WW3 In South China Sea: China Lures Foes With $10 Billion Loan

WW3 In South China Sea: China Lures Foes With $10 Billion Loan
F/A-18s and Su-30s fly above USS Enterprise. Official US Navy Page / Flickr CC BY 2.0

China, the world’s second-largest economy, has offered infrastructure loans to Southeast Asian countries, some of which are its foes in the South China Sea dispute.


The offer came after the U.S. gifted the Philippines with two warships and as the country announced regular patrols over the region with aircraft bombers. Could these announced loans ease the tension over the disputed islands? After all, the U.S., which vouched support for its Asian allies, was also in debt of China to as much as $1 trillion.

Newly elected Australian Prime Minister Malcolm Turnbull warned China that its unyielding behavior in South China Sea could ignite war. He made the warning in the sidelines of the East Asia Summit in Malaysia on Sunday, The Australian Financial Review reported. There had been fears of a looming third world war over the contested region. Russia was said to be rallying with China on this and the U.S. supporting its Asian allies.

But in a surprising turn of events, China is to offer Southeast Asian countries with a $10 billion loan to develop infrastructures. According to a report from Reuters, China’s Vice Foreign Minister Liu Zhenmin told press at the East Asia Summit in Kuala Lumpur that his country will also provide aide amounting to $560 million to underdeveloped states members of the ASEAN.

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ASEAN was established in 1967 by Indonesia, Malaysia, Philippines, Singapore and Thailand. Brunei Darussalam, Viet Nam, Lao PDR, Myanmar and Cambodia joined later.

In the same press conference, Liu said his country will continue to build military and civilian facilities in the South China Sea. He said China planned to expand and upgrade these facilities to better serve commercial ships, fishermen, to help distress vessels and provide more public services.

“As the islands and reefs are far from China’s mainland it is necessary to maintain and build necessary military facilities. This is necessitated by China’s national defense purpose and to protect those islands and reefs,” Liu was quoted as saying by Bloomberg. He, however, stressed that these activities should never be linked with efforts to militarize the islands, reefs and the entire South China Sea.

Liu upheld that China’s behavior over the South China Sea is of public service and the U.S. was testing it by sending warships through the area. Indeed, U.S. Navy warships will again patrol South China Sea, this time near Mischief reef in the Spratly Islands claimed by China and the Philippines. According to sources who had spoken with The Washington Free Beacon, the operation will involve two Navy warships that will patrol within 12 nautical miles of the reef. Just recently, President Barack Obama and Philippine President Benigno Aquino III strengthened their alliance, with the latter receiving two warships from U.S.

In March, the Treasury Department announced that China owned $1.261 trillion worth of U.S. government securities, Money Morning reported. China then became the largest holder of U.S. debt with the country having more than 20 percent of America’s total foreign debt.

  • Dan

    Why start another world war when all they want is to help fishermen is that’s so much to ask ?