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The rebellion in Hong Kong and its geopolitical effects

Giancarlo Elia Valori

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The rebellion in Hong Kong is more complex and politically relevant than we may think, both nationally and internationally.

In the elections held on last September in the former British colony, as many as eight openly pro-independence representatives were elected who, at the first meeting, shouted hate phrases against the People’s Republic of China and expressed clear rejection of its specific sovereignty.

The “students” and the other participants in the protests immediately attacked  police stations and then closed the main tunnel that connects the island of Hong Kong with the rest of the former British colony’s territory. Finally ,in Wanchai’s Golden Bauhinia Square – a magnet for tourists from other parts of China – they spray-painted palaces and a statue with provocative statements such as “Heaven will destroy the Communist Party” and “Liberate Hong Kong”.

The operation, organization, stability and continuity of the rebellion, as well as the control and cohesion of its ranks, the elimination of undercovers, the military quality of the “students’ operation”, the excellent publicity and recruitment ability make us think that this rebellion is so well organized that it certainly has points of reference, sponsors and supporters abroad.

Who? Certainly, the United States – with its foundations for the globalization of democracy – which thinks of exploiting Hong Kong to destabilize China, especially given the proximity of Shenzen, one of the largest developing areas of Chinese economy and technology that could easily be “infected” by the rebellion.

Certainly, China’s current dilemma about its next military reaction and its impact on the world public is already a serious damage to Chinese national and foreign policy.

The United States has every interest in causing at least China’s global defamation before and after the Hong Kong rebellion, precisely pending the clash over duties and tariffs for the import and export of Chinese goods.

There is also Taiwan that, thanks to the large echo of the Hong Kong rebellion, is trying to publicize its idea of independence from China, as well as of reaction against China’s latest adverse actions against the Nationalist Island.

The countries interested in the destabilization of the link between Hong Kong and China may also include Japan, which is interested in weakening the Chinese strategic projection eastwards, and finally even Britain which -fallen prey to the retro dream characterizing the current phase of Brexit – could think of recovering the old colony or even merely taking revenge against China.

It all began with a major demonstration in late April against the extradition bill, which facilitated the transfer from Hong Kong to mainland China of Chinese people found guilty according to local regulations, as well as of Chinese criminals who could be protected by Hong Kong’s autonomy.

The rebellion has already forced Carrie Lam, the current Chief Executive and President of Hong Kong’ Special Administrative Region, to drop the extradition bill. But now it is too late to stop the rebellion.

One of the protesters’ objectives is also to “raise awareness” among the many Chinese tourists of their demands and claims, which have been magnified by the current crisis of the local economy.

Also the choice of this type of propaganda makes us think of an influence by Westerners. Indeed, a not casual influence.

Certainly one of the rebellion goals is also the attempt to radicalize and destabilize the Chinese areas on the border with the former British colony, which is the reason why President Xi Jinping has created a “cordon sanitaire” for the news coming from Hong Kong.

The longer the rebellion lasts, the more the goal – rather unrealistic but rational, considering the current political equilibria – is precisely that of “infecting” the most modern and productive areas of Southern China.

Overseas and in Asia, there are those who dream of even “disintegrating China”, by stirring up the major minorities present in the People’s Republic of China, and by destabilizing the centres of greatest industrial concentration in the South, as well as by infecting the areas of most difficult communication with the political Centre and with Beijing.

Three concurrent and simultaneous projects for destabilizing China, which have already been underway for some time.

With or without the Hong Kong rebellion, which – in any case – is currently strategic for the splitting up of the People’s Republic of China.

Otherwise, those who oppose the growth of China as a great power may think about strengthening the Islamist insurgency in Xinjiang and in Tibet or triggering another insurgency by one of the 56 recognized minorities of the People’s Republic of China, namely the Miao, the Dong, the Yao or the Koreans.

This is what really lies behind the idea of the “Hong Kong Nation” that is spreading among the leaders of the current rebellion.

The independence issue, however, still accounts for 20-25% of voters in the old British colony – and all this has nothing to do with “nostalgia” for Great Britain.

