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Suez Canal Exposes Risks of Global Supply Chains

Any upheaval in the Chinese economy due to the blockage of the Suez Canal by a massive container ship is likely to be minimal given most of its intermediate supply chains are located in the Asia-Pacific region, economists and analysts said.
Although there will be some impact on China, it will be mostly limited to sectors such as battery and rubber manufacturing, which depend on intermediary raw materials from Europe, they added.
However, the bottleneck in one of the world’s busiest trading waterways following the grounding of the ultra-large Ever Given has raised the alarm again in economies dependent on trade with China and Asia, underlining the need to diversify supply chains, especially after the mayhem caused by lockdowns during the pandemic.
“Many of [Asia’s] intermediate supply chains are located within the Asia-Pacific region, which should initially mute the impacts of supply and price. Much depends upon the length of the shutdown of the canal,” said Steve Cochrane, Moody’s chief economist for the Asia-Pacific region.
Source:https://www.scmp.com/economy/china-economy/article/3127506/suez-canal-blockage-china-see-minor-raw-material-disruptions

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Published 19/11/2020

Indonesia’s South China Sea Dilemma

27/09/2020

How Indonesia chooses to act next will set an important precedent in the region.

by Amelia Long

For the third time this year, the Indonesian navy has faced off against Chinese fishing vessels trawling within the 200-mile Exclusive Economic Zone surrounding the Natuna Islands. The latest incident occurred on 17 June when an Indonesian warship pursued and fired warning shots at the Chinese vessels, which were ultimately confiscated and their crews detained.

Indonesia and China continue to butt heads on official interpretations of the incident. Indonesian Foreign Minister Retno Marsudi used the aftermath of the spat to reiterate Indonesia’s position on the South China Sea issue: as Indonesia shares no overlapping territorial waters with China, it’ll remain a non-claimant state. China’s foreign ministry took an alternative view, stating that ‘China and Indonesia have overlapping claims for maritime rights and interests’ in the waters surrounding the Natuna. As Beijing expands upon its claim that those waters are a ‘traditional Chinese fishing ground’ and Indonesian lawmakers urge the government take a firmer stance on the disputed waters, it’s important that the Indonesian government actively canvasses its options.

Currently, Indonesia appears to stubbornly stick to a position of ‘hollow neutrality’. This is fundamentally a ‘see no China’ policy wherein it rejects the notion of provoking or confronting China over contested waters. Regardless of whether Indonesia continues down this path, it’s likely that the number of incursions will continue to rise within the boundaries of Indonesia’s EEZ—especially as the Permanent Court of Arbitration (PCA) prepares to hand down its ruling on the Philippines v. China case. In other words, China will continue to take advantage of Indonesia’s uncertain posture. China’s acknowledgement of overlapping claims indicates that perhaps Beijing doesn’t see the waters off the Natuna as part of Indonesia’s EEZ, which aggressively expands its previous claim that the area is a ‘traditional fishing ground.’ The now-disputed waters have the potential to increasingly become a hotspot where China can demonstrate its resolve.

Source: Originally taken from https://nationalinterest.org/blog/the-buzz/indonesias-south-china-sea-dilemma-16707