The Goldman Sachs technology M&A team, led by Sam Britton, has cashed in on its software focus and decades of experience to dominate 2019's biggest deals.Technologyread more
American small and medium-size companies that rely on China are scrambling to adjust their business plans in response to the escalating trade war.Traderead more
Here are the products that stand to be the most affected by China's new tariffs on $75 billion worth of U.S. goods.Marketsread more
The summit comes amid fears over a global economic slowdown, and U.S. tensions over trade allies, Iran and Russia.Politicsread more
The world's second biggest economy is past a point where it cannot ignore its enormous debt anymore, according to an analyst.China Economyread more
Carl Medlock used to work at Tesla. Now he's one of the few people in the U.S. that can fix the company's original Roadster electric vehicles.Technologyread more
Trump does have some powerful tools that would not require approval from U.S. Congress.Politicsread more
Stocks dropped after Donald Trump ordered that U.S. manufacturers find alternatives to their operations in China.US Marketsread more
As demand for lab monkeys continues to rise, U.S. scientists are reporting delays in research projects because they can't obtain enough animals, according to the National...Politicsread more
The European Union will respond in kind if the U.S. imposes tariffs on France over digital tax plan, EU chief Donald Tusk told G-7.Technologyread more
Trump said he will raise tariffs on $250 billion in Chinese goods to 30% and hike duties on another $300 billion in products to 15%.Politicsread more
Tensions in the South China Sea—scene of naval standoffs in the past year as China has pressed its smaller neighbors on the open sea—may seem far off to many Western investors, but any conflict in the region could affect the global economy.
There are no definitive government estimates about the amount of global trade passing through the South China Sea, but the United Nations Conference on Trade and Development estimated that 8.4 billion tons—or about half of the world's annual merchant fleet tonnage—passed through the region in 2010.
The U.S. Commerce Department estimated that the United States exported $79 billion in goods to the countries around the South China Sea in 2013, and imported $127 billion from them that year. Including goods simply passing through, Navy Adm. Robert Willard estimated in 2011 that the region accounts for $5.3 trillion in bilateral annual trade—of which $1.2 trillion is U.S. trade.
Read MoreWhy we need to boost US-Asia trade
Whatever the actual trade figure, tensions in the South China Sea pose an economic security risk to the entire globe, said Peter Dutton, professor of strategic studies and director of the China Maritime Studies Institute at the U.S. Naval War College.
One such risk is that if a flare-up were to arise between China and one of its smaller neighbors, those global trade routes could be affected, hurting the world economy, Dutton said.
"The impact of a disruption for even a period of three weeks would be substantial," he said, adding that he did not consider any outright conflict in the region to be especially likely, although the possibility remains.
But even if shipping companies still attempted to pass through the area during a conflict—whether to access the resources there, or to cut transit times—the insurance costs "would be prohibitive," Dutton said.
Another economic security concern could arise not from conflict, but from an outright Chinese takeover of the region.
Over the years, Dutton said, China has demonstrated a desire to control all of the passage through what it considers its sphere of naval power. This predilection is in direct opposition to the U.S.-backed global standard of free passage through the high seas, he added.
"Our concern becomes that China, because it defines its rights broadly to control areas under its maritime jurisdiction, reserves for itself the right to ban foreign military movement," Dutton said. If this were to occur, other countries may begin to enforce similar principles.
The entire system of global trade would consequently become more costly because the presence of strong, oftentimes Western, navies "tends to dampen disruption," and China's navy isn't strong enough to police the region on its own, Dutton said.
Still, Dutton noted, any conflict is unlikely at this point because all parties involved would have so much to lose.
In fact, some don't think trade routes will ever become a point of contention in the region. Gary Li, a senior analyst with IHS Maritime, told CNBC in an email that disruption of the shipping lanes is not even on the table given that "everyone needs them to function, most of all China."
Southeast Asians may be 'egg-sucking'
Each regional country is conducting a distinct calculus in determining how to act—or not act.
This calculus was particularly evident during the standoff between China and Vietnam earlier this year.
When China parked an oil rig in waters that Vietnam considers its territory, international tensions rose, and Vietnamese civilians rioted in the streets. Ultimately, Hanoi did nothing to stop the Chinese rig and its accompanying vessels from conducting oil exploration. When the Chinese left the area two months later, they effectively announced that they would be back with four rigs, said Zachary Abuza, a Southeast Asian security affairs analyst.
Many in Vietnam saw "caving into China as a disaster," Abuza said, in part because they worry that China will steal its much-needed energy. But others in the Vietnamese government want to maintain good relations with China as a nod to the "fraternal socialist" community, he said.
Those Vietnamese officials "have this very naive belief" that if they reach an accommodation with China in certain matters, then the Chinese will cut them a deal with something else, such as the disputed Spratly Islands, he said. This outlook is definitely "folly," as the Chinese have become "more aggressive" in asserting their territorial claims in recent years, and they have discovered that "this has all come at very little cost to Beijing," he said.
Additionally, recent conflicts have altered the Southeast Asian countries' calculus in dealing with China because the United States has not "come out looking like a very reliable ally a lot of the time."
Malaysia is another neighbor considering the calculus of exerting its maritime claims in the face of Chinese counterclaims, Dutton said. But, along with Vietnam, they have "at this point implicitly decided that their economic relationship with China is more important."
The only country that has done more than "let off popular steam" with protests is the Philippines, according to Dutton. In January 2013, Manila filed for international arbitration against China under the United Nations Convention on the Law of the Sea. China has rejected the arbitration, but the U.N.'s Permanent Court of Arbitration at The Hague considers the case ongoing.
While this strategy may ultimately afford the Philippines some bargaining power against its more powerful neighbor, no other nation will be able to implement the same strategy, according to Dutton.
"The Philippines surprised China—there is no more surprising China. It's done," he said. Instead, China "has made it known there will be costs to any country that litigates."
The one country that remains a "wildcard" in the South China Sea is Indonesia, Abuza said, as it holds significant sway in the Association of Southeast Asian Nations (ASEAN), and so could rally the region against China. It's unclear whether China claims oil fields that Indonesia considers its own, he said, but if that were the case, the dynamics could change significantly.
Still, Indonesia would be unlikely to take direct action against China, as its "heart might be in the right place for the South China Sea, but it might not have the resources" to do much, Abuza said.
Ultimately, this may be the case for all of the smaller countries that have conflicting claims with China.
"I'm increasingly beginning to think there is going to be a lot of egg-sucking going on if you're a Southeast Asian," Dutton said. But the increasing enforcement of China's maritime claims will most likely not happen all at once, he said.
"It's not going to happen quickly—it's going to be piecemeal," Abuza said. "The Chinese operate by salami slices: atoll by atoll. It's just going to happen and no one is going to stop that."
—By CNBC's Everett Rosenfeld