Testing the Waters: The South China Sea and the Future of U.S.-China Competition

In the contested South China Sea, symbolic territorial claim demonstrations are nothing novel. Just last week, China conducted a combat-readiness patrol near an island claimed by the Philippines. In May, China and the Philippines engaged in a competitive flag-raising activity on Sandy Cay - a disputed sliver of land that multiple countries in the region claim. Although theatrical, the flag-raising displays provide a clear message: China sees the waters as its own and intends to control them despite opposition.

But Sandy Cay is just a sole example of the larger issue in these waters. The South China Sea is one of the world’s most strategically important and overly contested maritime regions. It is a crucial commerce corridor, a resource-rich zone, and militarily advantageous for the controlling state. China claims around 90% of it under the so-called “nine-dash line,” which overlaps with the claims of four other countries in the region—Vietnam, the Philippines, Malaysia, and Brunei. Although Beijing’s claims have been rejected under international law, it has nonetheless aggressively militarized numerous artificial islands in the area, increasing tensions with neighboring countries.

But how far is China willing to go beyond symbolism and theatrics? Not all encounters in the South China Sea have gone so peacefully, with China ramping up its assertive actions in recent months. During one alarming incident in April of 2025, a Chinese vessel dangerously approached a Philippine ship near Second Thomas Shoal, nearly causing a collision. In other instances, the China Coast Guard employed a military grade laser and water cannons against Philippine ships. Last year, the collision between the Philippine and Chinese ships further demonstrated Beijing’s willingness to use coercive measures to assert its claims. However, it has not been easy for Beijing to achieve its objectives in the contested waters. The Philippines and Vietnam have been China’s persistent challengers, using every opportunity to remind Beijing that they too have stakes in these waters. Vietnam has repeatedly called out Beijing’s actions and has strengthened its maritime defense capabilities, including purchasing military equipment from Japan. The Philippines took legal action against China in 2016, on which the court ruled in its favor, rejecting Beijing’s historic rights and legal claims based on the “nine-dash line.” Manila has also extensively expanded its alliance with the United States to present a united front against China’s assertive actions in the waters. In June, The Philippines, Australia, Japan, and the United States announced the formation of a “Squad,” which aims to cooperate in intelligence-sharing, security, and maritime operations in the South China Sea. These developments signal that other actors in the region are far from passive. On the contrary, they are increasingly alligned to uphold international regulations and push back on Chinese encroachment, even if it entails tapping into the help and cooperation from their non-regional allies.

But such skirmishes are not merely confrontations between regional powers. They reflect China’s broader strategy to dominate the Indo-Pacific region and displace the United States from it. From Beijing’s perspective, however, asserting control over the South China Sea is driven not only by the need to project power but also by perceived national vulnerabilities and the pursuit of national security. As rival claimants refuse to make territorial concessions, China risks strategic isolation both militarily and economically. A weakened posture could leave Beijing entrapped by its adversaries, such as the United States and the Philippines. The economic stakes are also quite high, given that roughly 40% of China’s total trade volume passes through these contested waters. China’s claims, in addition, extend to the South China Sea’s vast natural resources, including billions of barrels of oil and trillions of cubic feet of natural gas.

The South China Sea, therefore, serves as a strategic lifeline; it allows Beijing to protect its posture in global trade, energy supply routes, and geopolitical upper hand in a volatile, multipolar world.As Beijing grows bolder in defending what it views as its territory, questions arise about how and whether the United States can effectively respond. At a time when the United States is reassessing its global commitments, adapting to recent leadership change, and navigating political transitions, it cannot afford to sideline the South China Sea issue. Doing so would create a dangerous window of opportunity for Beijing to assert itself more aggressively. If the United States fails to act proactively in response to Chinese maneuvers in the region, Beijing could interpret this as a positive shift in the balance of power, further emboldening its coercive behavior. Such a scenario increases the risk of escalation and the potential for conflict.

