...economics...

Tuesday, October 11, 2005

Chapter 1 Media Article

"Japan and China: Oil and Gas in Troubled Waters", The Economist - October 6, 2005

There is a territorial dispute between Japan and China over the two countries' Exclusive Economic Zones (EEZ). This dispute is due to the exploitation of undersea oil and gas deposits on the border line of the two EEZs. China has set up a "reserve vessel squadron" in the East China Sea and is suspected to have already begun production of gas and oil at the Tianwaitian/Kashi field, which straddles the border line. However, not far from the Tianwaitian/Kashi field, also straddling the border, lies Chunxiao/Shirakaba - which in July, Japan had granted Teikoku Oil with drilling rights to that area. If Teikoku Oil were to begin drilling, the tensions between these two countries would rise dramatically. There is no right answer between who is right and who is wrong because according to the UN's Convention on the Law of the Sea, an EEZ reaches out 200 nautical miles from the country's shoreline, whereas the East China Sea between Japan and China is only 360 nautical miles. Both Japan and China are now trying to work towards an agreement of joint development of these fields.

Relation to Chapter 1 - scarcity of resources (land)

Japan and China both want full rights to the area of the East China Sea which they have equal rights to. The reason of this dispute between them is not only due to territorial factors, but also, to the scarcity and demand for oil. Oil, as a non-renewable resource, could cause the devlopment of the Tianwaitian/Kashi and Chunxiao/Shirakaba fields to be very profitable for the country. However, if neither of the countries is willing to take a step down, then no agreement could be established and tensions would rise. China has set up military vessels near the fields to strengthen their position on this dispute. With the deployment of vessels and such, could this dispute soon lead to military conflict? Also, if the demand for oil and gas were not so high, and they were not such scarce resources, would this conflict have risen so great?

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