Analyze the strategic and economic importance of the South China Sea with respect to Indian trade. Explore how the ongoing territorial disputes in the region affect international shipping lanes and global supply chains. (10M, 150 words) [GS-2: International Relations]

Introduction

• The South China Sea, a critical part of the western Pacific Ocean, is bordered by China, Taiwan, the Philippines, Indonesia, Vietnam, Thailand, Cambodia, and Malaysia.
• This region is estimated to hold approximately 5.38 trillion cubic meters of natural gas and 11 billion barrels of oil reserves, according to the US Energy Information Administration.
• The South China Sea is a vital maritime route, with about one-third of global trade passing through its 3.5 million square kilometers annually, as reported by the United Nations Conference on Trade and Development (UNCTAD).
• Approximately 40% of the world’s petroleum products are transported via the South China Sea each year.

Body

Strategic and Economic Significance for Indian Trade

• The South China Sea has historically been a crucial sea-lane for communication and trade, with uninterrupted transit for millennia.
• India has had a long-standing trading presence in this region, from Kedah in Malaysia to Quanzhou in China, supported by substantial historical and archaeological evidence.
• Nearly $200 billion worth of Indian trade flows through the South China Sea, and many Indian citizens study, work, and invest in ASEAN countries, China, Japan, and the Republic of Korea.
• India’s economic prosperity is closely tied to the region’s peace and stability, with freedom of navigation and secure maritime routes being essential for continued growth.

Implications of Ongoing Territorial Disputes

• China’s extensive territorial claims in the South China Sea, which cover almost the entire area, have led to conflicts with neighboring countries, infringing on their exclusive economic zones.
• In 2016, an international arbitration court in The Hague ruled against China’s broad claims, but Beijing has disregarded this verdict, leading to further tensions.
• Recent aggressive actions by the Chinese military in the South China Sea, including skirmishes with Filipino vessels, have heightened concerns about potential military conflict.
• Vietnam has also submitted a claim to the United Nations for an expanded continental shelf, adding to the complexity of the territorial disputes.
• The Malacca Strait, located to the south between Malaysia, Indonesia, and Singapore, could pose a significant threat to trade if tensions escalate, potentially disrupting global supply chains.

Conclusion

• Escalating tensions between China and its neighbors could exacerbate the global shipping crisis, with maritime companies potentially avoiding the South China Sea, leading to delays, increased costs, and shortages of goods.
• Key Asian ports like Singapore, Malaysia, and Taiwan could experience reduced revenues as a result.
• Additionally, the Pacific Ocean, which holds vast reserves of rare-earth minerals essential for cleaner energy transitions, is largely controlled by China, further complicating the geopolitical dynamics in the region.