The Chinese government and Chinese businesses are embroiled in numerous battles across the world. While the battle over the South China Sea Islands gains the most headlines, it’s not the only ocean going conflict the Chinese have found themselves embroiled in.
In late December 2012, off the coast of Argentina in the South Atlantic, Argentinian coast guard ships fired upon and commandeered two Chinese vessels for illegally poaching ilex squid.
Now the conflict continues to stir on, highlighting rising tensions as China’s influence grows around the world.
Voss Capital is betting on a housing market boom
The Voss Value Fund was up 4.09% net for the second quarter, while the Voss Value Offshore Fund was up 3.93%. The Russell 2000 returned 25.42%, the Russell 2000 Value returned 18.24%, and the S&P 500 gained 20.54%. In July, the funds did much better with a return of 15.25% for the Voss Value Fund Read More
Surging demand in China for luxury foods for a booming economy and huge population have encouraged some Chinese businesses to engage in rather unsavory tactics to secure food supplies. The ilex squid is an essential component of the South Atlantic food chain, providing food for whales, predator fish, penguins, and other carnivores. Unfortunately, it is also in high demand in China.
This has led to the rise of a large, unlicensed, and illegal fishing fleet that poaches squid from international waters (without permit) and also frequently enters into Argentina’s national waters. The fleet is so massive that its lights can be seen from space. Fishing ships immediately transfer the squid to refrigerator ships that then transport the squid back to China. Then the fishing ships refuel from fueling ships and continue plundering. This assures a 24/7 operation that can operate year round.
In December of 2012 the Argentinian coast guard has seized two ships and hauled them into port, with their crews being detained. Argentina fired warning shots and physically boarded the ships after they surrendered. The Argentinian government claims that the ships were illegally fishing.
To make matters worse, Argentina and the Falkan Islands are still engaged in a long stand off over whether the islands are a part of the United Kingdom or Argentinian territory. Combined, the Falkan islands and Argentina might be able to exert enough power to curb illegal fishing and protect the squid stocks. Currently, however, the two parties refuse to even engage in open dialogue. As a result, the illegal Chinese fishing fleet can plunder practically without pause.
The dispute centers around ownership of the Falkan Islands. The British claim of sovereignty dates back to 1690 but did not permanently colonize the territory until 1830. Prior to 1830, Argentina claims that it held sovereignty at various times over the islands, and so now they should be returned to Argentina.
In 1982 Argentina invaded the islands and seized control of the Falkan Islands. A short war erupted and lasted for nearly three months before Argentina was expelled. Argentina also suffered numerous economic and political defeats, was condemned by the United Nations and suffered trade sanctions from numerous countries.
Tensions still remain high between the Falkan Islands and Argentina. As a result the two parties have been unable to cooperate on managing fishing grounds in the area. Argentina refuses to recognize the Falkan Islands as sovereign or part of any foreign country and thus will not enter into agreements with the islands. As a result, the illegal Chinese shipping fleet can plunder squid unchallenged.
Across the rest of the world, a growing appetite for luxuries in China is increasing pressure on the world’s resources. Nearly 90 percent of the world’s fish stocks are fully exploited and increased poaching from Chinese vessels could strain these fishing stocks past the breaking point. While the fishing vessels and companies operate separately from the government, so fair Beijing and showed little desire to seriously curb their efforts or poaching.
While the current sea based conflicts with China center around the South China Sea islands, look for the increasing presence and impact of the Chinese fishing industry to set off new rounds of conflict. With fish being vital to numerous countries around the world, global fishing stocks could quickly become a hotbed for confrontation.