Sat, Aug 11, 2018 - Page 5 News List

China’s state-owned firms cementing lucrative role in S China Sea: study


Filipino protesters, wearing masks of Philippine Secretary of Foreign Affairs Alan Peter Cayetano, left, and Chinese President Xi Jinping, right, denounce a government plan to offer China a “60-40” joint-exploration scheme in the disputed Spratly Islands, at a rally outside the foreign affairs building in Pasay, Metro Manila, yesterday.

Photo: AP

China’s giant state-owned enterprises (SOEs) are playing an increasing role in Beijing’s buildup in the South China Sea and could seek to cement their dominant position in coming years, new research shows.

The work by academic Gong Xue (龔雪) and published this week by Singapore’s ISEAS Yusof Ishak Institute sheds light on a little-examined element of rising tensions across the vital trade route, showing extensive work by Chinese SOEs in developing infrastructure and tourism, as well as oil and gas, some in hotly disputed areas.

Some experts and regional diplomats believe the strong commercial presence could further complicate any future regional solution should Beijing, which research shows has encouraged firms to operate, protect them politically and militarily.

Chinese SOEs operated in a complex and often opaque environment, serving national strategic interests as they sought new opportunities, Gong said.

“They cannot operate independently, but they are ultimately opportunists and when the policy environment is favorable, then they will go for it. And we have seen signs of that behavior in the South China Sea,” said Gong, who is based at Singapore’s Nanyang Technological University’s S. Rajaratnam School of International Studies.

“If the Chinese government can maintain an upper hand and leverage while achieving stability, there might well be greater opportunities,” she said.

The Chinese Ministry of Foreign Affairs said there was nothing wrong with Chinese firms carrying out of “normal commercial activities” on Chinese territory.

“The Chinese government manages and regulates Chinese companies in accordance with the law,” the ministry said in a statement.

While the research notes the difficulty in obtaining financial information, it suggests turning China’s seven reefs and cays in the Spratlys archipelago (Nansha Islands, 南沙群島) — which Taiwan also claims — into manmade islands was a multibillion-dollar effort.

It cites state media estimates that building up Fiery Cross Reef (Yongshu Reef, 永暑島) alone, now home to a 3km runway and military facilities, including missile and radar installations, cost about US$11 billion.

The ongoing buildup of the seven islands deep in the maritime heart of Southeast Asia has alarmed the US and other regional powers.

China’s so-called “nine-dash line” claim covers much of the South China Sea, overlapping claims of Taiwan, Vietnam, the Philippines, Malaysia and Brunei.

Gong’s research shows how China Communications Construction Corp (CCCC) and its subsidiaries seized on policies advocated by Chinese President Xi Jinping (習近平) in 2012 to expand its maritime capabilities via the South China Sea, in part by developing some of the world’s largest dredgers.

CCCC planned to list its dredging operation in 2015, but its application later lapsed, according to the Hong Kong Stock Exchange.

The company has formed new units centered on the Paracel Islands (Xisha Islands, 西沙群島), which Taiwan and Vietnam also claim, that are eyeing expansion in tourism, logistics, fishing, as well as ongoing construction business, according to the paper.

It has earmarked US$15 billion for investment across various sectors — a plan that “stems from the fact that it has quietly benefited from land reclamation in the South China Sea through implementing national tasks,” the research states.

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