Chinese maps of China always show a looped extension of the southern borders reaching 1500km down through the South China Sea to within spitting distance of Borneo, enclosing a host of reefs and minute islands. These sit over what might be major oil and gas reserves, and are consequently claimed by every nation in the region – China, Malaysia, the Philippines, Taiwan and Vietnam have all put in their bids, based on historical or geographic associations. Occupied by Japan during the 1940s but unclaimed after World War II, the Spratly and Paracel islands are perhaps the most contentious groups. Vietnam and China both declared ownership of the Paracels in the 1970s, coming to blows in 1988 when the Chinese navy sank two Vietnamese gunboats. Then the Philippines stepped in in 1995, destroying Chinese territorial markers erected over the most westerly reefs in the Spratly group and capturing a nearby Chinese trawler. Ongoing minor brawls encouraged the nations of the region – including China – to hammer out a landmark agreement in November 2002, which basically allows access for all, while territorial disputes are settled one by one. This is likely to be a relief to companies such as the US conglomerate Exxon, who – despite the fact that guaranteed oil reserves have yet to be found – are already investing in the region.

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