Escalating China-Philippines Maritime Dispute in the South China Sea: A Geopolitical Risk Analysis

Executive Summary

China is effectively blocking Filipino fishermen's access to Scarborough Shoal through a 'nature reserve' it has designated there, thereby circumventing accusations of violating international law. This is the roundabout strategy of establishing effective control that China adopted after the 2016 Hague arbitral ruling stripped the 'historic rights' rationale of its international legal basis. The United States has confined itself to criticism at the level of statements, leaving it vulnerable to China's framing of such support as 'empty rhetoric,' while ASEAN lacks the capacity for a collective response due to conflicting interests among its member states. Going forward, the base-case scenario of a continued low-intensity war of attrition carries the highest probability, though the risk of accidental escalation during the exercise of coercive means—as in the August 2025 coast guard-navy collision case—remains ever-present. Given the massive volume of maritime trade passing through the South China Sea, the Korean government and businesses need to continuously monitor route risk premiums and spillover effects on the fisheries and shipping sectors.

I. Situation Analysis

Escalating China-Philippines Maritime Dispute in the South China Sea: Situation Analysis

1. Background and Developments

Scarborough Shoal (known in China as Huangyan Dao) is a coral reef feature located 240 km west of Luzon Island[7]. It lies several hundred kilometers from mainland China[7]. China and the Philippines have long disputed sovereignty over this reef.

In 2016, the Permanent Court of Arbitration at The Hague ruled in the case brought by the Philippines that China's 'nine-dash line' claim had no basis in international law[10][12]. The tribunal held that none of the features in the Spratly Islands could generate an exclusive economic zone or continental shelf[2]. China rejected the ruling, declaring it "null and void, and not binding"[5]. Immediately after the ruling, China responded with large-scale maritime military exercises[5]. Nevertheless, it is difficult to deny that China, which has long presented itself as a 'responsible major power,' suffered damage to its image as 'a state that does not comply with international law'[5].

Since then, the situation in the South China Sea has developed into a contest of raw power, irrespective of the ruling. In June 2024, an incident occurred near Second Thomas Shoal in which Chinese coast guard personnel armed with blades boarded a Philippine vessel[6]. In April 2025, the Chinese coast guard landed on Sandy Cay, an uninhabited sandbar in the Spratly Islands, and raised the Chinese flag there[16]. This marked China's first formal, on-the-ground assertion of sovereignty over an uninhabited feature in roughly a decade, suggesting that the focus of the dispute—which had centered on maritime rights—is shifting back toward a contest for control of land features[16]. On August 11, 2025, a Chinese coast guard vessel and a naval destroyer, while attempting to obstruct a Philippine coast guard operation in the waters off Scarborough Shoal, collided with one another, resulting in the deaths of two coast guard personnel[14][15]. China did not officially acknowledge the accident at the time but has recently posthumously honored the two as having 'died in the line of duty'[14][15].

2. Current Situation

On August 8, 2026, the U.S. State Department issued a statement criticizing China for blocking Filipino fishermen's access to waters around Scarborough Shoal[1]. The State Department pointed out that China was advancing its sovereignty claims under a 'dubious' environmental rationale[7]. The target of this criticism is the 'Huangyan Dao National Nature Reserve' that China has designated[9].

China's state-run Global Times pushed back forcefully. It argued that the United States, riding on the Philippines' 'exaggerated propaganda,' was smearing the Huangyan Dao nature reserve as 'stoking instability'[9]. A Chinese expert claimed that Washington, while encouraging Manila to disturb regional peace, was in fact providing only empty rhetoric without substantive support, thereby actually deepening tensions in the region[9]. This is a framing effort aimed at highlighting that U.S. involvement amounts to nothing more than 'verbal support,' in order to cast doubt on the efficacy of the Philippines' hardline stance toward China.

On the military front, the People's Liberation Army's Southern Theater Command conducted a joint naval-air exercise in the waters off Scarborough Shoal on August 1, 2026[11]. China took issue with the Philippines' submission to the United Nations of a chart aimed at extending its seabed rights in the South China Sea, characterizing it as "a challenge to territorial sovereignty and maritime rights and interests"[11]. On the ground, tensions continue not only around Scarborough Shoal but also near Pag-asa Island (known in China as Thitu). A Filipino fisherman named Joseph reported witnessing Chinese coast guard vessels and PLA Navy ships lined up across the horizon in every direction while fishing in his usual grounds near Thitu Island[4]. Local journalists and experts have raised concerns that even the features currently under the Philippines' effective control could be eroded[4].

Response at the level of regional multilateral institutions has effectively stalled. Even though an armed clash between China and the Philippines occurred during the period of the ASEAN Foreign Ministers' Meeting, ASEAN failed to produce even a joint statement on the recent maritime incident[3]. This reconfirms that ASEAN's capacity to forge consensus on South China Sea issues is structurally weak[3].

Within the Philippines, the issue is also spilling over into the realm of education policy. Members of the House of Representatives have introduced a bill requiring the Department of Education and the Commission on Higher Education to develop standardized educational materials on the South China Sea[13]. While the intent is to counter pro-Beijing narratives, controversy has also arisen over what exactly constitutes 'teaching the truth'[13].

