A look at global maritime routes through the lens of US-China interests

To the north, Egypt's Suez Canal carries approximately 12% of global trade every year and over 60% of Chinese goods shipped to Europe transit the channel.

Its vulnerability to disruption —and the global consequences of such disruption  — was highlighted in 2020 when the Ever Given blocked the canal for six days, preventing the passage of $10 billion worth of daily trade.

China's expected return to pre-pandemic levels of growth will come with an increasing reliance on imports of foreign oil and gas to fuel its industry-led economy and growing population.

The measures being taken by Western allies to sanction Russian supplies is also intensifying competition for resources. This means that controlling access to these resources is a top priority for President Xi.

China is the largest investor in Egypt's Suez Canal Corridor. It views the North African state as a regional manufacturing hub for Chinese businesses given that the canal is the Asian giant's main shipping route to Europe — its largest market.

To the south, the Bab al-Mandab Strait is one of the world's most critical chokepoints, particularly for oil flows. The US Energy Intelligence Administration (EIA) estimates that 6.2 million barrels per day (mbpd) of crude oil and refined products transitedthe strait in 2018, comprising some 10% of total seaborne-traded oil.

Bordering Yemen, it is both a strategic node in China's BRI strategy, but also particularly vulnerable to overspill from the ongoing conflict on its shores.

On the east side of Saudi Arabia is the Strait of Hormuz — the only sea passage connecting the Arabian Gulf to the open ocean and a vital route for hydrocarbons exports from oil-producing heavyweights to the Asian market.  

Carrying approximately 20% of the world's oil trade, it is a prime target for disruptive activities, mostly directed by Tehran with the twin goals of upsetting the interests of both Riyadh and Abu Dhabi, which export the majority of their hydrocarbons through this route, as well as jeopardising international oil markets and shipping in response to ideological differences with Western powers and the sanctions they impose against Iran.

Prioritising the Asian Pacific

As a result, the strait's security has historically been a primary focal point in US Middle East policy. But Washington now prioritises its interests in the Asian Pacific and, by doing so, has started to adjust the parameters of its relationships with Middle Eastern capitals. Its role in assuring the physical security of the region's waterways is set to change.

The Biden administration is seeking to reduce the US' operational presence and responsibility for security in the Middle East, instead pursuing a burden-sharing approach with regional states.

Read more: Biden's security strategy reflects waning US interest in the Middle East

While this is a long-term project managed by US military commands Africom and Centcom, it has started in earnest. But it has a 20-year timeframe during which the US will watch over the waterways given their importance to global commodities supplies and, by extension, prices.

There is also another reason for Washington's continued interest in these waters.

Of the 13.6 million barrels per day that transit Hormuz, 3.5 million barrels, or nearly 26%, go to China. This constitutes approximately 38% of China's total oil imports.

China has refused invitations to participate in naval patrols to secure shipping vessels in these straits. Instead, Beijing has deliberately maintained relations with both Iran and Saudi Arabia — conducting naval training exercises with each — to ensure smooth passage of commodities to Chinese markets.

Its 2020 announcement of a $400 billion investment package for Iran's oil and gas sector is undoubtedly an insurance policy against disruption to its interests in these waters.

China has also sought to minimise antagonism with the US, content to allow Washington to lead on security provision while benefitting from the status quo without having to commit its own resources.

But as tensions between Washington and Beijing rise, China has begun to militarise its approach. It has boosted defence cooperation with Cairo, and further south, established in 2017 a military base in Djibouti — its first permanent overseas military presence. It also plans to construct other defence facilities — or sites with the ability to become dual purpose — in the region.

Read more: Why do so many foreign powers have military bases in Djibouti?

Beijing is hedging against a possible attempt by the US to restrict or curtail energy flows to China in a future conflict or crisis scenario. As a result, the US cannot risk taking its eye off the ball and these waterways will remain of strategic importance to Washington, only now for different reasons.

'The Malacca Dilemma'

Moving eastwards, the Malacca Strait connects the South China Sea to the Andaman Sea and the Pacific and Indian Oceans. It is a narrow stretch of water between the Indonesian island of Sumatra and the Malay Peninsula and remains one of the world's narrowest straits —1.5 nautical miles at its narrowest point, the Phillips Channel near Singapore — making it a particularly perilous place for ships.

Singapore —a major US ally that frequently participates in US naval drills —is located at the mouth of the strait's eastern opening, making the Strait of Malacca a natural strategic chokepoint.

It is one of the busiest shipping routes in the world, with over 100,000 vessels passing through it every year. It also accounts for over 40% of global trade and is geopolitically important to Asia, in particular, China, as 70% to 85% of China's imported oil uses it after already passing through the Hormuz chokepoint on its way from the Middle East.

China became the world's largest oil importer in 2017, surpassing the US. The US Department of Commerce expects that China's oil requirement by 2040 will be 80% dependent upon imports.

Former President Hu Jintao characterised China's oil dependency as the 'Malacca Dilemma', which encapsulated the country's vulnerability to the key waterway.

There are alternatives, should the Malacca Strait be closed, via the Lombok and Makassar Straits. But they are much longer routes and would incur additional shipping costs estimated to be from around $84 billion to $220 billion per year, according to the S. Rajaratnam School of International Studies (RSIS).

