatening to disrupt one of the world's largest trade routes with devastating consequences -- for the economies of the region and the multinational companies that draw a big chunk of their revenues from there.
The South China Sea disputes began as a regional tug of war between China and its neighbors, but they quickly turned into a showdown of economic and military might between China and the US.
Almost three years ago, China elevated the tensions in the region by building artificial islands in the South China Sea. 

America countered by expanding its naval presence in disputed waters, and by advancing its missile capabilities in South Korea.
In the beginning, China confined its response to a few loud statements about America’s “violation” of international law, and by recruiting American allies with the AIIB initiative.
Then, Beijing raised the stakes by announcing that it would send nuclear submarines into the area to “deter” US presence.
Compounding the dispute was an international arbitration ruling last July, which determined that China has no historic title over the waters of the South China Sea – a ruling serving to limit China’s drive to control trade and resources in the region.
Defiant of the ruling, Beijing flared up tensions, reaffirming its determination to continue the artificial build up, setting “red lines” and sending loud messages to neighborhood countries. 

Beijing, for instance, warned Japan to “not 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.
Last month, following a show of naval force in the Taiwan Strait, Taiwan sent a blunt message to China by preparing its military forces to fend off Beijing’s threats.
Taiwan’s defense minister Feng Shih-kuan told Taiwan Central News Agency that the "enemy's threats are increasingly expanding" as he issued orders for the military to step up training exercises.
Last week, America drew its own red line in the China Sea by asserting its determination to defend Japanese Senkaku islands claimed by China, drawing Beijing’s angry protests.
In the meantime, allegations have surfaced that Japan has launched a propaganda war against China, further flaring tensions between the two countries. 

That’s something Tokyo has yet to refute.
Still, financial markets fixated on central bankers’ easy money and the prospects of a massive US stimulus have been treating the South China Sea disputes as a noise rather than as something more serious. 

But for how long?