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Explained by Graphics: Tension in the South China Sea

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Explained by Graphics: Tension in the South China Sea

Explained by Graphics: Tension in the South China Sea

Claims on the South China Sea, the recent ruling, and why China is ignoring it

The Chart of the Week is a weekly Visual Capitalist feature on Fridays.

Tension in the South China Sea reached a potential inflection point this week.

Days ago, an international tribunal ruled in favor of the Philippines, dismissing China’s sweeping territorial claims to the hotly contested waters in the South China Sea.

Since then, it has become clear that China plans to ignore the ruling, while Chinese Vice-Foreign Minister Liu Zhenmin has threatened to declare an air defense identification zone over the waters to help protect the country’s interests.

But how did we get to this point? How was this ruling determined, and what does it mean moving forwards?

Why the South China Sea matters

The South China Sea is home to 250 small islands, shoals, reefs, sandbars, and other tiny landmasses.

The South China Sea is the second most used sea lane in the world, and home to:

  • $5 trillion of annual trade
  • 11 billion barrels of oil
  • 266 trillion cubic ft of natural gas

Six countries claim parts of the South China Sea as their own: China, Taiwan, Philippines, Vietnam, Malaysia, and Brunei.

However, China has the boldest claim, insisting that over 80% of the sea is their territory based on historical maps.

Island or Rock?

The ruling in the Philippines vs. China hearing is based on the provisions of the United Nations Convention on the Law of the Sea (UNCLOS), which came into force in 1994. All countries disputing claims in the South China Sea are signatories.

UNCLOS defines three types of landmasses, and whether something is a “rock” or an “island” has huge implications for territorial claims.

  • Low-tide elevation: A landmass above water only at low tide.
  • Rock: A landmass permanently above water, but unable to sustain human habitation or economic life on its own.
  • Island: A landmass permanently above water that can sustain human habitation and economic life on its own.

Rocks get some territorial benefits, but islands get 200 nautical miles (370 km) of special economic rights around them in each direction.

  • Low-tide elevation: Not entitled to any separate maritime zone.
  • Rock: Entitled to territorial sea and contiguous zone. Each are up to 12 nautical miles (22 km) from base line.
  • Island: Entitled to territorial sea and contiguous zone, but also entitled to an exclusive economic zone of 200 nautical miles (370 km), and continental shelf rights.

The economic zone confers rights for fishing, drilling, energy production, and other economic activities.

The Ruling

The tribunal ruled that Scarborough Shoal, along with areas occupied by China in the Spratly Islands do not count as “islands”, and therefore do not justify 200 nautical mile (370 km) economic zones around them.

China has rejected the ruling calling it “ill-founded”. Taiwan, which has administered Taiping Island since 1956, also rejected the ruling.

China has argued that the tribunal has no legitimate jurisdiction on this issue since it concerns “sovereignty” – which the text of the UNCLOS explicitly prohibits tribunals from addressing.

What are the consequences?

If China continues to ignore the ruling, likely there will be a “hit” to China’s reputation, but that’s it.

Going back in history, there is a long list of situations where superpowers have ignored international rulings. It is also worth noting that China is a permanent member of the U.N. Security Council and has veto power.

Tension will continue to increase in the South China Sea, creating a situation that could boil over at any time.

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Chart of the Week

The Best and Worst Performing Wealth Markets in the Last 10 Years

This telling chart shows how national wealth markets have changed over the past decade, highlighting the biggest winners and losers.

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The Best and Worst Performing Wealth Markets

A lot can change in a decade.

Ten years ago, the collapse of Lehman Brothers sent the world’s financial markets into a tailspin, a catalyst for years of economic uncertainty.

At the same time, China’s robust GDP growth was reaching a fever pitch. The country was turning into a wealth creation machine, creating millions of newly-minted millionaires who would end up having a huge impact on wealth markets around the world.

The Ups and Downs of Wealth Markets (2008-2018)

Today’s graphic, using data from the Global Wealth Migration Review, looks at national wealth markets, and how they’ve changed since 2008.

Each wealth market is calculated from the sum of individual assets within the jurisdiction, accounting for the value of cash, property, equity, and business interests owned by people in the country. Just like other kinds of markets, wealth can grow or shrink over time.

Here are a few countries and regions that stand out in the report:

Developing Asian Economies
In terms of sheer wealth growth, nothing comes close to countries like China and India. The size of these markets, combined with rapid economic growth, have resulted in triple-digit gains over the last 10 years.

For the world’s two most populous countries, it’s a trend that is expected to continue into the next decade, despite the fact that many millionaire residents are migrating to different jurisdictions.

Mediterranean Malaise
European nations saw very little growth over the past decade, but the Mediterranean region was particularly hard-hit. In fact, eight of the 20 worst performing wealth markets over the last decade are located along the Mediterranean coast:

Rank (Out of 90)Country% Growth (2008-2018)
89🇬🇷 Greece-37%
87🇨🇾 Cyprus-21%
86🇮🇹 Italy-14%
85🇪🇸 Spain-13%
84🇹🇷 Turkey-11%
82🇪🇬 Egypt-10%
80🇫🇷 France-7%
76🇭🇷 Croatia-6%

European Bright Spots
There were some bright spots in Europe during this same time period. Malta, Ireland, and Monaco all achieved positive wealth growth at rates higher than 30% over the last 10 years.