Hong Kong is an area of great importance for China: since the British takeover of the island in 1977, Beijing has always privileged relations with the powerful financial and industrial elites of Hong Kong.

Exactly in the phase of the Four Modernizations, this enabled China to actually have one of the major financial hubs in the world.

Goodness knows how important this was for the further and subsequent growth of China.

But the former British promontory is very important also from the geopolitical viewpoint.

Indeed, it is the fifth most important port in the world.

For years China has already been implementing the “Great Bay” project that will unite Hong Kong with China, both in fact and in law.

Moreover, there is already the project of putting Hong Kong in communication with Macau and Zhihai, but the promontory is also already a member of the Asian Infrastructure Investment Bank and will hence play a remarkable role in the New Silk Road.

It should also be recalled that when control over Hong Kong returned to China in 1977, under Deng Xiaoping, the leader of the Four Modernizations (and of the repression of Tiananmen Square), the former British colony accounted for over a quarter of the GDP of the entire People’s Republic of China.

Hence the issue was not only strictly economic, but also strategic in nature.

For President Xi Jinping, however, the main issue is to avoid – both in Hong Kong and in China – what now appears to be an obvious “colour revolution”, similar to the Georgian and Ukrainian ones, and to the various Arab Springs that spread the jihad to a large part of the Maghreb region.

Currently the dilemma for China is radical and very hard to solve.

Should it come to terms and – as some Chinese leaders are envisaging –accept to meet some demands from the Hong Kong insurgents who, however, deeply hate China?

Or should it do the same as in Tiananmen Square? A likely, but still dangerous option – mainly for its international effects.

Chief Executive Carrie Lam will probably be held in power by China to avoid a new “election” by the Hong Kong Election Committee, a body of 12,000 members in a city of over 7 million people.

Moreover, 1.3 million of them live in deep poverty but, for the time being, the “rebellion” is entirely organized by the middle class – like the European protests of 1968, the best operation of destabilization in recent history that has many fathers.

Nevertheless, unlike the European protests of 1968, the Hong Kong rebellion still lacks official leaders. While, at the same time as the democratic and pro-Western “rebellion” is developing, the pro-China insurgency tries to invade the streets against the struggle of the “autonomists”.

We should not forget this part of the issue either.

The maximum pressure of the “rebels” will certainly last until October 1, the day on which the anniversary of the founding of the People’s Republic of China is celebrated.

In my opinion, this seems to be the key date beyond which a Chinese intervention could have the greatest political and economic impact.

After all, there are two real reasons underlying the autonomist and anti-Chinese “rebellion” in the city-State: the clear mistrust vis-à-vis China, on the one hand, and, on the other, the total distrust also vis-à-vis the current government in Hong Kong which is still – almost more than the Chinese power – the current objective of the civil war now underway.

China could still separate the two objectives of the rebels, thus sparking off a crisis in the local government and then reacting militarily against the rest of the “students”.

The rebels are aged 25, on average, and are equally distributed by gender.

Most of them come from the educated middle class, especially the part that already votes for the “pan-democratic” parties, those that have long been opposing the pro-Chinese government in Hong Kong.

The rebels even accuse the poor population of supporting China. According to them, the poor are not “true Hongkongers” – and this says a lot about the social nature of the rebellion.

The “movement” is also very decentralized. It publishes good magazines and it is even said that its cameras frighten the police.

None of the local universities, however, officially supports the “rebellion”.

There is not yet workers’ clear solidarity for the “rebellion” – not even by the many migrant workers.

For the current rebels in Hong Kong, the word “democracy” does not concern the creation of an electoral system with universal suffrage that, indeed, already exists – albeit to a limited extent – but it is a sort of universal “system”, without repression, restrictions and controls – and hence it will be difficult to face similar demands by simply extending political representation.

However, most of the citizens living in the city-peninsula still do not support the rebels – not even superficially.

