Beijing's huge state-owned enterprises are taking stakes in disputed islands on the South China Sea. That's according to new research from Singapore seen by Reuters. It shows China's state-owned companies have built up tourism as well as oil and gas in the maritime heart of Southeast Asia. Chinese military development in the region, which includes critical shipping routes, has worried military and diplomatic observers for years.
But as Reuters' Greg Torode reports, so far, Chinese commercial activity there has flown under the radar.>> There hasn't been very much attention at all placed on the state-owned enterprises. And we can see that they've played a growing and lucrative role as China has built up its islands in the last five or six years.
And that role is likely to continue in future. Some research we've got hold of suggests that it's been a very lucrative role for some companies. We're getting the sense that there have been billion-dollar projects down there.>> The new research shows state-owned oil company CNOOC and the Chinese National Travel Service have both been active here.
>> It seems the state-owned enterprises are playing a broad role. They're promoting tourism in some areas, in the disputed Paracels, for example, through cruise ships, and flights of patriotic tourists. It's an unusual kind of dynamic at work. China, in some cases, we can see, according to the research, has pushed and nudged and encouraged SOEs to take a greater role in South China Sea developments, incentivizing them, effectively.
At the same time, the SOEs have been looking for new opportunities and new markets.>> Many of the islands China claims are disputed by its neighbors, Vietnam, the Philippines, Malaysia, and Taiwan.>> Analysts tell us that it could raise future complications in, perhaps, brokering some sort of smooth settlement of the dispute, because it basically raises the commercial stakes for China.
There is a sense that China would be willing to defend it militarily because of the importance of that presence.>> The new report says other Chinese state-owned companies, including telecommunications firms, fisheries, and banks, are also eyeing projects in the region.