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 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.
War and Peace: How Violence is Disrupting the Global Economy
This graphic estimates the direct and indirect costs associated with violence, and explores how they are negatively impacting the global economy.
War and Peace: How Violence is Disrupting the Global Economy
Although you may not see it, millions of lives are disrupted by violence everyday.
War, homicide, terrorism, suicide, and sexual assault can be found across the world in various degrees. While certain types of violence can incur costs that result in personal traumas, violence can also create significant economic disruptions.
In today’s Chart of the Week, we visualize data estimates from the Global Peace Index 2019 on the global cost of violence, and its geographical spread.
How is Violence Linked to the Economy?
The Global Peace Index calculates the total cost of violence using purchasing power parity (PPP) by considering three factors:
- Direct costs: Immediate consequences to the victims, perpetrators and the government
- Indirect costs: Delayed economic losses following the violent event, including the after-effects of trauma experienced by the victim
- Multiplier effect: Calculates the additional economic activity that would have accrued if the direct costs of violence had been avoided.
Between 2012-2017, the cost of violence increased by 11% to $14.6 trillion—mainly due to rising violence in Syria, Libya, Yemen, and other parts of the Middle East and North Africa.
In 2018, the total cost of violence decreased for the first time in six years to $14.1 trillion. That’s the equivalent of 11.2% of global GDP (PPP), or $1,853 for every person.
In this one year, the $475 billion saved from decreased violence costs was largely due to lower levels of armed conflict in Syria, Ukraine, and Colombia.
The Top 10 Worst Affected Countries
It comes as no surprise that countries affected by conflict incur the greatest costs due to a higher than average death toll, and sizable military expenditures.
Here are the countries with the highest cost of violence according to the report:
|Rank||Country||Cost of violence (% of GDP)|
|#3||🇨🇫 Central African Republic||42%|
|#4||🇰🇵 North Korea||34%|
|#10||🇸🇻 El Salvador||22%|
Since 2017, Venezuela has climbed the ranking and now sits in the top 10, due to continuing political repression and a spiraling economy as a result of hyperinflation.
The Global Composition of Violence
Government spending on military comprises 40% of the global total, or $5.7 trillion in constant purchasing power parity (PPP).
|Type of economic impact||Share of total|
|Internal security expenditure||31.7%|
|Private security expenditure||5.8%|
Naturally, the types of violence costs vary by region, and the most noticeable difference is in military expenditure. It represents 59% of Middle East and North Africa’s violence costs—but only 8% for Central America and the Caribbean.
Interestingly, the Middle East and North Africa boast the lowest levels of violent crime, homicide, and suicide, representing only 4% of the total, compared to South America’s 45%.
Keeping the Peace
Despite today’s chart painting a picture of the world as a dangerous place, it is worth noting that there are two sides to this story.
Of the 163 countries ranked in the index, 86 countries improved their peace score in the last year, with Iceland retaining its number one position for over a decade. In fact, the country has not had any gun murders since the Global Peace Index began in 2007.
Is the recent drop in costs of violence a sign that we are moving towards a more peaceful planet, or just a blip on the radar?
Ranked: The 20 Easiest Countries for Doing Business
Entrepreneurship is challenging at the best of times. Here are the countries where at least starting a new business is easy to do.
Ranked: The 20 Easiest Countries for Doing Business
Contrary to popular belief, the hardest part about running a business may not be finding customers, it’s getting one started.
Depending on the public policies and application processes of your country, you might struggle or succeed in opening and operating a business.
If you live in New Zealand, for example, you can get a new enterprise up and running in half a day. If you live in Luxembourg or Argentina, however, it’s a different story─with the process sometimes taking over a year.
Today’s chart uses data from the World Bank’s annual Doing Business 2020 report, which delves into the ease of doing business in countries around the world.
Measuring the Ease of Doing Business
Now in its 17th year, the Doing Business (DB) report measures how easy it is for someone to start and run a company in an economy, using 12 key factors throughout a business lifecycle:
- Starting a business
- Employing workers
- Dealing with construction permits
- Getting electricity
- Registering property
- Getting credit
- Protecting minority investors
- Paying taxes
- Trading across borders
- Contracting with the government
- Enforcing contracts
- Resolving insolvency
Of the 190 countries reviewed last year, only 115 made it easier for entrepreneurs to do business.
Note to readers: this year’s DB score did not factor in Employing Workers or Contracting with the Government when ranking economies.
Top 20 Easiest Countries to Run a Business
|#1||🇳🇿 New Zealand||86.8|
|#3||🇭🇰 Hong Kong||85.3|
|#5||🇰🇷 South Korea||84|
|#6||🇺🇸 United States||84|
|#8||🇬🇧 United Kingdom||83.5|
|#16||🇦🇪 United Arab Emirates||80.9|
|#17||🇲🇰 North Macedonia||80.7|
In the top spot for the fourth year in a row, New Zealand only requires half a day to start a business. Singapore also stands out for having the shortest timeframe when it comes to paying business taxes and enforcing business contracts.
Only two African nations─Rwanda and Mauritius─are listed in the top 50 countries, with Mauritius being the only one to crack the top 20 list.
Latin American economies are noticeably missing from the rankings, as many countries in this region are fraught with bureaucracy and prolonged processes.
Most Improved Scores
Several developed and developing economies made significant strides in 2019 to implement reforms that opened doors for new business owners.
The Doing Business 2020 report shows that the cost of starting a business has fallen over time, particularly in developing economies.
Top 10 Most Improved Economies, 2018-2019
Saudi Arabia made the greatest improvement overall, adding 7.7 points to its score.
Bahrain also made improvements over the most number of factors (9). While Jordan showed improvement in the fewest factors (3), it showed the second highest jump in DB Score.
Gains Among Low-Income Countries
The DB 2020 study also shows that developing economies are making progress: it’s now cheaper than ever before to run a business in developing economies.
However, a significant disparity still remains when we consider the difference in business costs between high-income and low-income economies.
An entrepreneur starting a company in a low-income economy will spend about 50% of per capita income (PCI) to launch a venture, whereas an entrepreneur in a high-income economy spends only 4% PCI to accomplish the same task.
Put another way, entrepreneurs located in the bottom 50 economies spend an average six times more to open a new company as those in a high-income economy.
Entrepreneurship and Economic Growth
Generally, more entrepreneurs will enter a market where they can easily conduct business─adding more value to local economies.
While the rankings clearly illustrate the link between ease of doing business and economic growth, there are still significant barriers in place that not only deter entrepreneurship but also inhibit a relatively simple strategy for growth.
Markets11 months ago
The Jeff Bezos Empire in One Giant Chart
Maps1 year ago
Mercator Misconceptions: Clever Map Shows the True Size of Countries
Advertising10 months ago
Meet Generation Z: The Newest Member to the Workforce
Misc1 year ago
24 Cognitive Biases That Are Warping Your Perception of Reality
Advertising9 months ago
How the Tech Giants Make Their Billions
Technology11 months ago
The 20 Internet Giants That Rule the Web
Chart of the Week11 months ago
Chart: The World’s Largest 10 Economies in 2030
Environment10 months ago
The World’s 25 Largest Lakes, Side by Side