China rekindles row over disputed islands
China's declared air control zone over disputed islands has tested America's resolves.
The Chinese government has triggered a diplomatic crisis by including a chain of disputed islands that lie between it and Japan in a new air control zone'.
While the area known as the Senkaku Islands in Japan and the Diaoyu Islands in China is uninhabited, this is more than just a symbolic issue, since ownership of the islands also entails control of the adjoining territorial waters and their natural resources.
Beijing has vowed to shoot down any military aircraft that enters the new territory without its permission, while civilian planes will have to notify Chinese authorities before entering its claimed airspace.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Both Washington and Tokyo have condemned the moves. Japanese airlines are refusing to notify China, while the US has flown B-52 bombers over the disputed area.
What the commentators said
Beijing is trying to use them to "fulfil its naval ambitions to break beyond its coastal waters", but even if it thinks its claim is justified, "it should seek to take the dispute to international arbitration".
The fact that it doesn't suggests that "it may see the islands as a way of driving a wedge between the US and Japan". This is an "irresponsible game".
Economically, the impact of the dispute should be small, said Capital Economics. Only Japanese firms operating in China might see an impact if Chinese buyers shun them while tensions remain high.
But geopolitically, the consequences could be much greater, said Ambrose Evans-Pritchard in The Daily Telegraph. This is a "watershed moment for the world", since the dispute offers "a perfect opportunity for Beijing to test the resolve of the Obama Administration".
The question is whether that will backfire by forcing the US "to alter its officially neutral position on the sovereignty dispute", said Michael Mazza on CNN.com.
In particular, sending US military aircraft into the area could be seen as "an implicit rejection of Chinese claims to sovereignty over the islands".
Sign up to Money Morning
Our team, led by award winning editors, is dedicated to delivering you the top news, analysis, and guides to help you manage your money, grow your investments and build wealth.
-
Energy bills to rise by 1.2% in January 2025
Energy bills are set to rise 1.2% in the New Year when the latest energy price cap comes into play, Ofgem has confirmed
By Dan McEvoy Published
-
Should you invest in Trainline?
Ticket seller Trainline offers a useful service – and good prospects for investors
By Dr Matthew Partridge Published