3. Key Actors and Positions

The Philippines has made maintaining effective access to Scarborough Shoal and Pag-asa Island its top priority. This is both a matter of fishing rights tied directly to fishermen's livelihoods, and an attempt to convert the legal asset of the 2016 arbitral ruling into actual, effective control. Its submission to the United Nations of a chart extending seabed rights[11] and its efforts to build public opinion through domestic education legislation[13] can be read as a multilayered strategy to simultaneously accumulate legitimacy under international law and in domestic politics.

China is attempting to institutionalize effective control under the pretext of environmental management, through the designation of the 'Huangyan Dao Nature Reserve'[9]. In response to U.S. criticism, it dismisses the criticism as mere "empty rhetoric," employing a framing that portrays the Philippines' closer ties with the United States as itself the cause of regional instability[9]. At the same time, China is pursuing a dual strategy of demonstrating on-the-ground superiority through joint naval-air exercises and the permanent deployment of coast guard vessels[11][4].

The United States has maintained a principle of not taking sides on the sovereignty dispute itself, while checking China's expansion of influence under the banner of freedom of navigation and support for allied nations[2]. The latest State Department statement is an extension of this posture. China, however, points out that such involvement amounts to nothing more than 'verbal support' without substantive security guarantees, casting doubt on its efficacy[9].

ASEAN, despite including most of the regional parties to the dispute, has been unable to produce a meaningful collective response due to divergent positions on China among its member states[3]. This demonstrates that multilateral management of the South China Sea issue is effectively being absorbed into a structure of bilateral standoffs between individual parties and the broader U.S.-China rivalry.

4. Key Issues

First, the issue is whether the designation of a 'nature reserve' can serve as a legitimate basis under international maritime law for restricting fishing rights. The United States characterizes this as an indirect means of asserting sovereignty[1][7]. China justifies it as the exercise of a sovereign prerogative in environmental management[9].

Second, the question of the efficacy of the 2016 arbitral ruling is resurfacing. The gap between the legal ruling and actual on-the-ground control has persisted, unresolved, for nearly a decade[10][12][5].

Third, there is the possibility of a renewed contest over control of land features. As shown by the Sandy Cay case[16], if the focus of the dispute shifts from maritime rights to the physical occupation of features, the risk of accidental clashes will increase considerably.

Fourth, there is the risk that accidental military clashes could become a recurring feature. The fatal collision between a coast guard vessel and a naval ship in August 2025[14][15] shows that on-the-ground tensions have already reached a stage where they result in loss of life.

Fifth, ASEAN's institutional impotence is widening the gap in dispute management[3]. In the absence of a functioning multilateral mediation mechanism, the dispute is likely to be increasingly absorbed as a subordinate variable of the broader U.S.-China strategic rivalry.

II. In-Depth Analysis

Escalating China-Philippines Maritime Dispute in the South China Sea: In-Depth Analysis

1. Analysis of Root Causes

The immediate trigger for this dispute is China's designation of a 'nature reserve.' This is not, however, a new conflict but rather a variant expression of the existing sovereignty dispute. China has designated the 'Huangyan Dao National Nature Reserve' at Scarborough Shoal[9]. While environmental protection is cited as the justification, the practical effect is to restrict Filipino fishermen's access[1]. The U.S. State Department has characterized this as a new tactic for asserting sovereignty under the guise of "dubious environmental logic"[7].

The underlying background to this approach lies in the 2016 ruling of the Hague arbitral tribunal. The tribunal held that none of the features in the Spratly Islands could generate an exclusive economic zone or continental shelf[10][12]. China's 'nine-dash line' claim itself thereby lost its basis under international law[2]. This ruling made it difficult for China to openly assert its traditional 'historic rights' rationale on the international stage. Instead, it can be seen as having pivoted toward a strategy of accumulating effective control through indirect means such as environmental protection, fisheries management, and the establishment of administrative districts. The designation of the nature reserve is a measure aimed at blocking the physical access of Philippine fishing vessels while avoiding accusations of violating international law.

A deeper cause lies in the geopolitical value of Scarborough Shoal and Pag-asa (Thitu) Island. Scarborough Shoal is a coral reef feature rich in fishery resources, located 240 km from Luzon Island[7]. Given that it lies several hundred kilometers from mainland China, China's claim is weak on grounds of geographic proximity[7]. Nevertheless, the reason China refuses to abandon this area is its strategic goal of securing control over the South China Sea as a whole. Near Pag-asa Island, it has already become routine for Filipino fishermen to fish while surrounded on all sides by Chinese coast guard and PLA Navy vessels[4].

