Troubled Straits: Analyzing Trade Chokepoints in the South China Sea

CSIS | Brian Hart, Matthew P. Funaiole, David Peng, Jasper Verschuur, Bonny Lin, and Leon Li

The South China Sea is the world’s most consequential maritime corridor, handling trillions of dollars in goods annually, with geopolitical tensions threatening global commerce. New CSIS analysis provides granular insight into trade flows through eight chokepoints, challenging existing notions of their importance. In 2024, nearly $6.4 trillion worth of goods transited these straits, with the Malacca and Taiwan Straits each moving over $2.4 trillion, representing 21 percent of global maritime trade.

A conflict, particularly over Taiwan, poses the gravest threat, potentially disrupting the Taiwan Strait and nearby Luzon Strait. China faces a significant "Taiwan Strait dilemma," as 33 percent of its imports and 16 percent of its exports passed through it in 2024, compared to 21 percent of imports and 14 percent of exports via the Malacca Strait. While the United States is not directly reliant, key allies like Japan, South Korea, and the Philippines are deeply dependent, shipping $755 billion through the Taiwan Strait and $474 billion through Malacca in 2024. Other disruption scenarios include state interventions, piracy, terrorism, accidents, and environmental disasters, all carrying significant rerouting costs.

To read in details click here