With specific reference to the international support for the rebellion, certainly the United States views it favourably, but we should also mention the now known direct commitment of the NGO National Endowment for Democracy, linked to the CIA, while the Chinese press underlines that the bill that triggered the revolt was inevitable, otherwise the already judged and convicted Chinese criminals could have fled to Hong Kong, thus becoming untouchable.

Furthermore, seventy NGOs have already signed an open letter to stop the extradition bill, including Amnesty International, Human Rights Watch and Red Cross International.

Too many not to think badly. Moreover, the rebels’ slogans and messages seem to be produced with purely Western techniques and methods.

Many of them are already written in English, instead of Chinese, and Hong Kong has always been one of the main places of CIA’s action against China.

Moreover, the aforementioned NGO, namely National Endowment for Democracy, already operates mainly through the Hong Kong Journalists Association, the Civic Party, the Labour Party and the Democratic Party of Hong Kong.

There is also the cryptocurrency created by an obscure supporter of the rebellion, who calls himself “Dr. Dragon”, who has recently devised a “coin” to be distributed among the rebels to encourage and fund their actions.

As already said, Taiwan is certainly endeavoring to influence the rebels in Hong Kong.

There is also the Chinese Triads’ presence during the repression of the rebellion in the various cities of Hong Kong.

The Triads are essential to understand the economy of both Hong Kong and Macau.

Hong Kong is the traditional home of China’s major criminal organizations.

For example, the 14K, Wo Shin Wo and Sun Yee On Triads are essential in the entire world crime economy.

There are over 50 minor Triads in Hong Kong. Every economic activity in the former British colony is subject to bribery.

The major legal and illegal activities controlled by the Triads are gambling, prostitution, drug trafficking and dealing, as well as the counterfeiting of all kinds of products, ranging from drugs to toys.

Nevertheless, there is an economic sector in Hong Kong that is almost entirely in the Triads’ hands, namely the movie industry – mainly the genre related to martial arts and pornography.

Probably it is not by chance that the “rebels” often quote the old films of Bruce Lee, who was born in San Francisco but died in Hong Kong, and was a decisive figure in the martial arts movie sector.

Macau is the world capital of gambling. The city has five times the players of Las Vegas.

Moreover, as is well known, gambling is the main channel for money laundering.

While in China and Hong Kong gambling is forbidden – at least officially – the huge crowd of Chinese players goes to Macau for gambling. Also 47% of government officials and executives of Chinese state-owned enterprises go there for gambling and this allows to possibly blackmail a significant number of Chinese (and Hong Kong) bureaucrats.

However, there are also strong ties between the Triads and the Chinese government.

The activity of finding important civilian and military technologies is often “commissioned” to the Triads by the Department of the Chinese Intelligence Services, namely the Guoangbu.

The Chinese espionage relating to the World Trade Organization (WTO) is often carried out by the Sun Ye On Triad.

As part of the mutual assistance relations with the Chinese government, the Triads control and repress much of the petty crime in both China and Hong Kong.

Therefore, in all likelihood, there will also be the collaboration of some Triads in the future Chinese repression of the “rebellion” in Hong Kong.

Advisory Board Co-chair Honoris Causa Professor Giancarlo Elia Valori is an eminent Italian economist and businessman. He holds prestigious academic distinctions and national orders. Mr. Valori has lectured on international affairs and economics at the world’s leading universities such as Peking University, the Hebrew University of Jerusalem and the Yeshiva University in New York. He currently chairs “International World Group”, he is also the honorary president of Huawei Italy, economic adviser to the Chinese giant HNA Group. In 1992 he was appointed Officier de la Légion d’Honneur de la République Francaise, with this motivation: “A man who can see across borders to understand the world” and in 2002 he received the title “Honorable” of the Académie des Sciences de l’Institut de France. “

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East Asia

Implications of French President’s Visit to China on the International Arena

Mohamad Zreik

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French President Emmanuel Macron pursues a policy of opening up to China and solving problems that may arise peacefully and diplomatically. France and Germany are the main pillars of the European Union, and the French opening to China is a European recognition of the importance of China’s role internationally.