The National Strategy:

Beijing’s maritime assertiveness and long-term objectives regarding power are well captured in the State Council Information Office’s recent White Paper on national security. The document voices Xi Jinping’s “holistic security” approach, which frames national security in comprehensive terms—encompassing the military, political, economic, ideological, and technological spheres. This outlook has two main purposes: maintaining the Chinese Communist Party’s (CCP) unchallenged leadership in all domains and aligning all aspects of national development with CCP priorities. Among the key highlighted risks in the White Paper are so-called anti-China forces from the West that threaten the CCP’s power and territorial sovereignty. However, understanding Beijing’s national strategy warrants acknowledging the Century of Humiliation, referring to the period of domination by imperialist powers, defeat, and political fragmentation of China until to the formation of the People’s Republic of China and its consolidation of state borders. As China emerged as a sovereign state with fixed borders, it sought to consolidate its territorial claims. It was during this time that maps began to portray the infamous “nine-dash line” as China’s legitimate maritime boundaries. Some of these claims are even rooted in ancient historical narratives dating back thousands of years.Thus, Beijing’s assertions over the South China Sea are not only strategic but also tied to a national identity shaped by historical defeat and the need to reassert China’s status as a Great Power—one able to resist foreign influences and exploitation.

The CCP’s current outlook then reflects a longstanding strategy that centers on regime security and expanding geopolitical influence. These drivers, with roots in history, have shaped Beijing’s assertive foreign policy— particularly in how it seeks to project national power abroad and manage competition with the United States. Indeed, Beijing is testing the international system, challenging U.S. red lines, and bending prevailing norms to uphold its national interests.

The U.S. Outlook:

While China attempts to increase its regional influence and control its South China Sea claims, the United States prioritizes preserving the U.S.-led international system and deterring China’s regional hegemony. The South China Sea is a pivotal area for the United States, serving as a major global commerce and military corridor. Washington’s interests also aim to reinforce the credibility of its alliances, particularly with the Philippines, in order to avoid Chinese actions that could entrap Washington in a conflict. Therefore, the stakes for Washington are high. Ultimately, China’s South China Sea dominance would undermine the United States’ influence, reducing the country’s ability to secure its interests and undermining its credibility in the international arena. Although it is indeed in Washington’s interest to push back against China’s growing aggressiveness, the current strategy does not come risk-free. The Freedom of Navigation Operations (FONOPs), for example, could raise tensions when conducted near disputed territories even though they are symbolic in nature. Similarly, while deterrent in its objective, initiatives like AUKUS could provoke responses from Beijing. The increasing uncertainty with Washington’s alliance politics and domestic issues could also limit its ability to respond effectively. As China becomes more confrontational and exploits windows of opportunities when its adversaries are weakened or distracted, Washington should not only enhance its deterrence aims but also reassess how its actions may be perceived in the region. It should understand the embedded risks of current strategies and balance military signaling with deeper commitments to multilateral diplomacy and regional dialogue. Working more closely with ASEAN and upholding inclusive regional security initiatives can prove to be a more effective tool for avoiding a militarized rivalry with Beijing.

What Comes Next?

While many aspects threaten to drive the Sino-U.S. relationship towards a more confrontational route, the possibility of conventional warfare remains unlikely in the near future. Based on the long-term strategic goals of both countries to remain global superpowers, their competition will likely continue to concentrate in the gray-zone. China’s approach to the South China Sea does not indicate that it is willing to engage in direct military conflict unless it believes that the odds have shifted overwhelmingly in its favor. This outcome, however, is dependent on many aspects, including Taiwan’s status, other global conflicts, and U.S. domestic developments. In case China perceives that the relative power dynamics have altered favorably for itself, then Beijing might become even more assertive in its actions.

In the near future, Beijing’s approach, however, will most probably remain coercive in nature, aiming to normalize its presence in contested waters and erode norms like freedom of navigation and territorial integrity. This presents a pivotal moment for the United States to apply diplomatic pressure and engage more vigorously in deterring China’s influence. This includes following through with regional agreements such as AUKUS and expanding its Freedom of Navigation Operations (FONOPs). However, the United States must remain cautious not to escalate tensions unintentionally through aggression, and equally prioritize diplomacy and regional cooperation with its allies. As Washington retains advantages over Beijing, including vaster alliance networks and soft power through international organizations like the United Nations, it has the opportunity to manage the rivalry and contain the risks of escalation. Even if the possibility of a direct war in the next couple of years may seem remote, Washington should not underestimate Beijing’s resolve when it comes to the South China Sea and the larger Indo-Pacific region. The important part is to avoid shifting the balance of power in Beijing’s favor - a development that can embolden it to pursue an even more assertive foreign policy and test U.S. global promises more relentlessly. If left unchecked, China may eventually overstep red lines in the region, whether through increased aggression in the South China Sea or provocation over Taiwan, risking a crisis that can entangle the United States and its regional allies into an open conflict. How this strategic rivalry unfolds in the coming years, therefore, will be a defining moment in the history of international affairs and global politics.