China
Drawing lines in the South China Sea: what Beijing’s new claims over a disputed coral reef mean
China recently declared new baselines around Scarborough Reef, asserting sovereignty amid ongoing disputes with the Philippines, raising tensions and potential risk of conflict in the South China Sea.
Earlier this month, China declared new “baselines” around Scarborough Reef, a large coral atoll topped by a handful of rocks barely above sea level in the South China Sea.
By doing so, China reaffirmed its sovereignty claim over what has become a global flashpoint in the disputed waters.
This was a pre-calculated response to the Philippines’ enactment of new maritime laws two days earlier that aimed to safeguard its own claims over the reef and other contested parts of the sea.
This legal tit-for-tat is a continuation of the ongoing sovereignty and maritime dispute between China and the Philippines (and others) in a vital ocean area through which one-third of global trade travels.
The Philippines rejected China’s declaration as a violation of its “long-established sovereignty over the shoal”. Defence Secretary Gilberto Teodoro said:
What we see is an increasing demand by Beijing for us to concede our sovereign rights in the area.
As the tensions continue to worsen over these claims, there is an ever-increasing risk of an at-sea conflict between the two countries.
What is the Scarborough Reef?
Scarborough Reef is called Huangyan Dao in Chinese and Bajo de Masinloc by the Philippines. It is located in the northeast of the South China Sea, about 116 nautical miles (215km) west of the Philippine island of Luzon and 448 nautical miles (830km) south of the Chinese mainland.
Disputed claims in the South China Sea.
Author provided
At high tide it is reduced to a few tiny islets, the tallest of which is just 3 metres above the water. However, at low tide, it is the largest coral atoll in the South China Sea.
China asserts sovereignty over all of the waters, islands, rocks and other features in the South China Sea, as well as unspecified “historic rights” within its claimed nine-dash line. This includes Scarborough Reef.
In recent years, the reef has been the scene of repeated clashes between China and the Philippines. Since 2012, China has blocked Filipino fishing vessels from accessing the valuable lagoon here. This prompted the Philippines to take China to international arbitration under the United Nations Convention on the Law of the Sea (UNCLOS) in 2013.
Three years later, an arbitration tribunal ruled that China has no historic rights to maritime areas where this would conflict with UNCLOS. The tribunal also concluded China had “unlawfully prevented Filipino fishermen from engaging in traditional fishing at Scarborough Shoal.”
China refused to participate in the arbitration case and has strongly rejected its ruling as being “null and void” and having “no binding force”.
What did China do this month?
China declared the exact location of the base points of its territorial claim around Scarborough Reef with geographical coordinates (longitude and latitude), joined up by straight lines.
China’s new baselines claims at the Scarborough Reef.
Author provided
The declaration of so-called “baselines” is standard practice for countries that want to claim maritime zones along their coasts. Baselines provide the starting point for measuring these zones.
A country’s “territorial sea” is measured from this baseline outward to as far as 12 nautical miles (22km). Under the UNCLOS treaty, a country then has full sovereignty rights over this zone, covering the seabed, water, airspace and any resources located there.
Countries want their baselines to be as far out to sea as possible so they can maximise the ocean areas over which they can reap economic benefits and enforce their own laws.
China is no exception. Along with other countries (especially in Asia), it draws the most generous baselines of all – straight baselines. These can connect distant headlands or other coastal outcrops with a simple straight line, or even enclose nearshore islands.
China is especially fond of straight baselines. In 1996, it drew them along most of its mainland coast and around the Paracel Islands, a disputed archipelago in the South China Sea. China defined additional straight baselines this March in the Gulf of Tonkin up to its land border with Vietnam.
China says these actions comply with UNCLOS. However, its use of straight baselines around Scarborough Reef conflicts with international law. This is because UNCLOS provides a specific rule for baselines around reefs, which China did not follow.
Based on our review of satellite imagery, however, China has only advanced the outer limit of its territorial sea by a few hundred metres in two directions. This is because its straight baselines largely hug the edge of the reef.
These new baselines around Scarborough Reef are therefore fairly conservative and enclose a dramatically smaller area than the US had feared.
China’s declaration signals that it may have abandoned its much larger “offshore archipelago” claim to what it calls the Zhongsha Islands.
China has long asserted that Scarborough Reef is part of this larger island group, which includes the Macclesfield Bank, a totally underwater feature 180 nautical miles (333 km) to the west. This led to concern that Beijing might draw a baseline around this entire island group, claiming all the waters within exclusively for its use.
The South China Sea arbitration tribunal ruled that international law prohibits such claims. There will be a collective sigh of relief among many countries that China decided to make a much smaller claim over Scarborough Reef.
Significance and future steps?
However, China’s clarification of its baselines around the reef signals it may be more assertive in its law enforcement here.
The China Coast Guard has said it will step up patrols in the South China Sea to “firmly uphold order, protect the local ecosystem and biological resources and safeguard national territorial sovereignty and maritime rights”.
Given the long history of clashes related to fishing access around Scarborough Reef, this sets the scene for more confrontation.
And what about the biggest prize of all in the South China Sea – the Spratly Islands?
We can now expect China will continue its long straight baselines march to this island group to the south. The Spratlys are an archipelago of more than 150 small islands, reefs and atolls spread out over around 240,000 square kilometres of lucrative fishing grounds. They are claimed by China, as well as the Philippines and several other countries.