Last Monday, the French president paid a three-day official visit to China amidst the US-China trade war. The French president has previously promised to visit China once a year throughout his term. These official exchanges between China and France strengthen China’s international standing, and prove the theory that China is a peaceful country seeking cooperation and opening up to the world.

Fifty-five years after the establishment of diplomatic relations between China and France, a bilateral relationship based on respect and friendship despite some differences in regimes or strategic alliances. The Chinese model is mainly based on people-to-people communication and peaceful cooperation, and these are the main pillars of the Belt and Road Initiative launched by Chinese President Xi Jinping in 2013.

Despite Washington’s withdrawal from the Paris climate agreement in 2015, Beijing and Paris have kept their promises to contain global warming, a positive point in the bilateral relationship. The French president considered that China and France should lead the climate agreement. Cooperation between the two countries has emerged considerably in the industrial sector, such as the development of nuclear energy, aerospace, and the automotive industry. Academic cooperation between the two countries has also been boosted through student exchange programs and the high demand for Chinese language learning in France, which was previously rare.

Commenting on the importance of trade exchanges between China and the EU, the Chinese Ministry of Commerce showed that trade between China and the EU exceeded 322.5 billion US dollars in the first half of 2018, up 13 percent year on year. Chinese Ambassador to France Zhai Jun recently expressed that China and France are to expand cooperation in agriculture, energy, advanced manufacturing and artificial intelligence.

From the ancient city of Xi’an, the French president announced that an alliance between Beijing, Europe and Paris should be established for a better future for the world, and Macron stressed the need for a balanced relationship between China and Europe. The French president praised the Belt and Road Initiative and called for its activation in order to enhance the trade role of Asia and Europe.

France was the first Western country to recognize the People’s Republic of China. In a meeting with French ambassadors, the French president stressed that the West is in a moment of decline and China is progressing at a tremendous speed. During his visit to China, the French president took advantage of the trade war between the United States and China and worked to develop France-China trade relations, increase French trade partners to China, and promoting the French tourism, agriculture and services sectors.

France is seeking to strengthen Sino-European relations because of its great benefit to the European economy, but it is contrary to the Western orientation. China is also a beneficiary of good relations with France, because France has influence in Africa and many regions in the world and is a permanent member of the Security Council and it is a developed country at the military, technological and technical levels. China’s cooperation with a powerful country like France will bring many benefits and opportunities.

China’s great economic, technological and military progress indicates that China has become an important country in international relations, and it is in the interest of any country in the world to establish good relations with China. The best evidence is that France is seeking to establish good relations with China, as well as the European Union countries to make their relationship with China distinctive.

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Tension in Hong Kong

Giancarlo Elia Valori

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After about three months of riots, often particularly violent and destructive, on October 23, 2019 the Chief Executive of Hong Kong, Carrie Lam, aliasChen Yuet-Ngor, withdrew the bill on mandatory extradition to China, which had sparked protests in the former British colony.

 Never evaluate a mass protest on the basis of the reason triggering it, which can often be irrelevant.

 The extradition bill, announced in September, was withdrawn a few days after the resumption of works in Hong Kong’s Parliament.

With a view to partially repressing the insurgency, the now former Chief Executive of the city-state resorted to emergency legislation, by mainly using the colonial law of 1922, which prohibits the use of masks and disguises during public demonstrations.

 The protesters were and still are approximately one million, out of about eight million inhabitants.

 The subsequent riots, designed to last well beyond the bill withdrawal, strained the always tense relations between the former British colony and China, with the result of throwing into crisis also the Chinese governance of the city-State and, in particular, the traditional Chinese model of “One Nation, Two Systems”.

 If this model fails, the formula devised by Deng Xiaoping will not even apply to Taiwan, or possibly to the North Pacific islands, and it will anyway undermine the current Chinese idea of peaceful expansion and win-win collaboration between the Chinese motherland and all the bordering areas both in the Pacific and in Central Asia.

Since 1977 – when the Fragrant Harbour came under Chinese control – all riots in Hong Kong have been triggered by strong dissatisfaction with the Chinese motherland.