It is unsurprising then, that China's leadership has sought to source oil supplies overland, but its dependency on seaborne deliveries remains a major weakness as long as it relies upon hydrocarbons to grow its economy.

US allies Japan and South Korea are also dependent on the Malacca Strait for their oil, liquified natural gas and other commodities. Washington itself views the strait as an essential channel to transport its exports to Asia Pacific markets and for the economic well-being of its allies.

Therefore, as with the chokepoints mentioned above, states in the region and beyond are dependent upon the strait remaining open, navigable, free from piracy, environmental and other risks. There is a clear shared interest in ensuring that trade can flow 365 days a year, and the commercial reasons for preserving a balance of interests are compelling.

The Malacca Strait's strategic importance partly explains the continued presence of the US Seventh Fleet in Yokosuka, Japan — its largest forward-deployed fleet.

The US has long-standing security guarantees with its regional allies, including Taiwan. It has also pledged its commitment to support its allies in resisting Chinese territorial claims in the South China Sea. Tensions in the South China Sea, therefore, are prone to rise and fall, correlating with the tide of US-Chinese relations.

For example, Russia's invasion of Ukraine in February 2022 has been a cause for concern amongst policymakers in Washington, as it has for the national leadership in Taiwan and other US ally states.

In response to Beijing's support for Russia, the US has sought to reassure Taiwan of its commitment. The visit of US House Speaker Nancy Pelosi to Taipei in August 2022 carried that message in unequivocal terms.

As an exercise of its deep displeasure, China held joint military exercises around Taiwan, launched ballistic missiles over the island and conducted air and naval operations across the centerline and on the edge of Taiwan's territorial waters. It also suspended or cancelled eight official military dialogues and cooperation channels with the US.

Over the coming decades, political tensions between Washington and Beijing will ebb and flow, especially as the balance of power between the two large countries edges towards equilibrium.

However, as long as their commercial interests continue to overlap — and that looks likely — then the Malacca Strait will remain a secure waterway. Risks of piracy, environmental degradation and congestion will remain among the hazards, but it will be highly unlikely that political or military action will close it.  

Panama Canal

The Panama Canal — responsible for 6% of global trade — is also not immune to Chinese influence. While most trade through the canal benefits the US, some 22% of cargoes in 2021 either started or finished their journey in China, and the waterway acts as a logistical hub for Chinese products entering Latin America.

In fact, Panama was the first Latin American country to sign on to the BRI initiative in 2018. Beijing has port contracts at either end of the channel, along with multiple investments in the logistics, infrastructure and power sectors. China's presence in, and influence over, this area has been steadily rising. 

The Panama Canal's significance to the US is also growing, due to the rise of "near-shoring"— a regionalisation of supply designed to mitigate against risks associated with long supply chains and distant markets highlighted by the global pandemic.

Tensions over Beijing's more strident posture on both Hong Kong and Taiwan and its activities on the US's doorstep in South America — in Venezuela and Chile  — have, in Washington's view, increased the risk of disruption to the canal's trade and, therefore, US economic security.

Pushback in recent times from both Washington and the current Panamanian administration has somewhat stalled China's ambition — a signal that the central American country is conscious of the need to placate both great powers despite its neutral status and commitment to grant equal access to all nations.

It was this same position that saw Panama resist calls to block the passage of Russian ships following Moscow's invasion of Ukraine in February 2022. But the US has reserved the right to intervene militarily to combat any perceived threat to the canal's neutrality and, in the current climate, China will need to tread carefully to avoid this.

Arctic and Bering Straits

As global warming melts sea ice, the Arctic is gradually opening up, and along with it the possibility of new sea routes that could reduce shipping times by up to two weeks, along with carbon emissions.

However, these new channels face the same prospects of competition borne out of geopolitical rivalry. While littoral states — the US, Canada, Norway, Russia and Greenland — accept that the established Law of the Sea Convention is the most appropriate legal framework through which to govern the Arctic region, differences over interpretation remain, specifically regarding what areas might fall under nationalas opposed to international jurisdiction.

Against this backdrop, tensions with Russia and increased competition to secure access to energy resources look set to continue and making these routes operational will be challenging.

Read more: Will China collaborate with Russia in the Arctic?

As with other maritime chokepoints, the Bering Strait — the sole sea line of communication between the Pacific and Arctic oceans — will become hotly contested.

China has already expressed its desire for uninhibited passage through the Arctic routes but as an observer to the Arctic Council — the primary leadership body for the region — it will need to secure support from the council's other members.

Key ally Russia is also on the outside as the only non-Nato member of the council. But even the relationship between Moscow and Beijing may not be enough for Russia to back China's interests in this space.

Logistical challenges aside, the Arctic routes are a tempting alternative to long and costly shipping routes. But for the exact same reason they, too, will be subject to competition and global geopolitical machinations.  

As the rivalry between China and the US edges the global order towards fragmentation, the importance of maritime chokepoints to national security strategies will only grow.

At present, each great power is gently testing the other's appetite for risk and escalation while pursuing their own interests. But history demonstrates how slow-burning embers can erupt into wildfire with just one spark.

The significance of international waterways — and the battle to control them — may be the match.