China and the World

Treasured islands

Why Terry Gou wants to buy the Diaoyu Islands

Treasured islands

One of the disputed islands

The only thing that billionaires seem to love more than holidaying on a tropical island is purchasing one. Further evidence of this emerged last week when tech titan Larry Ellison bought Lana’I, a Hawaiian island. According to local newspaper Star Advertise, Ellison spent “hundreds of millions” of dollars on the 365-square metre buy.

Closer to China, another giant of the technology world was making plain his desire to buy an island last week – but in this case much more controversially.

At a shareholder meeting for Hon Hai Precision Industry, the company’s billionaire boss announced that he might buy a chain of disputed East China Sea islands. Taiwanese tycoon Terry Gou – whose company assembles iPhones and iPads for Apple – said that he was “willing to buy” the Diaoyu Islands. The statement, which was reported by local media including the Economic Daily News, caused a minor uproar.

As regular readers of WiC will recall, the ownership of these atolls is disputed, a situation that provoked a diplomatic stand off between Beijing and Tokyo in September 2010 (see issue 78) when a Chinese trawler captain was seized for ‘trespassing’ in Japanese waters. Japan – which calls the atolls the Senkaku Islands – also claims sovereignty. China and Taiwan claim ownership too.

Gou claimed to have come up with a neat solution to the sovereignty question. According to the United Daily News, Gou said Japan, China and Taiwan should jointly develop an oil field off the islands, which he would then buy. Gou reckoned this could boost Tokyo’s moribund stock exchange to 20,000 points and that “this way, all of us would become rich and there would be no war, and Japan would no longer need to reopen nuclear power plants.”

Gou clearly sees himself as ideally placed to broker a solution. His subsidiary Foxconn is one of the biggest employers in China, while he recently purchased a big stake in Japanese blue chip Sharp Corporation (see WiC145).

However, the chances of Gou healing the rift look slim, especially as a spokesperson for Taipei immediately countered that Taiwan owned the Diaoyu and would not be selling them.

Of course, the incident only serves as a reminder of how contentious the islands around the Chinese coastlines have become. In WiC151 we reported on the tensions between Beijing and Manila over the Scarborough Shoal (called the Huangyan Island by China). And there was an earlier tiff with Vietnam over the Spratly Islands (called the Nansha Islands by the Chinese).

Sense a pattern developing?

In fact China is so determined to assert its authority in the South China Sea that it announced last Thursday that it would create a new city to do so. The Ministry of Civil Affairs said Sansha city (‘city of three sands’ in Chinese) would be established to administer the Xisha, Zhongsha and Nansha islands (also known respectively as the Paracel, Macclesfield Bank and Spratly islands). This muscle-flexing exercise was a response to a new maritime law in Vietnam that stipulates that all foreign ships passing through their waters must notify Hanoi.

The nationalistic Global Times was a predictable fan of the counter-initiative, believing that it made China’s presence in the same region “more tangible”. It noted that Hainan Island was the former forefront of the Chinese presence in the area but with Sansha’s planned administrative presence on Woody Island (also known as Yongxing) – the largest of the Paracels – that would change.

The newspaper later broke the news that in order to improve “the cultural life” of the islands, China planned to start broadcasting as many as 48 television channels there. Vietnam meanwhile has retorted that China is behaving in an “illegal” fashion. Its latest grievance centres on CNOOC. Hanoi is furious that the Chinese oil major has invited foreign companies to tender for exploration rights to areas of the South China Sea it claims sovereignty over.

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