Australia
While it’s expected to see rapidly-growing economies as prolific producers of wealth, it is much more surprising when mature markets perform so strongly. Singapore and New Zealand fall under that category, as does Australia, which was already a large, mature wealth market.

Australia recently surpassed both Canada and France to become the seventh largest wealth market in the world, and last year alone, over 12,000 millionaires migrated there.

Venezuela
The long-term economic slide of Venezuela has been well documented, and it comes as no surprise that the country saw extreme contraction of wealth over the last decade. Since war-torn countries are not included in the report, Venezuela ranked 90th, which is dead-last on a global basis.

Short Term, Long Term

In 2018, global wealth actually slumped by 5%, dropping from $215 trillion to $204 trillion.

All 90 countries tracked by the report experienced negative growth in wealth, as global stock and property markets dipped. Here’s a look at the wealth markets that were the hardest hit over the past year:

Wealth MarketWealth growth (2017 -2018)
🇻🇪 Venezuela-25%
🇹🇷 Turkey-23%
🇦🇷 Argentina-20%
🇵🇰 Pakistan-15%
🇦🇴 Angola-15%
🇺🇦 Ukraine-13%
🇫🇷 France-12%
🇷🇺 Russia-12%
🇮🇷 Iran-12%
🇶🇦 Qatar-12%

The future outlook is rosier. Global wealth is expected to rise by 43% over the next decade, reaching $291 trillion by 2028. If current trends play out as expected, Vietnam could likely top this list a decade from now with a staggering 200% growth rate.

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Chart of the Week

Mapping the World’s Busiest Air Routes

Flying can get you almost anywhere, but often people are journeying between two popular destinations. Here we map the busiest air routes globally.

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Mapping the World’s Busiest Air Routes

Modern air travel gives us almost unlimited possibilities for getting around.

Whether you are acting on your wanderlust to explore new and exotic destinations, hopping to a familiar island for a well-deserved vacation, or jetsetting to London in the comfort of business class, the modern airline industry can get you almost anywhere you need to go.

But while flying allows us to have unique experiences, it’s often the case that we are all coming and going from many of the same popular destinations. As a result, the world’s busiest air routes have hundreds of flights per day connecting important city pairs together.

Ranking City Pairs

Today’s chart pulls data from OAG, which has compiled a detailed report ranking the busiest domestic and international air routes from around the globe.

It’s worth noting that the data is over the period of March 2018 to February 2019, and it excludes carriers that operate fewer than 500 routes per year.

Let’s dive in to see which city pairs have the most air travel between them.

Domestic Routes

Domestic routes are far more popular than international routes globally. According to the report, there are 15 domestic routes that have more operating flights per year than any international route anywhere.

Here’s a look at the top 10 domestic routes:

RankCountryCity PairFlights (Annually)Carriers
#1🇰🇷Jeju ↔️ Seoul79,4607
#2🇦🇺Melbourne ↔️ Sydney54,1024
#3🇮🇳Mumbai ↔️ Delhi45,1886
#4🇧🇷São Paulo ↔️ Rio de Janeiro39,7473
#5🇯🇵Fukuoka ↔️ Toyko39,4064
#6🇻🇳Hanoi ↔️ Ho Chi Minh City39,2913
#7🇯🇵Hokkaido ↔️ Tokyo39,2714
#8🇮🇩Jakarta ↔️ Surabaya City37,7626
#9🇺🇸Los Angeles ↔️ San Francisco35,3655
#10🇸🇦Jeddah ↔️ Riyadh35,1495

The busiest domestic route might be a surprise, unless you are familiar with Asian geography.

With almost 80,000 annual flights, the 300-mile hop between Seoul and Jeju Island in South Korea is the busiest air route in the world by a large margin. Overall, there are seven carriers competing on it each day, with over 200 daily flights available between them.

What makes Jeju so popular?

Known as the “Hawaii of South Korea”, this volcanic island is an extremely popular vacation destination within the country, and it hosts roughly 15 million guests per year.

International Routes

On an international basis, the busiest route has almost 50,000 fewer flights per year than the Jeju-Seoul city pair listed above. Not surprisingly, this route – and many other top international routes – are also located in the Asia Pacific region.

RankCountriesCity PairFlights (Annually)Carriers
#1🇲🇾🇸🇬Kuala Lumpur ↔️ Singapore30,1878
#2🇭🇰🇹🇼Hong Kong ↔️ Taipei28,4475
#3🇮🇩🇸🇬Jakarta ↔️ Singapore27,0467
#4🇭🇰🇨🇳Hong Kong ↔️ Shanghai20,6785
#5🇮🇩🇲🇾Jakarta ↔️ Kuala Lumpur19,7418
#6🇰🇷🇯🇵Seoul ↔️ Osaka19,7118
#7🇺🇸🇨🇦New York (LGA) ↔️ Toronto17,0383
#8🇭🇰🇰🇷Hong Kong ↔️ Seoul15,7709
#9🇹🇭🇸🇬Bangkok ↔️ Singapore14,6985
#10🇦🇪🇰🇼Dubai ↔️ Kuwait14,5814

The short hop between Singapore and Kuala Lumpur takes only one hour, and it connects two major Southeast Asian commercial hubs. The route has 41 flights per day between eight airlines, making it one of the most competitive routes globally.

The busiest international route outside of the Asia Pacific is between Toronto and New York (LaGuardia) with 17,038 annual flights. Interestingly, it only has three competing carriers – the lowest of any of the top 10 routes.

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