The South China Sea is a crowded place. It is surrounded by six countries (China, Vietnam, the Philippines, Indonesia, Malaysia and Brunei; Taiwan is on the periphery, leaving aside the issue of whether Taiwan is a “country”). All of these countries lay some claim to exclusive economic zones that overlap in complicated ways because of the irregular borders that islands present. These economic zones are valuable both because of potential oil and natural gas claims and also because of plentiful fish needed to provide protein for fast-growing populations. Rights of navigation are also crucial because almost all of the oil exported from the Persian Gulf to the oil-hungry nations of China and Japan passes through the South China Sea. The situation lends itself to an international convention mediated perhaps by the U.S., India and Australia to sort out conflicting claims, research old treaties and grants and draw new lines that are fair and mutually agreed upon. China has a simpler solution. China simply claims the entire sea and forces all other surrounding nations back to a narrow 12-mile sovereign fringe with no rights to a customary 200-mile economic zone. China’s arbitrary claims have been amplified by its policy of dredging the sea floor to expand tiny atolls in ways that create artificial islands that China has now populated with naval vessels and fighter aircraft. The U.S. has asserted “freedom of navigation” by sending the U.S. Navy through the areas claimed by China. Other nations have asserted their rights by fishing in zones claimed by China. This uneasy modus vivendi might be maintained but for the potential for collisions, mistakes and hasty escalation in confrontations between local fishing vessels and Chinese vessels. That’s exactly what happened recently, as reported in this article. A Chinese vessel collided with a Philippine vessel leaving the Philippine fisherman stranded. They were later rescued by a Vietnamese vessel in the area. The Philippines is not just a bystander nation; it’s a military treaty ally of the United States. It’s not clear how this competition will be resolved. It is clear that the history of war is one in which small incidents escalate out of control before the participants even realize what’s happening. Institutional investors can schedule a proof of concept with the world’s first predictive data analytics firm combining human and artificial intelligence with complexity science. Check out Jim Rickard’s company at Meraglim Holdings to learn more.