The deep economic and social dissatisfaction has always been targeted against China and never towards local power elites. In psychoanalysis, this phenomenon is called transference.

 In 2003 many thousands of people living in the former British colony had protested against a law that, in their opinion, would make it difficult to express opinions and feelings defined as “anti-Chinese” and the law was postponed indefinitely.

Further riots broke out in 2012, when a clearly pro-Chinese school program was proposed and once again the local authorities (upon direct instructions from the national government) avoided implementing that law.

In 2014, there were the sit-in street protests of the Occupy Central movement, the so-called “Umbrella Revolution”, which lasted three months to ask – this time unsuccessfully – for the Chief Executive of Hong Kong to be elected by universal suffrage.

Currently, however, the real reason underlying the protests in Hong Kong is not so much the request for implementing – in the former British colony – democratic mechanisms typical of the Western culture, but rather the tension resulting from great economic inequalities.

 Not to mention the broken social elevator, which is  probably the real trigger of the youth rebellion in the Fragrant Harbour.

 People, especially the skilled workers, cannot be ensured acceptable wages and salaries. This is the reason why many inhabitants of the old city-state migrate to Canada or Taiwan. Another blow to China.

Young graduates’ wages and salaries have dropped by at least 10% compared to 25 years ago. There is a very severe housing crisis, but anyway the choice to create a local oligarchy that tries to convince the other inhabitants is an old British idea.

 In Hong Kong an oligarchy of very few families dominates the local economic system, which is worth a GDP of 343.5 billion US dollars.

 The five most powerful families are still those led by Li Ka-shing, Kwong Siu-hing, Lee Shau-kee, Henry Cheng and Joseph Lau.

 These five families alone control 70% of the entire Hong Kong market, including real estate and telecommunications, as well as TV channels.

 The 21 leading families in Hong Kong control a wealth equal to 1,893 billion US dollars.

Obviously in China no family controls such a huge amount of wealth. In the People’s Republic of China the five major real estate operators put together control only 9% of the entire Chinese construction market.

China, however, has tried to gain support in Hong Kong,  especially among entrepreneurs, with the Greater Bay Area plan, i.e. the new megalopolis on the Pearl River Delta between Hong Kong, Guangdong and Macao.

This is, in fact, Hong Kong’s infrastructure aggregation to the  Autonomous Economic Zone of the Pearl River Delta, between Guangzou, Shenzhen, Zhuhai, Foshan, Zhongshan amd Jiangmen, which are the most dynamic economic areas in China.

Taxes are very low in Hong Kong, as in all business-friendly countries but, coincidentally, there is no inheritance tax.

 The administrative machinery is therefore very simple: Hong Kong’sgovernment does not gain sufficient revenue from taxation and hence has no funds to invest in schools, hospitals and infrastructure.

 A city like Hong Kong, with over seven million inhabitants, provides for a statutory minimum wage of 4.82 US dollars per hour. Almost all flats are illegal and, considering the cost of rents and properties, they are so small that they are about half of the “tiny apartments” in large U.S. cities, which are already very small.

 The average size of Hong Kong flats per inhabitant is 16 square metres, while in Shanghai the average size per inhabitant is 36 square metres.

 45% of Hong Kong’s inhabitants live in state-owned or subsidised apartments, while 90% of the Chinese people own at least their own houses.

 Hong Kong’s tax reserves are at least 147 billion US dollars, but the local political system is too fragmented – even from the viewpoint of the complex electoral system – to mediate between different interests and to really solve the main problems of the city-state, namely housing, health and education costs.

 Those who are ill must wait an average of 150 weeks before being examined, with 43 public hospitals that, however, employ  40% of the doctors available, since the private sector attracts many of the best professionals.

 The solution of employing doctors from abroad is not very practicable, considering the low attractiveness of Hong Kong’s wages and salaries and the poor quality of health facilities.

 One in six people living in Hong Kong suffers from mental disorders due to social, economic and health conditions.

 The graduates’ average wages and salaries in the former British colony have fallen by over 10% compared to a decade ago. Nowadays graduates are easily paid the best salaries and wages of workers without university qualifications.

