THE NATIONAL INTEREST — China has fired off a music video, editorials and plenty of other propaganda, along with a few volleys from PLA Navy ships, in response to the international court ruling on the South China Sea, which it denounced as “null and void.” But after threatening to set up an air defense identification zone, what might the economic impact be if Beijing went one step further and closed off the entire area inside its so-called “nine-dash line”?
Based on a 1947 map by the then Kuomintang government, the vaguely defined nine-dash line encompasses around 90 percent of the South China Sea. It spans an area the size of Mexico extending more than one thousand kilometers from China, and which encompasses territory claimed by Malaysia, the Philippines, Taiwan and Vietnam.
While China is the major beneficiary of freedom of movement in the region, a number of other countries rely upon shipping routes through the disputed area, namely Japan, South Korea and Australia.
An estimated $5 trillion worth of goods are transported through South China Sea shipping lanes each year, including more than half the world’s annual merchant fleet tonnage and a third of all maritime traffic worldwide.
Oil transported through the Malacca Strait from the Indian Ocean, en route to East Asia via the South China Sea, is triple the amount that passes through the Suez Canal and fifteen times the volume that transits the Panama Canal.