Image source: John Simmons (via Unsplash)

Safeguarding global trade: Urgent discussions needed at Shangri-la Dialogue 2023

As global trade continues to grow, safeguarding the vital commercial shipping routes surrounding the South China Sea is crucial to maintain economic stability.

The South China Sea serves as a crucial artery for global trade, facilitating the transportation of goods worth trillions of dollars each year. About one-third of the world’s shipping passes through this sea, making it a major artery in international trade.

Goods that transit through the South China Sea annually are claimed to be worth about US$5.3t, with US$1.2t accounting for trade in the United States. It is particularly beneficial for countries like China, Taiwan, Japan, and South Korea, which all rely on the Strait of Malacca to connect the South China Sea with the Indian Ocean and the Pacific Ocean.

With major economies heavily reliant on these routes, any disruption or threat poses significant risks to international commerce and economic stability. Ensuring the unhindered flow of maritime trade through the South China Sea is vital for sustaining global supply chains and supporting economic growth.

Whilst there are concerns about disruptions to trade in the South China Sea, the economic incentives for preserving the free flow of trade outweigh the potential benefits of disrupting it.

Security threats and hazards in the South China Sea

Amongst other security threats, disputes over sovereignty, sovereign rights, and jurisdiction have been considered the most complicated factors that endanger the shipping routes in the South China Sea.

Earlier in February this year, a Chinese coast guard ship was accused of directing a “military-grade” laser at one of the Philippine Coast Guard’s vessels, putting the Filipino crew in danger. Last month, reports emerged of Chinese research vessels, accompanied by the coast guard, and nearly a dozen boats entering a gas block operated by state firms from Russia and Vietnam. Chinese vessels and aircraft have also repeatedly entered waters and airspace near the gas field of Malaysia in recent years.

This incident follows a pattern of assertive moves of late by Beijing in its neighbours' exclusive economic zones (EEZ) as it presses its claim to sovereignty over almost the entire South China Sea.

China has claimed that its ships are conducting normal activities within its jurisdiction. However, not only the Philippines but also Vietnam perceive China's actions as hostile and a violation of international rule. Other countries, like the US, Australia, and Japan, also voiced their objections to China’s activities toward maritime navigation freedom.

Rising tensions surrounding the South China Sea are forecasted to continue. Disputes over territorial claims, militarisation of islands, and the presence of foreign military forces have intensified the security challenges in the region. These incidents highlight the potential risks and challenges faced by countries in maintaining the security and stability of the shipping routes in the South China Sea.

Fostering productive dialogue through a balanced perspective

To maintain safety for maritime routes in South China Sea, a balanced perspective is crucial. Despite concerns and discrepancies, it is equally important to recognise that China has a vested interest in maintaining open trade routes in the region. Any congestion on these routes poses risks to navigation safety and therefore might lead to disruption of the global supply chain, which has already been challenged by other negative factors.

Given the gravity of the security threats facing commercial shipping routes in the South China Sea, as well as the host country Singapore’s position as one of the world's most connected countries strategically located along the world's major trade and shipping routes, the 20th Shangri-la Dialogue presents an ideal forum to discuss and sustain the safety and security of these vital arteries. By bringing together defence ministers and senior officials mainly from across the Asia-Pacific region—including China's Minister of National Defense Li Shangfu, US Secretary of Defense Lloyd J. Austin, and this year’s keynote speaker, Australia’s Prime Minister Anthony Albanese—the dialogue can foster constructive conversations and facilitate collaboration on strategies to safeguard the resilience of world trade.

In recognising the importance of these routes for global trade and understanding the challenges, attendees can engage in meaningful discussions to ensure their safety and security. These discussions may contribute to the stability of the South China Sea, protect the livelihoods of local communities, and safeguard the foundation of global economic growth

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