Economics and freedom of navigation in East Asia

Public calls for a more aggressive regional response to China’s pressing of its territorial claims in the South China Sea are typically couched in terms of the threat posed to freedom of navigation. Yet this invites an obvious question: If freedom of navigation, a vital interest for nearly every country in the region, is at risk, why has the regional response to China’s actions to date been so limited? This article argues that one compelling explanation lies in the economics of freedom of navigation in East Asia. Put simply, the risks of freedom of navigation being impeded are frequently overstated, and a more sober assessment of these risks can reduce the incentive that countries have to take more dramatic action.