"Some quick news from the Philippines (where I live) and China (where I work) to let you know about some tensions between the 2 countries regarding some territorial sovereignty issues. Each country has its own say on the issue (search on google for: in the Northern Philippines, Scarborough Shoal called Panatag shoal by the Philippines and Huangyan Island by the Chinese; and also in the Southern Philippines, Spratlys island); Chinese colleagues would say that the UN boundaries (200 km off-shore) are backed by the UN so it's biased because it is a US backed organization… Filipinos say that the islands are clearly near the Philippine main territory.

"The tension has escalated in the past few days. While diplomatic solutions are looked for, China is now playing with some economic restrictions such as travels to the Philippines (Chinese groups are postponing their trips) or imports on fruits (Philippine bananas are left and get spoiled at the China customs).

"The territorial issue (especially Spratlys) concern also some other south east Asian countries (Vietnam, Malaysia, etc.).

"All and all, this may affect some ASEAN stock markets."

David Fuller's view Many thanks for an informative email. Your personal and ongoing experience in both China and the Philippines brings a unique perspective to the Collective.

Fullermoney has long been concerned about competition for resources leading to tensions among countries. The Spratlys have been a potential flashpoint for many years because of their potential for offshore oil and gas. I last wrote about this on 30th July 2010 in response to an article from Bloomberg: "China Declares Sovereignty in Southern Sea".


I will not speculate as to why China is flexing its muscles at this time but no good can come of this and an international solution is required.