These countries can be expected to protest any attempted encirclement of the Spratly Islands by new Chinese baselines.
Editor’s note: one of the original authors of this article has been removed at their request.
This article is republished from The Conversation under a Creative Commons license. Read the original article.
Business
Yakult Unveils Restructuring Plans for Its China Operations | ESM Magazine
Yakult reorganized its China operations, dissolving the Shanghai subsidiary while opening a new branch. Manufacturing now consolidates at Wuxi and Tianjin plants, aiming for enhanced efficiency and growth.
Yakult’s Business Reorganisation in China
Yakult has announced a significant reorganisation of its operations in China, aiming to enhance competitiveness and sustainability. The company has dissolved its wholly-owned subsidiary, Shanghai Yakult, which previously managed manufacturing and sales functions. This strategic move is expected to streamline its operations in the Chinese market.
New Branch and Manufacturing Adjustments
Yakult’s head office in China has established a new branch in Shanghai, transferring the sales division from Shanghai Yakult to this location. As of December 6, the branch has started selling various products, including Yakult and its light variants. Meanwhile, the manufacturing plant in Shanghai has ceased operations, with production capacity now absorbed by the Wuxi and Tianjin plants to ensure efficient supply.
Commitment to Growth
The company remains steadfast in its dedication to the Chinese market and is optimistic about future growth. Yakult reassured stakeholders that the reorganisation will have minimal financial impact and aims to enhance efficiency. Founded in 2005 in Shanghai, Yakult China currently employs approximately 2,216 individuals, reinforcing its commitment to customer health and expanding operations.
Source : Yakult Announces Reorganisation Of China Business | ESM Magazine
China
Italy’s Strategic Shift Towards China After Exiting the Belt and Road Initiative
Italy’s exit from the Belt and Road Initiative, driven by limited benefits, may reshape relations with China, influenced more by broader geopolitical dynamics than bilateral agreements, despite recent diplomatic visits.
Italy’s Withdrawal from the BRI
Italy’s initial participation in China’s Belt and Road Initiative (BRI) was unexpected, but its withdrawal in 2023 has been more anticipated. The limited economic gains and the primarily symbolic nature of the agreement led to disillusionment. Despite the Italian Prime Minister Giorgia Meloni’s visit to China in July 2024 and a new three-year action plan, future relations between Italy and China will likely hinge on broader geopolitical dynamics involving the European Union, China, and the United States, rather than isolated agreements.
Diplomatic Signals of a Reset
Meloni’s trip, along with President Sergio Mattarella’s expected visit, may indicate a shift in Chinese-Italian relations after withdrawing from the BRI. However, Meloni’s visit does not set Italy apart, as many European leaders have engaged with Beijing post-COVID-19. Her delayed engagement suggests that Italy is now focused on developing a comprehensive strategy for its relations with China beyond the scope of the BRI.
The Ineffectiveness of the Initial Agreement
Italy joined the BRI in 2019, becoming the first G7 nation to do so, yet the benefits were ambiguous. The original memorandum failed to produce actionable goals, marked mostly by general commitments. This ineffectiveness became evident when, following the signing, China solidified substantial economic agreements in France, overshadowing any potential advantages for Italy. Consequently, Italy faced backlash from both the EU and the U.S. for diverging from a unified Western approach concerning the BRI.
Source : Italy’s soft reset with China after dropping the Belt and Road
China
Financial Analysis and Cost Audits: Uncovering Cost Inefficiencies
Financial analysis and cost audits are vital for identifying unnecessary expenses and supporting cost optimization in companies. By comparing financial data over time, firms can uncover trends, reduce rising costs, and assess the effectiveness of implemented cost-saving measures.
Financial analysis and cost audits are indispensable tools in cost management, essential for evaluating unnecessary expenditures and ensuring the sustainability of cost optimization results.
In this article, we introduce common strategies for financial analysis and cost audits amid a company’s cost reduction efforts.
By comparing financial data over different periods, financial analysis can reveal trends and reasons for cost changes, identifying potential cost-saving opportunities. For example, if an expense is consistently rising without corresponding revenue growth, management might consider reducing that expense or finding more economical alternatives. Additionally, businesses can leverage financial analysis to renegotiate contracts with parties responsible for recurring, substantial fixed costs. In this context, financial analysis often serves as the initial step in cost optimization efforts.
Furthermore, after implementing cost optimization measures, financial analysis evaluates their effectiveness by comparing data before and after the changes, assessing the extent of cost savings and their impact on profitability.
In accounting, costs are divided into direct and indirect costs. Direct costs include the cost of principal activities, other activities, and taxes and surcharges on operations. Indirect costs encompass selling and distribution expenses, general and administrative expenses, financial expenses, and impairment of assets. For cost optimization purposes, financial analysis should focus on expenses that exceed industry averages or historical data. Initially, accounting analysis is necessary to identify the top costs for the company or industry and those that have significantly increased.
To be more specific, the below issues need special attention:
This article was first published by China Briefing , which is produced by Dezan Shira & Associates. The firm assists foreign investors throughout Asia from offices across the world, including in in China, Hong Kong, Vietnam, Singapore, and India . Readers may write to info@dezshira.com for more support. |
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