CHINA'S aggressive territorial claims in the East and South China Seas have often been in the news lately, usually portrayed as Beijing flexing its new-found political muscle.
But a different conclusion emerges from the economic perspective, unmasking China's recent aggressiveness as attempts by Beijing to address future weaknesses in the Chinese economy.
One of the main problems is China's reliance on fossil fuels and its high energy usage. China has now become the largest crude oil importing nation - over six million barrels per day and rising. Oil experts tip that China will have to import up to 10 million barrels a day in the next decade. At US$100 per barrel, this would be US$220 billion (S$279 billion) a year.
Feeding this hunger is the inability of domestic oil extraction to keep up with demand, as China's onshore fields are now mature, with heavy regulation preventing technological advances.
China needs to secure supplies and earn US dollars to pay for the oil. This is different from the United States, which has the privilege of being able to print as much US dollars as it needs to pay for imported oil.
Currently, China has no problem paying for oil imports. Its trade surplus - driven by manufacturing - was US$230 billion last year, although this may disappear if China has to import 10 million barrels of oil daily.
On top of that, the manufacturing future in China does not look too rosy. The rise in operating costs, advances in robotics and other factors have made assembly operations in China increasingly less attractive. Already, about 20 per cent of world manufacturing now takes place in China, which appears to be a peak.
China's overall foreign direct investment (FDI) - a long-term indicator of manufacturing activity and export performance - peaked in 2011. But for Chinese manufacturing FDI, the turning point may have been in 2006.
Manufacturing was 70 per cent of total FDI in 2006, versus about 38 per cent currently. In absolute numbers, manufacturing FDI is slightly lower now than in 2006. And it is a downward trend.
In five to 10 years, it is quite possible that China will be struggling with trade deficits. If it cannot pay for its imported oil, petrol will have to be rationed. Even if this does not cause unrest, the economy will get undone.