Wed, Dec 26, 2012 - Page 1 News List

China to invest US$1.6bn in disputed islands

By J. Michael Cole  /  Staff reporter

The city of Sansha in the Paracel Islands is seen from the air on July 27.

Photo: AFP

In a move that risks increasing regional tensions, China yesterday announced it will invest more than 10 billion yuan (US$1.6 billion) to build infrastructure on disputed islands in the South China Sea and to strengthen marine law enforcement in the region.

Citing Hainan Province Governor Jiang Dingzhi (蔣定之), the Guangzhou-based 21st Century Herald reported that China would build an airport, piers and other important infrastructure on islands administered by Sansha (三沙), a prefecture-level city under Hainan’s jurisdiction that was created in July following approval by the State Council in June.

Located on Woody Island (Yongxing Island, 永興島), the largest island in the Paracels (Xisha Islands, 西沙群島) and 350km southeast of Hainan, Sansha “administers” more than 200 islets, sandbanks and reefs and their surrounding waters in the Spratly Islands (Nansha Islands, 南沙群島), Macclesfield Bank (Zhongsha Islands, 中沙群島) and the Paracel chains.

Some of the construction has already begun, the paper said, without providing details.

The Industrial and Commercial Administration Bureau of Hainan Province announced in September that the establishment of Sansha had caught the attention of investors, with the bureau receiving “multiple queries” about setting up businesses in Sansha.

A construction company and a tourism investment company received approval in August and September respectively, Chinese media said.

According to a report in Caijing magazine, officials in Sansha have been evaluating various commercial development plans, including the establishment of a tax haven and casino resorts.

While serving to create facts on the ground to bolster China’s sovereignty claims in the South China Sea, the investment projects have been a source of tension with other claimants, forcing Beijing to add a security component to the project.

In July, China’s Central Military Commission approved the creation of a military garrison on Sansha.

Taiwan, Vietnam, the Philippines, Malaysia and Brunei also have claims to some of the islets. Itu Aba Island (Taiping Island, 太平島), the largest islet in the Spratlys, is controlled by Taiwan.

According to the Herald, Jiang added that in addition to supporting infrastructure, the funds would be used to acquire marine law enforcement vessels and supply ships.

Under new rules announced last month and which are to come into effect on Tuesday next week, police in Hainan will have the authority to board and seize control of foreign ships that “illegally” enter Chinese waters. It remains unclear whether the directive only pertains to coastal areas near Hainan Island or to the entire body of water administered by Sansha.

Chinese media reported at the time that the government would also send new maritime surveillance ships to supplement the fleet responsible for patrolling the South China Sea.

Additional reporting by Bloomberg

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