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7 July 2024

Why the South China Sea Matters

Wilson Beaver & Maria Victoria Almeida Vazquez

Clashes between the China Coast Guard and the Philippine Navy escalated in June. Philippine officials announced late last month that Chinese personnel attacked dinghies attempting to provision Philippine troops at the disputed Second Thomas Shoal in the South China Sea.

If China succeeded in dominating the South China Sea, the consequences would be immense: Beijing could potentially choke off trade and shipments to Japan, control access to technologies crucial to U.S. economic activities (especially microchips), and project power deep into the Pacific.

The economic significance of the South China Sea cannot be overstated. As one of the busiest maritime routes in the world, it serves as a vital artery for international trade, facilitating the flow of 64 percent of total goods discharged worldwide in 2022. Any disruption to the free passage of ships through these waters would have far-reaching consequences for the global economy, affecting not only the countries directly involved in the dispute but also the broader international community.

Any attempt by China to restrict access or assert control over the South China Sea would directly impact U.S. economic interests, potentially leading to higher shipping costs, supply chain disruptions, and increased market volatility. South China Sea trade accounts for 5.72 percent of all trade in goods for the United States. Safeguarding freedom of navigation in the South China Sea is essential to protecting American prosperity and maintaining its leadership role in the global economy.

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