While investors from around the globe are desperately looking for clues if the simmering trade war between the US and China is about to get rather hot at midnight on Friday, when as the US Trade Rep warned after the close, the US will hike tariffs to 25% on Chinese imports, the not so veiled geopolitical conflict between the two superpowers which has a far greater chance of mutating into a “kinetic” exchange after China expressed its “strong opposition” on Monday after two US warships sailed near disputed islands in the South China Sea.
It was the third time this year that Washington has challenged Beijing’s maritime claims in the region which China has expressly claimed as its national interest, amid escalating rivalry between the two powers.
As we reported this morning, guided-missile destroyers USS Preble and USS Chung-Hoon passed within 12 nautical miles of Gaven and Johnson reefs in the Spratly Islands on Monday, Commander Clay Doss, a spokesman for the US Navy’s Seventh Fleet, said according to Reuters. The territory is also claimed by the Philippines, Vietnam and Taiwan.USS Preble, one of two guided-missile destroyers that took part in Monday’s freedom of navigation exercise in the South China Sea.
Quoted by the SCMP, Commander Doss said the move aimed to assert international rights to “innocent passage” and “challenge excessive maritime claims” in accordance with international law, although Beijing hardly saw the latest US intervention in Chinese backwaters as “innocent.” The incident was the third time this year that the US has conducted so-called freedom of navigation operations in the South China Sea, compared to five publicly reported passages last year and four in 2017.
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