The CCP Weaving an Economic Noose in the South China Sea

A special report between Tyrsight Ltd and ALCON Intelligence Ltd.

The Chinese Communist Party (CCP) is routinely disrupting rotational and resupply (RoRe) missions to the Armed Forces Philippines (AFP) in the South China Sea. Peoples Liberation Army/Navy (PLAN), Chinese Coast Guard (CCG), and People’s Armed Forces Maritime Militia (PAFMM) personnel have used disruptive and aggressive actions, including ramming and towing, and permanently injuring a Filipino Navy SEAL to disrupt routine resupply missions to the BRP Sierra Madre at Ayungin Shoal. These actions have resulted in damage to Philippine ships and injuries to personnel.

The Philippines has condemned China's actions and called for them to stop the disruptions. The United States has also condemned China's actions and expressed support for the Philippines. Despite the disruptions on 27 July 2024, the Philippines has successfully completed resupply missions to the BRP Sierra Madre, delivering essential supplies to the sailors and marines stationed there. The Philippines and China have reached agreements on resupply missions, but China's actions have violated these agreements. The Philippines has reiterated its commitment to upholding its sovereignty and maritime rights in the South China Sea. The CCP wants all RoRe missions completed under their terms, timelines, inspections, and other restrictive language that makes it difficult to come to a diplomatic conclusion. 

The CCP claims to have demonstrated its goodwill towards the Philippines by agreeing to jointly manage maritime disputes and hopes that the Philippines would abide by the agreements reached between the two countries. China's concern about the activity of the U.S. military in the area and their attempts to negotiate and bi-laterally manage disputes with the Philippines. This negotiation is not suitable for a long-term RoRe of Filipino sailors and marines on the Sierra Madre. In fact, this draws a huge CCP military presence in the SCS and disrupts commercial and routine maritime traffic.  

Analysis: The Chinese Communist Party is preventing the establishment of permanent features in the SCS. This will enable the CCP expansion of its interests, air defense identification zones (ADIZ), and economic exclusion zones (EEZ). This problem is not a new problem, the implications to global trade are showcased when the CCP forces interdiction of Philippines RoRe missions. The violent interaction will occur more frequently if the CCP controls those features and forces commercial trade to a screeching halt in the face of global pressure, campaigns, and sanctions. Alternative and costlier logistics to circumvent CCP pressure tactics will have to be heavily considered in the near term.

Tyrsight/ALCON Intelligence Ltd. Recommendations: Our customers can receive in depth and insight into the threat of their operations in the face of these uncertain events. Tyrsight Ltd. offers analysis to safeguard customers assets, decrease signature/footprint, and maneuver around these powder keg type activities. Increased support of Philippine’s markets, exports and labor force enhances economic ties with the partner nation while decreasing dependency on CCP markets. Companies with shipping interests in the SCS, or companies that rely on maritime supply lines, should develop contingency plans should trade be disrupted.

Outcomes: Escalation of this activity may threaten the trade/commerce of up $5.3 trillion worth of goods that transits through the South China Sea annually, with $1.2 trillion (Philippine GDP ~404.3 Billion USD) of that total accounting for trade with the United States. Tysight/ALCON Intelligence Ltd analysis concludes that the U.S. customer base will suffer with increased product price points, delayed import/export of goods and orders, and a decrease of availability of on demand products. Increased public support for Philippine sovereignty in the SCS coupled with the Filipino diaspora world wide will highlight the CCP’s outrageous claims and reach in the SCS which is an incredibly important global trade artery.