Originally produced on June 6, 2016 for Mauldin Economics, LLC
The Chinese have a strategic problem in the South and East China seas. China is obviously interested in what happens in these waters. There is much speculation as to why the level of interest is so high.
The answer is simple: China wants to keep foreign powers away from its coast and away from waters vital to its global trade routes.
China’s greatest threat in these waters is the United States. Given the size of the US Navy and the location of the islands off China’s coast, the Navy is capable of blocking China’s access to the ocean. This would deal a serious economic blow to China.
Countering this threat means building a navy that could challenge the US… a far from easy task. So, China’s actions in these seas are meant to intimidate regional countries away from American influence. The goal is to boost China’s ability to control shipping lanes. This calls for a show of strength.