EXCERPT FROM: Asia's Cauldron by Robert D. Kaplan.

The South China Sea, which extends from the Strait of Taiwan to the Strait of Malacca, is nestled in the underbelly of China just as the Caribbean is nestled in the underbelly of America. Except that fully one-third of all the world's maritime traffic passes through its waters. As China's power increases, it bristles under the perceived encroachment of other nations' claims in this region, just as America did in the late 1800s in reacting to the presence of other countries in the Caribbean. But as Kaplan writes, "no one state will dominate the South China Sea, ... [which] is on the way to becoming the most contested body of water in the world":

"Here in Southeast Asia, with its nearly 600 million people, [is] where China's 1.3 billion people converge with the Indian Subcontinent's 1.5 billion people. And the geographical meeting place of all these states is maritime: the South China Sea.

"The South China Sea functions as the throat of the Western Pacific and Indian oceans -- the mass of connective economic tissue where global sea routes coalesce. Here is the heart of Eurasia's navigable rimland, punctuated by the Malacca, Sunda, Lombok, and Makassar straits. More than half of the world's annual merchant fleet tonnage passes through these choke points, and a third of all maritime traffic worldwide. The oil transported through the Malacca Strait from the Indian Ocean, en route to East Asia through the South China Sea, is triple the amount that passes through the Suez Canal and fifteen times the amount that transits the Panama Canal. Roughly two thirds of South Korea's energy supplies, nearly 60 percent of Japan's and Taiwan's energy supplies, and 80 percent of China's crude oil imports come through the South China Sea. Whereas in the Persian Gulf only energy is transported, in the South China Sea you have energy, finished goods, and unfinished goods.

"In addition to centrality of location, the South China Sea has proven oil reserves of seven billion barrels, and an estimated 900 trillion cubic feet of natural gas. If Chinese calculations are correct that the South China Sea will ultimately yield 130 billion barrels of oil (and there is some serious doubt about these estimates), then the South China Sea contains more oil than any area of the globe except Saudi Arabia. Some Chinese observers have called the South China Sea 'the second Persian Gulf.' If there really is so much oil in the South China Sea, then China will have partially alleviated its 'Malacca dilemma' -- its reliance on the narrow and vulnerable Strait of Malacca for so much of its energy needs coming from the Middle East. And the China National Offshore Oil Corporation has invested $20 billion in the belief that such amounts of oil really do exist in the South China Sea. China is desperate for new energy. Chinese oil reserves account for only 1.1 percent of the world total, while it consumes over 10 percent of world oil production and over 20 percent of all the energy consumed on the planet.
 

"It is not only location and energy reserves that promise to give the South China Sea critical geostrategic importance, it is the territorial disputes surrounding these waters, home to more than two hundred small islands, rocks, and coral reefs, only about three dozen of which are permanently above water. Yet these specks of land, buffeted by typhoons, are valuable mainly because of the oil and natural gas that might lie nearby in the intricate, folded layers of rock beneath the sea. Brunei claims a southern reef of the Spratly Islands. Malaysia claims three islands in the Spratlys. The Philippines claims eight islands in the Spratlys and significant portions of the South China Sea. Vietnam, Taiwan, and China each claims much of the South China Sea, as well as all of the Spratly and Paracel island groups. In the middle of 2010 there was quite a stir when China was said to have called the South China Sea a 'core interest.' It turns out that Chinese officials never quite said that: no matter. Chinese maps have been consistent. 

"Beijing claims to own what it calls its 'historic line': that is, the heart of the entire South China Sea in a grand loop -- the 'cow's tongue' as the loop is called --surrounding these island groups from China's Hainan Island south 1,200 miles to near Singapore and Malaysia. The result is that all of these littoral states are more or less arrayed against China, and dependent upon the United States for diplomatic and military backing. For example, Vietnam and Malaysia are seeking to divide all of the seabed and subsoil resources of the southern part of the South China Sea between mainland Southeast Asia and the Malaysian part of the island of Borneo: this has elicited a furious diplomatic response from China. These conflicting claims are likely to become more acute as energy consumption in developing Asian countries is expected to double by 2030, with China accounting for half of that growth."