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LRP's Original "China Rim" Analysis

Crisis on the China Rim: An Economic, Crude Oil, and Military Analysis

"There is a crisis rising on the China Rim, a crisis made of economic imbalances, energy insecurities, ancient hatreds, and unsettled scores. The catalyst for this crisis is success itself, the success of the People’s Republic of China in its de facto rejection of a failed experiment in communism and its rapid transformation into a thriving market economy. The inseparable companion of this success, though, is an insatiable hunger and thirst for precious resources... most important among these, crude oil."

2005.04.14 | 85 pages | download

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Post 35 - 2005.07.14
Japan Losing Patience with a Confrontational China in the East China Sea

In Laguna Research Partners' 2005.04.14 "Crisis on the China Rim..." (CCR) analysis,  we described competing claims by China and Japan to energy reserves lying under the East China Sea.  Here's our discussion from page 52 of CCR:

"...according to the United Nations Convention on the Law of the Sea, crafted in 1982, coastal nations can claim an Exclusive Economic Zone (EEZ) extending 370 kilometers from their shores   ...the east-to-west distance across the East China Sea between China and Japan, though, is approximately 650 kilometers  ...half of that cross-Sea distance is 325 kilometers, 45 kilometers less than the EEZ allowed by international law   ...accepting this geographic reality, Japan claims an East China Sea EEZ boundary that is midway between its own and China’s East China Sea shores   ...this produces an EEZ boundary that is roughly 325 kilometers from the East China Sea shores of both China and Japan  ...China, though, claims an East China Sea EEZ that is comprised of its 185-kilometer underwater continental shelf, plus the 370-kilometer Zone allowed by international law ...this produces a Chinese East China Sea EEZ extending a total of 555 kilometers from Chinese shores   ...this claim puts the eastern edge of China’s East China Sea EEZ claim just 93 kilometers off of the west coast of Japan’s Okinawa Prefecture"

Our China and the China Rim map provides a visual representation of these competing EEZ claims.

The confrontation between China and Japan over East China Sea resource rights has been simmering for years.

China and Japan have held talks regarding the possible joint development of resources under the East China Sea, but those talks have proved fruitless.

China began drilling for crude oil in the East China Sea in 2003 in an area that both countries agree is in Chinese waters.  Japan suspects, however, that Chinese platforms situated on the border of the Japanese claim are "slant drilling" and drawing natural gas from Japan's claimed EEZ.

To date, Japan has delayed drilling in the East China Sea while the two sides have tried to resolve their competing claims via negotiation.

Japan's patience in this regard, though, appears to have reached its limit.

The Japanese Ministry of Economy, Trade and Industry awarded to Teikoku Oil Co. today the right to explore and drill for energy reserves in the East China Sea within the Japanese EEZ claim, but near Chinese drilling platforms.

Teikoku asked for those rights in 2004.04 when the Japanese government first indicated that it would change its East China Sea test drilling policy.

Importantly, Teikoku is unlikely to commence drilling immediately.  The company must first consult with various Japanese government agencies regarding issues such as worker safety.

China's reaction to Japan's move towards acting on its "equidistant" EEZ border claim has been predictably confrontational.   Liu Jianchao, spokesman for China's Ministry of Foreign Affairs, is quoted by the BBC as stating, "If Japan persists in granting drilling rights to companies in disputed waters it will cause a serious infringement of China's sovereign right."

Posted by:
Kevin B. Skislock
Partner and CEO
Laguna Research Partners
[bio] [disclaimer]

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