EDITOR: | December 15th, 2012

Gold: China v Japan Friday’s Action.

| December 15, 2012 | No Comments
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During the week just past, relations between China and Japan nosedived. China sent a Maritime surveillance patrol aircraft  to fly the over and around the disputed uninhabited Diaoyu/Senkaku  Islands in the East China Sea. Japan which administers the islands and claims sovereignty over them and airspace, and which claims to have purchased them from their Japanese “owners” on September 11th,  responded by sending up 8 F-15 fighters to order the Chinese plane out. Under Japanese law, incursions by aircraft require a response by the military. Four Chinese ships also intruded into “Japanese” waters the same day, making the 17th incursion since September 11th.

Japan called in China’s Ambassador to make an “extremely severe protest” about the incident.  Chinese foreign ministry spokesman Hong Lei told reporters in Beijing that China’s activities were “completely normal.”  “China requires the Japanese side to stop illegal activities in the waters and airspace of the Diaoyu islands.”  Japan votes in a general election tomorrow Sunday, with the right wing Liberal Democrat Party expected to win by a landslide, after a campaign of, among other things, China bashing, and calling for a much tougher hard line stance with China.

On Friday (14th) China upped the ante again. China’s State Oceanic Administration filed with the United Nations “China’s demarcation proposal of the outer limits of its continental shelf in the East China Sea.”  To comply with  “the United Nations Convention on the Law of the Sea (UNCLOS) and its relevant provisions, if the continental shelf of a coastal state extends beyond 200 nautical miles from the baselines from which the width of the territorial sea is measured, information on the limits of the continental shelf beyond 200 nautical miles shall be submitted by the coastal state to the Commission on the Limits of the Continental Shelf under the UNCLOS.”

Effectively, China is pushing Japan all the way back to the Okinawa Trough, and has filed a claim under UNCLOS, of an economic zone extending beyond the more usual 200 nautical miles. Anticipating a win by the Liberal Democratic Party’s Shinzo Abe on Sunday, and a big downturn in bilateral relations, China got in the first blows last week.  An exciting 2013 lies ahead for both nations, but China with its filing of Friday, has complied with international law.

When the USA passed administrative control over the islands to Japan back in 1972, they never passed over sovereignty because the US never had or claimed sovereignty over the islands, merely temporary administration. In a very different cold war age, the US and its allies didn’t want Mao’s murderous regime to get hold of them. But life is very different now, as Friday’s clever technical move by UN Security Council member China shows.

Japan’s new government likely faces months of China probing and testing over the islands. Mr Abe in a sop to the right of his party, has promised to build on the islands. China has claimed a sovereign right to take all measures to prevent that. Unless Mr Abe makes a humiliating U-turn right at the start of his new government, a clash between China and Japan in 2013 looks inevitable. Will China dare Japan to shoot down one of their planes? What if China shoots down one of Japan’s?  None of this is priced into precious metals as we end 2012. Bankrupt America’s two largest creditors are squaring up to clash! Stay long physical precious metals, the antidote to 2013.

United Nations Convention on the Law of the Sea of 10 December 1982
Overview and full text
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China reports to UN outer limits of continental shelf in East China Sea
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