This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Cool Heads Quietly Dominate Heated South China Sea Dispute

Stocks in this article: CEO XOM ZTCOF

(Corrects story originally published May 12 to say China accused Vietnam of ramming its ships.)

TAIPEI (TheStreet) -- It looks like Southeast Asia is prepping for war.

On Thursday China accused Vietnam of ramming its ships after water cannons had forced them back in a flap over the bigger country's oil rig on the smaller one's continental shelf. China had demanded earlier in the week that the Philippines return 11 of its fishermen who were arrested on suspicion of poaching sea turtles in what Manila considers an exclusive economic zone.

The two Southeast Asian governments hardly accept what Beijing says about the latest upsets in a 40-year-old contest over rights to the strategic, resource-packed South China Sea. Both found backing from the Association of Southeast Asian Nations meeting Sunday and lean increasingly on the United States for support. The Philippines is also pressing for United Nations action against China, but Beijing says it won't go there.

No one, however, will go to war. Everyone needs everyone else. China wants Southeast Asia's markets and economic cooperation. Southeast Asia looks to China as an export destination. The United States backs Asia ex-China only to check Beijing's growing power but otherwise prizes its stable relations with the world's No. 2 economy.

Flaps last week over the ocean tract south of Hong Kong show China is standing up for its perceived rights to drill and fish. They prove that the smaller South China Sea claimants, at least two out of five, are sick of China's maritime expansion. That's all.

"For China, a two-pronged strategy is still on track, although the hard hand has gone up a little," says Lin Chong-pin, retired strategic studies professor in Taiwan, noting that Beijing also wants economic relations with neighbors to the south.

"The United States wants those neighbors to challenge Beijing, but no war, just to consume China's energy or time by encouraging Vietnam and other countries," he says.

That means China's state-owned oil giant CNOOC Ltd. (CEO) can keep drilling in the 3.5 million square-kilometer ocean without a serious fight. The Philippines can go ahead with awarding oil and natural gas exploration contracts, potentially to foreign bidders. Speaking of which, Exxon Mobil (XOM) started working a natural gas tract in the same ocean just over a year ago, a joint venture with Malaysia. The ocean is estimated to hold 7.5 billion barrels worth of oil.

1 of 2

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 18,053.71 +23.50 0.13%
S&P 500 2,088.77 +6.89 0.33%
NASDAQ 4,806.8590 +33.3870 0.70%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs