APEC-Manila and South China Sea Joint Development Areas

At the Asia-Pacific Economic Cooperation (APEC) meeting later this month , the elephant in the room will be the South China Sea.

Ambiguities over China's nine-dotted line is hindering development of South China Sea oil and gas supplies. Joint Development Zones connected to multilateral infrastructure could solve this problem.
Source: US EIA, Klaudia & Sandler, 2005, Grenatec

And while it's not on the official agenda, it'll be very hard to sweep under the rug.

For proof of the sensitivity, look no further than China.

With the meeting just weeks away (Nov 18-19), China still hasn't confirmed whether Chinese President Xi Jinping will attend.

Despite assurances the South China Sea won't be discussed officially, it may be hard for China to avoid having the issue come up in bilateral meetings.

That's because 'energy resiliency' IS on APEC's agenda, and this includes things like deepening cross-border energy infrastructure connectivity. China, of course, supports this.

The reason is that international infrastructure projects now offer a crucial outlet for China's world-class industrial state champions like State Grid Corp of China.

Now that China's big internal infrastructure needs are largely met, these huge and politically connected companies face domestically destabilizing mass layoffs without new projects overseas.

In China, overseas infrastructure investment is being called, in various ways, the 'going out' strategy. It provides much of the rationale behind China's 'One Belt, One Road' slogan. The slogan is aimed at encouraging deeper economic integration in Asia through expanded cross-border infrastructure.

This would be largely built by Chinese companies and funded in whole or part through funding from China's newly-created $100 billion Asian Infrastructure Investment Bank (AIIB).