Hot: Fishing boat warfare: Chinese vessel sink Vietnamese boat

The geopolitical tension between the Chinese and the Vietnamese government seems to be intensifying. Both countries have engaged in a proxy military warfare but channeled through, for now, fishing boats ramming the foe and the firing of water cannons.

The latest casualty: one Vietnamese boat

The Bloomberg reports

Vietnam said a Chinese vessel sank one of its fishing boats, the most serious bilateral standoff since 2007 and a move that underscores China’s assertiveness in pushing its claims in the disputed South China Sea.

“It was rammed by a Chinese boat,” Foreign Ministry spokesman Le Hai Binh said by phone. The 10 fishermen on board DNa 90152 were rescued by other Vietnamese ships after yesterday’s scrap, according to a government statement posted on its website. The incident occurred after some 40 Chinese fishing vessels encircled a group of Vietnamese boats in Vietnam’s exclusive economic zone, the government said.

The Vietnamese craft overturned as it harassed a Chinese fishing boat in the area, China’s official Xinhua News Agency reported.

One thing can lead to another.

Earlier Chinese troops had reportedly been amassing at the Vietnam border.

Reports the China Daily Mail:

A large number of People’s Liberation Army troops have reportedly been spotted heading towards the China-Vietnam border as tensions between the two countries continue to escalate, reports Hong Kong's Sing Tao Daily. Sing Tao Daily is generally considered to be aligned to Chinese state media.

Thousands of Chinese nationals living or on business in Vietnam have already fled the country amid anti-China riots, which were sparked by a tense standoff between Chinese and Vietnamese naval ships near a Chinese oil rig in disputed waters off the Paracel Islands in the South China Sea on May 4.

The Chinese and Vietnamese government has squared off in a number of times. 

In 1974, there was the Battle of Paracel islands, exactly the same area where the current flare ups have been. Then it was the South Vietnamese government that engaged the Chinese government.

Following the loss of American government in the Vietnam war, the Vietnamese government aligned with the Soviet Union, attacked and invaded the Khmer Rouge of Cambodia—an ally of the Chinese government. Due to the Sino-Soviet split, the Chinese government deemed the Cambodian invasion as Soviet expansionism. So the Chinese retaliated and fought at their borders, which was known as the Third Indochina. This ended up in a stalemate with both sides claiming victory. But Vietnam remained in Cambodia.

So grudges from previous rivalries could resurface once again with the growing risks of real engagement.

As I have been saying, while rancorous actions of the Chinese government may partly be in response to US foreign policy of encirclement, a much bigger factor could be the financial and economic pressures from the hissing bubble which has been aggravating the spreading of local unrest.

In short, the Chinese government have most likely been diverting the national attention from the economy and use nationalism to rally people around them. If the Chinese economy does meltdown, chances of political instability will surge. This may lead to revolts which may unseat current leaders. So the Chinese government may be spreading the troubles in the region again to distract home audience. It’s all about maintaining power by the political elites.

But for the don’t worry be happy crowd, such deterioration in regional relations will be discounted. For them, there has been little or no risks from protectionism and real military engagements even if these may lead to capital flight. Again for the same crowd, stocks have only one direction: up, up and away!