In 2018, President Donald Trump will have no choice but to engage in more aggressive military intervention in the ongoing South China Sea dispute.
Beijing claims sovereignty over nearly all of the contested waters and the land therein, disregarding the aquatic borders of six different countries.
In fact, an international tribunal ruled against China's assertions in 2016, but Beijing largely ignored the ruling. The Philippines, which had brought the case against the Red Dragon, has stopped resisting entirely.
And because U.S. focus has been, throughout 2017, directed elsewhere - namely toward North Korea - the Red Dragon's developments in the region have progressed largely unchecked. China even managed to construct and build upon artificial islands within an area of 290,000 square miles last year. The Asian superpower also installed airplane hangars, missile shelters, and large radar and sensor arrays, according to satellite images reviewed by the Asia Maritime Transparency Initiative, a U.S. think tank, on Nov 8.
But Beijing's free reign won't last much longer.
That's because President Donald Trump will have to put a stop to China's military development in order to keep the South China Sea open for the $3 trillion dollars' worth of trade that passes through it each year.
Here's what military experts expect President Trump to do in 2018...
Half-Measures Won't Cut It in the South China Sea This Year
The Pentagon will likely pressure President Trump to take a tougher line with Beijing over the South China Sea this year.
"We know that the Pentagon, unlike the Trump administration, is very much worried about the South China Sea," Dr. Richard Javad Heydarian, a Manila-based security analyst, told The Washington Post today (Jan. 3). "The Pentagon is looking at options to bring the fight to the Chinese and up the ante there."
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The Pentagon's worry is well-placed; the current FONOPs (freedom of navigation operations) being carried out in the South China Sea have done little to stall China.
FONOPs are U.S. Navy maneuvers that involve sailing ships through the South China Sea to challenge Beijing's overzealous maritime claims. The U.S. naval fleet sails close to the islands China controls, often triggering heated warnings from the nation's coastal patrols.
It seems like more of an antagonistic tactic than a practical one. In fact, there was a nearly eight-month gap between the last FONOP under former President Barack Obama in October 2016 and the first under Trump in May 2017, which resulted in speculation that Trump had backed off on FONOPs in the hope that China would help to restrain North Korea.
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Still, while Beijing was displeased when Trump reinitiated the FONOPs, it didn't slow down its development in the disputed maritime region.
Trump could increase FONOPs frequency in the months ahead. But one expert says that FONOPs alone aren't enough to dissuade China's progress.
"FONOPs are not a full strategy," Bonnie Glaser, a senior advisor for Asia at the Center for Strategic and International Studies in Washington, told The Straits Times today. "It was not enough in the Obama era and it's not enough under Trump."
What is enough remains unknown.
Whatever move America makes next will have to involve the United States rethinking the "status quo" and taking its South China Sea strategy off "auto-pilot," said Glaser. "There is not enough thinking about what the U.S. will do to deter or respond to what will be the next Chinese actions in 2018."
Some analysts believe that President Trump could be more diplomatic with his South China Sea approach moving forward.
But if Trump would like to bring China to the negotiating table over the contested waters, then he'll have to make this one move he should've made long ago...
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The U.S. Needs Diplomats in the South China Sea
Trump will have to fill the diplomatic posts left vacant after President Obama left office.
Gregory Poling, the director of the Asia Maritime Transparency Initiative, told CNN on Dec. 25: "It's no secret that the Trump administration is still woefully understaffed when it comes to the Asia squad. It's no surprise that they can't focus on anything but North Korea. And occasionally they talk about trade deficits with China, but that's it."
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Scores of senior diplomats, including 60% of career ambassadors, have left the State Department since the beginning of 2017, when Trump took office, according to Foreign Policy on Nov. 8. There are still 74 top posts at the department that remain vacant with no announced nominee to this day.
Trump will need to recommend astute diplomats to fill the positions of assistant secretary for international security and non-proliferation and assistant secretary for East Asia if his administration truly wants to end the South China Sea dispute via diplomatic means.
The current U.S. ambassador to China, Terry Branstad, who assumed office in May 2017, started his career off on the wrong foot. He threatened to quit last June - a month in - when Trump exited the Paris climate deal. While he didn't resign after all, Branstad's position and loyalty to the White House remain shaky at best - not a comforting development in the wake of the ongoing South China Sea conflict.
Money Morning Executive Editor Bill Patalon, who's been reporting on the South China Sea since 2012, way before the mainstream media picked up on the roiling tensions - says, "the South China Sea affair will heat up when least expected and likely at the most inopportune time."
Fortunately, he sees a way forward for investors.
The ongoing dispute, he says, will likely "converge with the North Korea business as those two become inextricably linked. And when that happens... it will ignite gold prices."
Indeed, investors worldwide have historically turned to gold in times of uncertainty. And as the pressure on Trump to take meaningful action against China increases, gold will become more and more popular.
In fact, it's already happening.
The commodity's price broke above the psychologically important $1,300 level just ahead of the new year, and it's stayed there since.
The tensions with Pyongyang alone significantly contributed to gold's 10% increase in 2017. We think that's just the beginning.
"Don't forget that, buried beneath every emotional purchase or sale, there are actual supply-and-demand metrics that can influence where gold heads next," Bill says. "Gold demand is buoyed by private investment, as you'd expect, but we're also witnessing relatively strong demand from global central banks, the jewelry industry, and even the technology sector. Demand will continue to play an important role in gold's climb."
And Bill has just the way to profit.
In fact, his gold charts are showing an "event" unfolding - something that's happened just twice in the past 20 years - that's packing some incredible profit potential. Click here to keep reading...
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