German companies profiting from rising tensions in the South China Sea:

According to the German Handelsblatt, German companies along with French and British arms exporters are providing engines and other defence equipment to both sides of the conflict in the South China Sea, including China, Singapore and Malaysia.

While arms sales to China are prohibited due to embargoes by both the EU and the US, the EU embargo does not cover ‘components’ and ‘dual use’ equipment. This means that companies such as MTU can provide engines for warships as they are also used in civilian shipbuilding. In China these are used in several types of submarines as well as in three types of destroyers ((  )). Another supplier of engines to China is MAN Diesel and Turbo, which supplies engines used on China’s newest frigates, Jiangkai I and II,

On the other side of the conflict, German companies are again involved, supplying Malaysia with six Kedah Class MEKO A-100 corvettes and Singapore with two new Submarines (( )) India, which is becoming increasingly involved in the conflict, has contracted the German company ThyssenKrupp to modernise two of its submarines ((  )).

In July 2016, an international tribunal found that China had violated the UN Convention on the laws of the Sea, backing the Philippines’ case (( )). However, China rejected this ruling and has continued its territorial claims in the region, in conflict with the Philippines, Vietnam, Malaysia and Brunei.

The Handelsblatt article is available here.

Investors in ThyssenKrupp are available here.

Investors in Man Diesel and Turbo are available here.