The civil ship Sansha I sails for Yongxing Island in Sansha City, south China's Hainan Province, Jan. 6, 2015. [Xinhua/Xia Yifang]
The South China Sea issue has once again become a hot topic during the " two sessions ," which is China's most important annual political event, as the United States sent an aircraft carrier strike group to the region a few days before the event.
According to the U.S. newspaper Navy Times, the move was aimed at demonstrating U.S. commitment to the "freedom of navigation" and opposing China's attempt at "militarizing the region."
However, it was the U.S. navy fleet that flexed its military muscle. It's obvious to all who's militarizing the region.
Unfortunately, the game in the South China Sea might last for a rather long period of time. The United States is seeking an alliance with a wide range of countries and regions, including Japan, Australia, ASEAN and India, to confront China in the Western Pacific Ocean.
For China, in addition to building a blue-water navy, there are many other solutions to solve the issue. The suggestion made by Han Fangming, founding chairman of the Charhar Institute, is a very helpful and practical one.
Han suggested that China's Yongxing Island be made an offshore jurisdiction and offer offshore company registration services to boost economic development and bring about joint prosperity in the region.
An offshore jurisdiction, also known as an offshore financial center, is usually a small island country or region far away from the continent. Due to the inconvenient location and small land area, it is often made a special economic zone to offer favorable tax policies or even zero tariffs to non-resident companies, thus widely known as a "tax haven."
According to Han, making Yongxing Island an offshore jurisdiction will bring many benefits to China. More importantly, it will effectively relive the tension in the South China Sea.
Yongxing Island enjoys an advantageous geographical location, surrounded by the world's most economically dynamic areas. If it can offer offshore business registration services and companies based there will wield their own business and financial influences to put a stop to the regional military confrontation.
Military confrontation in the South China Sea will do no good to anyone. When the region is patrolled by military ships and planes of various sides, none can exercise a stable administration, let alone boost economic development.
However, if China turns Yongxing Island into an offshore financial center, a new tax haven will come into being, bringing benefits to businesses all around the world. It will also show China's goodwill in solving disputes peacefully.
Once Yongxing Island is built into an offshore financial center, it will set a good example for other countries. This will promote economic and business exchange instead of intensifying military confrontation, and will offer a chance for all parties to jointly exploit and share resources in the region.
Sovereignty disputes in the South China Sea have become increasingly complicated, as more and more parties have been dragged into the chaos. The United States is allying with Japan, Australia, Southeast Asia and India to confront China and encroach upon China's maritime activities. Direct confrontation will drain the powers of both sides and increase mutual mistrust.
Confronting each other's militaries is unwise. Establishing an offshore financial center, which has proved to be a mature practice and fit into the economic globalization trend, could offer a possible solution to the issue.
After all, China, the United States, Australia, Japan and countries in Southeast Asia are home to the largest number of transnational companies in the world and are important trade partners to each other. Once Yongxing Island is made into a tax haven, it will help achieve peace and a win-win situation in the South China Sea.
Zhang Jingwei a researcher at the Charhar Institute.
The article was translated by Chen Xia. Its unabridged version was published in Chinese.
Opinion articles reflect the views of their authors, not necessarily those of China.org.cn.