On Reflection | Welcome to conflict tourism: how Chinese state firms are using the South China Sea

Analysts have tried to interpret China’s rejection of the UN arbitration on the South China Sea dispute from Beijing’s strategic and regional security policy perspectives. What is missing in all such analyses is the increasing role of Chinese state-owned enterprises (SOEs), some of which may even be complicating China’s position in the dispute.

But in addition to the defence industries, there are other less well known but active SOEs reaping benefits from the South China Sea disputes.

Cruising the disputed Paracel Islands

It is easy to understand that the Chinese defence industry has significantly benefited from the South China Sea disputes. The stock market offers a glimpse of its latest gains. In the weeks leading to the tribunal ruling, a few notable Chinese stocks experienced significant hikes in prices and trading volumes. For example, the shares of Beifang Daohang Technological Corporation, affiliated to China North Industries Group, rose by 8.8 per cent; China RACO, which specialises in satellite communication, rose by 6.6 per cent; and State China Shipping Corporation jumped 19.6 per cent between 24 June and 12 July.

Although the tourism industry may seem to be the unlikeliest candidate to experience growth in times of regional conflict and uncertainty, it is not the case for Chinese companies that offer tour services to the South China Sea.

Sun, surf and patriotism ... life as a tourist cruising the South China Sea

On the day after the release of the arbitration ruling, two aircraft, chartered by China Southern Airlines and Hainan Airlines, both state-owned, departed from Haikou ( 海口 ) and landed on Mischief Reef and Subi Reef respectively. Pundits in China suggested their government may eventually come up with a plan in the future to utilise the tourism resources on the newly constructed artificial islands occupied by China in the South China Sea.