As already said, there is no social elevator.

 The cost per square metre is much higher in Hong Kong than the average price in a central neighbourhood of  New York.

 As happens also in the West, the career prospects of young graduates in Hong Kong are very limited. They never have a house of their own and their prospects are much worse than those of their colleagues who lived in Hong Kong a few decades ago.

In Hong Kong the Gini Index, which is used as a gauge of economic inequality, is 5+, one of the highest and most unequal indexes in the world.

 This is the real political core of the issue: for those who protested in Hong Kong – as currently happens everywhere in the world – “democracy” in the Euro-American sense means above all greater social equality, many opportunities and efficient public services.

 This is obviously not true, but it is the model that took to the streets the crowds of the Arab Spring, the Euromaidan citizens in Ukraine and the “colourful” rebellions in Georgia.

 Paradoxically, just when Western democracies are turned into  States based on unearned income and the extent and quality of their Welfare diminish, they are mythicized as efficient and open.

In this case, Vilfredo Pareto would have spoken of “residues”, i.e. memories of a time that no longer exists, but that are still in action in the crowds’ deep psyche.

 In 1997, at the time of unification based on the “One Country, Two Systems” model, Hong Kong’s GDP accounted for 18% of  whole China’s GDP.

Currently, after China’s fast growth, the importance of the Fragrant Harbour is the same as the relevance of Guangdong or Shenzhen.

 The current protests, however, have also put Hong Kong’s business community in severe difficulty.

The majority of Hong Kong’s leading companies do most of their  business with China. It is not by chance that last August the Chinese authorities gathered 500 of the most important businessmen and political leaders in Shenzen to support the Hong Kong government and, possibly, sufficiently improve the social situation of the city-state, which, however, remains explosive.

 Hong Kong’s financial market has suffered the greatest damage.

The Chinese company Alibaba has postponed its listing on the local Stock Exchange until the uprising has finally abated, while Fitch has lowered Hong Kong’s rating.

Pending a systemic integration with the regulatory network of  mainland China.

 Another problem that the riots in the Flagrant Harbour may cause  is migration.

 Last year 24,300 highly-skilled young people left the country and the rate of  migration requests has risen by 15% per year.

Where do they go? To Canada, Australia, New Zealand and Taiwan.

 On the other hand, the number of Chinese people migrating to Hong Kong has decreased by 14,000 per year.

Furthermore, this November there will be the Hong Kong District Council elections and it is very likely that youth discontent will find a way to assert itself in the polls.

 A fragmented society under crisis creates many problems for those planning business cycles and Hong Kong is likely to see its growth rate decrease by at least 3%.

Where will capital go? Obviously in the Chinese area bordering on Hong Kong, with an expected investment growth of almost 6.5%, largely consisting of capital outflows from Hong Kong.

 The differences between Hong Kong and China, however, are much wider than those shown with violence during the recent long protests, which often followed the same tactics of the color revolutions organized by the US Services, according to the old model developed by the Einstein Institute.

 For China, Deng Xiaoping’s criterion “One Country, Two Systems” means that China takes over Hong Kong despite the differences in political and economic systems, which will eventually tend to overlap. Conversely, for Hong Kong leaders the “Country” is just lip service paid in view of maintaining the separation from China, both from a cultural as well as an economic and political viewpoint.

 China has so far controlled Hong Kong with the same logic with which it has supervised its “dangerous” territories, namely Tibet, Xinjiang and Manchuria.

 The current Chinese centralization stems from the analysis of the inglorious collapse of the almost federalist Soviet Union. In this regard, suffice to recall the ironic smiles that welcomed Gorbachev on his visit to China, just when the Tiananmen Square protests had reached their climax.

 It does not matter that the right to secession was established in Lenin’s Sacred Texts. The fact is that, for the Chinese leadership, the unity of the Country and the repression of every regionalist secession is fundamental to the permanence of the State – and of  the Party.

 China, however, still depends on the financial hub of Hong Kong, the only one completely open to the world capital flows.

