China is protesting the voyage of the destroyer USS Lassen near Chinese-claimed territory. It may retaliate against American business.
China has little effective means to register its displeasure over U.S. Navy incursions into areas of the South China Sea that it claims other than to increase interference with American business in China. This would be in the hope that disgruntled U.S. businesses might push to moderate their government’s provocations. American businesses operating in China may have to brace for a rocky road ahead.
Today China is loudly protesting the voyage by the destroyer USS Lassen near the Chinese-claimed Mischief Reef, part of the Spratly Islands in the South China Sea.
Although the U.S. is officially treating this incident as a routine demonstration of the freedom of navigation in international waters, China sees it as deliberately provocative. It is likely that the U.S. is taking this step now (for the first time since 2012) in retaliation for the alleged massive Chinese hacking of private data on millions of U.S. government employees. Apparently, recent talks in Washington between President Barack Obama and Chinese President Xi Jinping did not resolve the dispute.
President Obama has little to lose in disputing Chinese claims at this time. A tough stance against China might neutralize a potential Republican campaign point against Democratic Party leadership during the 2016 presidential campaign. Obama’s action also seems to be popular among U.S. allies in the region, several of which made statements of support. U.S. officials have stated that this sort of action is likely to be repeated.
It is difficult to imagine that China could threaten armed retaliation against a U.S. intrusion. China might threaten to reduce economic cooperation with the U.S., but in this area too there is little China could do that would not injure Chinese interests as much as American business.
Originally published at The Street on October 28, 2016 – South China Sea Dispute Could Hurt American Business in China