Business and Geopolitics: International Business Threatened by South China Sea Tensions

International commerce and business presumes that the criss-crossing of goods and services are unhindered. Geographical conflicts whether on land, air, or water, impose severe restrictions to the free flow of commerce and investments as has been demonstrated by the consequences of tensions in the Middle East and Africa. China and the ASEAN-member countries have recently shown some potential for increased tension because of overlapping claims of sovereignty over islands situated in the South China Sea.Up to 85 per cent of energy sources of the three East Asian countries comprising Japan, China, and South Korea pass through the South China Sea. Indeed, this waterway, which is near the U.S.-identified Malacca Straits “choke point”, is a lifeline for commerce and trade in the region. Up to about 30% of total trade between ASEAN countries and the three East Asian countries make use of the navigation access provided by this body of water. Seen from another angle, about 60% of the world’s water-transported oil passes through the South China Sea, mainly coming from the Middle East bound for East Asia.