2. Structural Context

Political Structure

The South China Sea dispute is strongly characterized as a derivative of the U.S.-China hegemonic rivalry, going beyond a purely bilateral issue. "While the South China Sea dispute is directly a matter between regional countries such as China, the Philippines, and Vietnam, beneath the surface lies the grand power struggle between the United States, which has enjoyed dominant status in the Western Pacific, and a rising China"[2]. The United States maintains the principle of not intervening in the sovereignty dispute itself[2]. Instead, it has chosen to check China's expanding influence under the banner of freedom of navigation[2]. This is "because Washington judges that failing to check China in the South China Sea would mean losing both its hegemonic standing in the Asia-Pacific and the trust of regional countries"[2].

ASEAN has failed to function as a substantive actor within this structure. Even though an armed clash between China and the Philippines occurred during the period of a Foreign Ministers' Meeting, ASEAN was unable to produce even a joint statement[3]. With the interests of other South China Sea claimant states such as Vietnam and Malaysia diverging, compounded by the passive stance of member states wary of jeopardizing their economic ties with China, ASEAN's capacity for collective response remains structurally constrained[3].

Within the Philippines, there is a discernible trend toward the institutionalization of hardline public opinion against China. In the House of Representatives, a bill has been introduced to develop standardized educational materials on the South China Sea[13]. This bill explicitly states its purpose of countering pro-Beijing narratives[13]. This underscores how the South China Sea issue has become a fixed variable in Manila's domestic politics.

Economic and Security Structure

Scarborough Shoal and the Spratly Islands carry economic stakes tied to fishing rights and potential seabed resources. At the same time, the South China Sea holds security value as a key artery of global maritime trade. The division of roles between the Chinese coast guard and the PLA Navy is also noteworthy. In August 2025, a Chinese coast guard vessel and naval destroyer, while obstructing a Philippine coast guard operation near Scarborough Shoal, collided with one another, resulting in the deaths of two coast guard personnel[14][15]. This mode of operation—simultaneously mobilizing both the coast guard and the navy—exemplifies the characteristics of 'gray-zone tactics': applying pressure that is substantively backed by military force, without putting regular armed forces at the forefront.

3. Historical Precedents and Comparable Cases

The 2012 Scarborough Shoal standoff is the archetype of the current situation. At that time, China effectively consolidated its control over the area following a standoff with the Philippines. The current designation of the nature reserve can be interpreted as a further step aimed at legally and administratively cementing that effective control.

China's pattern of response since the 2016 ruling is also being repeated. China declared the ruling "null, void, non-binding, and neither accepted nor recognized," while simultaneously conducting large-scale maritime military exercises[5]. This same pattern has recurred this time: immediately after the U.S. State Department's criticism, the PLA's Southern Theater Command conducted a joint naval-air exercise in the waters around Scarborough Shoal[11]. Responding to international legal criticism with a show of military force has effectively become China's standard grammar of response.

The April 2025 landing on Sandy Cay is a precedent illustrating a change in the nature of the dispute. It represented "China's first formal, on-the-ground assertion of sovereignty over an uninhabited feature," an occurrence unseen in roughly a decade[16]. This suggests that the center of gravity is shifting from legal disputes over maritime rights toward a contest for physical occupation of land features[16]. The designation of the nature reserve is likewise an extension of this trend, being an attempt to expand the area of effective control through administrative measures alone, without physical occupation or military clashes.

4. Key Variables in the Development of the Issue

The first variable is the level of U.S. involvement. The United States has thus far refrained from direct intervention in the sovereignty dispute, maintaining a response limited to statements and freedom-of-navigation operations[2]. A Chinese expert has dismissed this approach as nothing more than "empty rhetoric," arguing that verbal support without substantive backing only deepens regional tensions[9]. Whether the United States expands substantive security guarantee measures based on the Mutual Defense Treaty, or remains at the current level of diplomatic criticism, will be a variable that determines the intensity of the Philippines' future response.

The second variable is the Philippines' strategy of leveraging international law. The Philippines has submitted to the United Nations a chart aimed at extending its seabed rights in the South China Sea[11]. This is a continuation of Manila's approach of consistently utilizing legal instruments since its 2016 arbitral victory. Given that China has characterized this as "a challenge to territorial sovereignty and maritime rights and interests" and responded with military exercises[11], further legal and diplomatic measures by the Philippines could serve as a catalyst determining the intensity of China's physical response.

The third variable is whether accidental clashes can be managed. The August 2025 case of fatalities resulting from a collision between a coast guard vessel and a destroyer[14][15] shows that on-the-ground physical standoffs have already reached a level involving loss of life. China's recent posthumous designation of the deceased coast guard personnel as having 'died in the line of duty'[14][15] suggests that domestically, it is consuming this incident through a nationalist narrative. This mode of domestic political consumption could function as a constraint that makes it harder for China to adopt a flexible external posture should similar incidents occur in the future.

The fourth variable is the possibility of collective action by ASEAN. To date, ASEAN has shown itself powerless, unable to even issue a joint statement on the China-Philippines clash[3]. If other claimant states such as Vietnam and Malaysia continue to choose silence, caught between their own economic interests with China and support for the Philippines, the Philippines is likely to move toward relying more heavily on bilateral and mini-lateral cooperation with extra-regional countries such as the United States and Japan, rather than on regional multilateral frameworks.