The following commentary is from Kevin Klowden, chief world strategist of Milken Institute.

News protection of the weekend’s Group of Seven meetings centered on Ukraine, however China’s rising world presence was the opposite massive subject on the G7 agenda. For two of East Asia’s largest economies, in specific, the implications of that rise are critically essential.

China desires to be the good army and political energy of East Asia. Nowhere is that extra evident than in President Xi Jinping’s “nine-dash” declaration, by way of which Beijing claims sovereignty over almost all the South China Sea. And of all of the countries with cause to be concerned about that claim, maybe none have extra on the road than Japan and South Korea.

Most of the world is concentrated on the useful resource and army implications of Chinese claims to the islands in the area, and Beijing’s improvement of what’s changing into the world’s largest navy. For Japan and South Korea, the risk to their provide chains and vitality imports is a way more actual and current challenge.

In specific, Japan and South Korea are involved about Chinese declarations which invoke not solely the appropriate to examine cargo, but additionally the flexibility to limit site visitors. Neither Japan nor South Korea has any political curiosity in the possession of the Spratly Islands, or in China changing the United States as a dominant naval energy. However, they have a robust financial stake in shifting their vitality imports and manufacturing elements with out worry of restriction. Even in a non-wartime scenario, China has taken the place that the South China Sea is a managed territory reasonably than open worldwide waters below Chinese guardianship.

China has to date not acted in an aggressive method towards delivery in the ocean, however the very potential of motion creates a clear risk to the economies of Japan and South Korea. China would not even have to immediately cease vessels — it might merely electronically monitor particular cargo, or perform inspections or diversions. Such actions would elevate the specter of unpredictability and considerably rising prices.

For Japan and South Korea, the function taken by the United States in the post-World War II interval was far much less disruptive, not solely due to their alliance however, extra importantly, as a result of the United States acted as a guarantor of free commerce and protected motion by way of the hall.

Few folks exterior Japan or South Korea give attention to or perceive simply how vital the South China Sea is in relation to regional and even world vitality provides. Significantly, the ocean is estimated to hold 30% of the world’s crude oil, supplying China and offering a important lifeline for the energy-dependent economies of South Korea and Japan.

For Japan, the 2011 Tohoku earthquake and subsequent nuclear accident at Fukushima solely exacerbated that dependence. The ensuing curtailment of Japan’s nuclear program has left the nation depending on vitality imports, with as a lot as 98% of Japanese oil coming from the Middle East.

In some ways, South Korea is much more depending on vitality imports than Japan, making oil and pure gasoline imports particularly vital.

The South China Sea is essential in extra than simply vitality. It additionally serves as a key passageway for Japan and South Korea’s world provide chains. Estimates counsel that the ocean carries between 20% and 33% of worldwide commerce; for Japan, that determine reaches as a lot as 40%.

As world provide chains regionalize, the function of the South China Sea in the Japanese and South Korean economies will solely develop. Linking the 2 international locations to buying and selling companions in Southeast Asia, India, and past goes to extend reasonably than lower in significance.

Japan and South Korea have been in a position to depend on the steadiness of the South China Sea as a conduit for driving their financial progress, whilst the worldwide political scenario has modified over the many years. Significant shifts, together with the Vietnam War and the tip of the Cold War, have not stopped commerce in the ocean from rising extra and extra essential.

As the United States balances commitments in Europe, Asia and elsewhere, the three strongest economies of East Asia — China included — all have a vested curiosity in guaranteeing the steadiness of commerce, provide chains and vitality flows.

For South Korea and Japan, commerce stays steady in the South China Sea for now. But with China more and more trying to assert itself and change the established order in its favor, it is important that each international locations ask themselves: How a lot are they keen and in a position to concede to China in the area earlier than it turns into untenable? And are they ready with options that can permit them to compete economically?

Knowing the solutions to these questions and being ready for a extra Chinese-dominant future in the South China Sea is essential for all three international locations — even when the established order holds for now.