According to 2018 data, the Hong Kong Stock Exchange capitalizes 29.9 trillion local dollars.

 Shenzhen and Shanghai cannot replace Hong Kong in this respect.

 Therefore, China could not intervene in Hong Kong because otherwise it would have destroyed on its own the way connecting China to international capital flows.

 Furthermore, the repression of the Hong Kong movements would have destroyed the model “One Country, Two Systems”, which is exactly the one that will be applied to Taiwan, at the right time.

 Nor should we forget that, pending the New Silk Road promoted by China, the Western Powers are conceiving political mechanisms for disrupting and possibly stopping the “Road”, by organizing rebellions and anti-Chinese parties and movements in the various countries where the passage of the Chinese One Belt One Road (OBOR) is planned.

Obviously China does not stand by and wait to see.

From this viewpoint, the Hong Kong uprising is a model that will soon be imitated and that China will oppose exactly with the same political tactics.

As is recommended in the Thirty-Six Stratagems, “Befriend a distant State and strikes a neighbouring one”.

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The final front in the South China Sea: Vietnam against China

Sisir Devkota

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A few years back, political tensions in the South China Sea was rife. China was seen as the main aggressor in trying to claim island areas for resource extraction. Now, the political climate in the rich region is changing at the expense of Vietnam’s interest. More so, in the legitimate interest of Vietnam. In the past few years, Chinese diplomacy has managed to take both Malaysia and the Philippines into its plans. Both the nations are on the verge of sanctioning new energy deals with China. On the other hand, Vietnam is resisting. In the midst of Chinese bullying, it is standing alone.

The South China Sea is making news again for a good reason. In what would best describe an economic proxy tool, foreign companies from the USA and Spain are investing on Vietnam’s share of resources, in the sea. China asserts itself with its self-designed nine-dash line, which separates its sphere of influence along the coastal borders, circling all three nations. Because of foreign interests in the region, it is not nations themselves, indulging into a confrontation. Exxon Mobil, which is the world’s largest energy enterprise, has entered into the picture. While Exxon’s initial plans were backed up by America’s political meddling; now, the multinational is facing a crisis that does not seem to escape from the China-Vietnam row.

Legitimately, the blue whale oil block, is a region inside the Vietnamese jurisdiction. As much as the oceanic geography is tricky to comprehend, China is closely monitoring Vietnam’s deal with Exxon, in order to extract natural gas reserves. Scientifically, the resources belong to Vietnam, but there could be possible twists in the favour of China. For instance, oceanic topographies have a history of breeding territorial tussle between coastal nations. Turkey and Greece are yet to settle their own set of similar crisis. The point of the matter is that Vietnam’s gas rich rocks might emanate inside the seabed leading to or from the Chinese territory. The Chinese government is not protesting the Exxon deal, but there is no prize for an obvious guess. They are saving the topographic argument for and if the need arises.

In fact, China is keeping peace under Exxon’s own credit problems. There are reports of the company facing capital crunches to fund similar projects in South America. A couple of years after it signed a deal with the Vietnamese government, the energy giant is looking to exit the troubled high seas. Exxon will also be looking to avoid the kind of embarrassment that PetroVietnam forced upon RepsolSA, a Spanish energy giant. While the Chinese started cruising their military vessels around the area, Vietnam succumbed to pressure and decided to end their extraction plans. Although the exact trade-offs cannot be accrued, the Spanish company incurred losses of more than $200 million after the exit. These events will be playing on the minds of Exxon hierarchy. A similar fate is possible in the face of Chinese intimidation. Exxon is also not sure if the Trump administration would come for a rescue; if things go horribly wrong.

Nevertheless, Vietnam is resisting. With more than $2.5 trillion at stake, China is succeeding in its pursuit to persuade both Malaysia and the Philippines for joint benefits. The Blue Whale project is important to Vietnam, as it would meet energy demands for the next twenty years. Amid its own financial problems and geopolitical standoff, Exxon will also be considering selling the project. The South China Sea is inviting another international standoff in the coming time. This time, the stakes are high. China is on the verge of controlling the waters, on its will.

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