South China Sea War: US Owes China $1.2 Trillion, A Reason To Go To War?

South China Sea War: US Owes China $1.2 Trillion, A Reason To Go To War?
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In today’s world, countries are getting linked closer and closer to one another due to its economies. In a global stage, there is no such thing as being self-sufficient. Everyone needs something from someone else. Everyone owes something from someone else. This is especially true in the case of the U.S. and China.


Even with continued tensions, provocations and incidents along the disputed territories of the South China Sea, the U.S. and China still continue to do business together. Currently, the U.S. debt to China stands at $1.238 trillion a relatively small sum, considering that the country’s debt is more than $19 trillion.

According to a report from About Money, China has become the largest foreign holder as of January this year. China is also more than happy to keep the United State dollar more highly valued than its own Yuan. This way, China exports would be cheaper, helping its own economy prosper. After all, a prosperous economy means a bigger budget. A bigger budget means the ability to fund a bigger war chest.

Would The U.S. Go To War To Further Economic Interests?

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Conflict is inevitable, but how about war? Would China or the U.S. ever risk war due to tensions rising along the South China Sea? Would the U.S. go to war in order to help its economy and largely, it’s national debt to China?

According to a paper published by the University of Iowa entitled “An Economic Theory of War,” a nation may actually choose to go to war in order to further its economic interests. The paper done by Nuna Monteiro and Alexandre Debs asserts that war can happen as a result of a “stronger state’s inability to commit to grant weaker states generous terms of access to resources vital to their economic growth.” Moreover, war is also seen as a way to free up any “economic hold-up problems.”

The Importance Of South China Sea As A Trade Route

At the same time, the paper also states that a state “highly reliant on trade may worry that being “cut off” by its partner(s) would result in economic decline, leading it to strike preventively.” According to the Council on Foreign Relations, there is as much as $1.2 trillion in U.S. trade that passes through the South China Sea every year.

Should the U.S. lose access to this route, U.S. companies may be subjected to longer transit routes, possibly higher transit costs and an increase in insurance rates. If so, would it push China to war to protect its interest along these waters?

The Case For Peace Despite South China Sea Tensions

If you ask Monteiro and Debs, the answer is not likely. For one thing, they pointed out that both countries remain highly nuclear able, making any cost of war between the two significantly high.

Nevertheless, another possibility is that Beijing may not be willing to go to war considering it is dependent on various international markets to continue its path to economic growth.

Moreover, “the high degree of institutionalization of the international economy” means that the U.S. would be reluctant to bring out its guns when it comes to China. It must also be not forgotten that China is a member of the World Trade Organization.

These arguments alone seem to apply that no matter how many ‘incidents’ occur between China and the U.S. along the South China Sea, peace will prosper. Somehow.

Also read: South China Sea Dispute: Island ‘Belongs To China’

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