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Sunset over the South Chinese Sea from a boat heading towards Scarborough Shoals from Subic Bay, Philippines, June 17, 2016.Sergey Ponomarev/The New York Times

While the geography of the South China Sea may not be familiar to many Canadians, the region is an increasingly important source of resources and is crisscrossed by crucial shipping routes. Over all, more than $5-trillion (U.S.) of trade passes through it every year.

On Tuesday, the Permanent Court of Arbitration in the Hague rejected China's claim to almost all of the South China Sea and its rich resources.

The court said there is no legal basis for China's centuries-old claim over the huge body of water, which had been challenged by the Philippine government. But the disputes over the region are probably far from over: China dismissed the ruling, saying the panel has no jurisdiction and it would not accept the decision.

China has been reclaiming land and building artificial islands in parts of the sea, and conducting more military activity.

The sea's bordering countries – China, Taiwan, Vietnam, Cambodia, Thailand, the Philippines, Malaysia, Brunei, Indonesia and Singapore – are all growing quickly, and the region is becoming central to the world's economy.

Among the key resources in the South China Sea:

Oil and gas

According to the U.S. Energy Information Administration, there are about 11 billion barrels of oil reserves and 190 trillion cubic feet of natural gas reserves in the South China Sea. But these are proven and probable resources, the EIA said, and the actual amount of recoverable resources could be considerably smaller.

However, the resource could also be much bigger, with some Chinese estimates as high as 125 billion barrels of oil and 500 trillion cubic feet of gas. The Chinese sometimes describe the area as a "second Persian Gulf."

Most of the currently producing oil and gas fields are along the shorelines and not in contested waters. While there is considerable potential in more remote parts of the area, there would be huge geologic and technical challenges in extracting the oil and gas, along with intractable political issues. In the southern part of the region, for example, Vietnam and Malaysia have tried to claim subsea resources, but China has objected strenuously.

Fishery

The South China Sea accounts for about 10 per cent of all the fish caught in the world. The industry is particularly important to Asian countries, where protein from fish makes up about 22 per cent of the average diet, compared with the 16 per cent average worldwide.

With high population growth, demand for fish is growing and this is intensifying conflicts over fishing zones. The tensions are exacerbated because coastal fishing has been on the decline, and fishers are going farther afield into disputed waters.

Key competitors for the resource include Vietnam, the Philippines and China, where fishing is an important source of employment as well as food.

Shipping

The shipping routes in and out of the South China Sea are the busiest in the world. More than half of the world's merchant fleet tonnage passes through the three straits of Malacca, Sunda and Lombok that form the western entrance to the sea, according to the EIA.

Robert D. Kaplan, who has written a book about the sea called Asia's Cauldron, describes it as "the throat of the Western Pacific and Indian oceans – the mass of connective economic tissue where global sea routes coalesce."

A third of the world's crude oil and half of the world's liquid natural gas go through the sea, and those numbers are likely to rise with the growing demand for energy in Asia, along with new production in the region. Natural gas moves through the sea on its way to countries such as Japan and South Korea, while oil flows from the Persian Gulf to China and Japan.

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