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Editorial: Much wind over gas in the East China Sea

Published by The Straits Times, Singapore on 2004-11-08

THE dispute between China and Japan over exploring for natural gas in the East China Sea's Chunxiao zone has gone beyond the unseemly spectacle of Asia's two most powerful economies exchanging the diplomatic equivalent of barnyard epithets. Not only does the dispute revive unpleasant historical memories of bad blood between the two countries, which are the world's biggest consumers of oil and gas, after the United States. It raises a far larger question of sustainable economic growth in the region in which both countries are competing for political and economic influence. At its most benign, the squabble could lead to an indefinite postponement of both countries' drilling plans. There's an estimated 300 billion cubic meters of natural gas below the East China Sea, according to a report last week by Mr Mike Moran of Standard Chartered Bank in Hong Kong; the Chinese can be expected to extract some 2.5 billion cubic meters of gas annually to feed their dynamic, if overheated, economic engine that's showing yearly growth rates touching 10 percent. Not so benign is the possibility that, if the spat isn't resolved soon through resumption of talks that failed last week, Japan could withhold relaying some of its excess electricity capacity to Chinese industries out of sheer pique. Equally worrisome is the possibility that the ongoing dispute could adversely affect Japan's plans to lessen its virtually 100 percent reliance on crude oil from the volatile Middle East by developing alternative sources of energy.

China now says that the offshore gas field should be developed jointly with Japan, but the latter insists that the issue isn't simply one of economic cooperation but of the far trickier one of demarcation of marine borders. Tokyo contends that, although the Chunxiao field lies of the Chinese side of the Japanese-proposed median line of the two countries' exclusive economic zones, any drilling for natural gas is certain to hit veins that extend into Japan's underwater territory. This, of course, raises yet another issue that transforms the China-Japan bilateral spat into a truly international one. Under the UN Convention on the Law of the Sea, countries are entitled to claim 200 nautical miles from their shores as their exclusive economic zones. But the area between Japan and China - marked as it is by an assortment of tiny islands, some no larger than hummocks - is not enough to give the two countries such zones. The two countries have been unable to agree on the demarcation line, with Japan saying that the median line that meets halfway between their shores, and China saying that the border should be where the continental shelf ends should separate the zones. China's proposal gives it a larger zone, extending almost as far as Okinawa, Japan's southernmost island prefecture. Other countries around the world have similar demarcation disputes, so how China and Japan resolve this economics-as-territory question may well influence the larger global community. In the meantime, gas exploration companies are salivating over the prospects of billions of dollars in drilling revenues.

Pranay Gupte,
Senior Writer and Global-Affairs Columnist

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