What is different about this latest round of tensions is that its scope has transcended the historical disagreements over exclusive economic zones (EEZs) and it is being played out against what is no longer a purely bilateral backdrop.  In late July, U.S. Secretary of State Hillary Clinton chose a multilateral forum – an Association of Southeast Asian Nations (ASEAN) Regional Forum meeting in Hanoi – to place the United States squarely in the middle of the South China Sea territorial disputes.  Her remarks – construed by the Chinese as an attempt to internationalize what they see as bilateral issues between China and the littoral states concerned – drew strong rebuttals from Chinese Foreign Minister Yang Jiechi and the Chinese Ministry of National Defense.

These were followed by more posturing:  at the end of July, China conducted its largest ever military drills in the South China Sea.  And earlier this month, the United States and Vietnam – the ASEAN chair and a party to offshore territorial disputes with China – held a week-long naval exercise; ostensibly, this was to commemorate the 15th anniversary of normalized relations, but in light of recent events, it wouldn’t be far-fetched to interpret it as a shot across China’s bow.

And while visiting the Philippines this week, the head of U.S. Pacific Command Admiral Robert Willard spoke out on China’s apparent assertiveness in the South China Sea region, denounced the coercive use of force to settle territorial disputes, and made an explicit commitment to a continued U.S. presence in the region for years to come.

Admiral Willard’s remarks coincided with the Pentagon’s release of its latest annual report to Congress on military and security developments involving China.  The report references China’s territorial disputes, including in the South China Sea, and mentions that the Chinese military is building the capacity to attack ships in the Western Pacific Ocean.

The actions of the United States, beginning with Secretary Clinton’s remarks in Vietnam, seem to be a response to the Chinese government’s surprising message to senior U.S. officials in March that the South China Sea issue was now one of China’s “core interests” – a diplomatic code phrase for a matter over which China would fight a war.

At the same time, those actions, while geared toward the situation in the South China Sea, would appear to be part of a broader series of overtures by the Obama administration to reassert the United States’ role in Southeast Asia.  Such overtures include signing the Treaty of Amity and Cooperation with ASEAN, announcing the intention to open a mission and name an ambassador to ASEAN in Jakarta, holding the first U.S.-ASEAN summit, and strengthening sub-regional and bilateral cooperation with specific ASEAN countries.

In short, despite being mired in two wars elsewhere in the world and having twice postponed a presidential visit to the region, the United States is issuing a clear reminder that it still is – and plans to remain – a key strategic player in the region.  That this reminder is in large part directed at China – and meant to reassure America’s Southeast Asian allies – begs the question of whether the South China Sea, and by extension Southeast Asia, is fast shaping up to be the next major battleground for influence between the two powers.  This, in turn, has implications for ASEAN unity:  as some countries (for example, Vietnam, the Philippines, Malaysia and Brunei) are affected more than others by the South China Sea issue, there is the potential for individual countries to be pulled in different directions, especially against the backdrop of big power intervention.

On the U.S.-China front, if managed imprudently or left to fester, the current tensions in this region could well develop, in the very near future, into a major source of friction that destabilizes bilateral relations.

There is thus an immediate need, as always, for cool-headed U.S.-China diplomacy, including through military-to-military dialogue.  It would be extremely useful, for example, for each side to clarify its definition of a “core interest” (in the case of China) or a “national interest” (in the case of the United States) in the context of the South China Sea issue; for the United States to explain the policy nuances behind Secretary Clinton’s remarks (as one reason for China’s displeasure is its perception that the United States has significantly changed its position on the South China Sea disputes); and for both countries to clarify their strategic intentions in the region.

There is also a greater need for maritime diplomacy among the key players in the South China Sea region.  While territorial disputes need to be resolved by the relevant parties concerned in accordance with international law, such disputes should not get in the way of the maritime trade and commerce that is critical to the region.

In this regard, stepped-up efforts between China and ASEAN to agree on a code of conduct in the South China Sea would help address freedom of navigation concerns amid conflicting territorial claims.  It would also reflect good faith on the part of China to engage constructively with its regional neighbors, despite their differences.

At the end of the day, however, codes of conduct and other confidence-building measures will not be effective if the root causes of mistrust are not addressed.  As China continues to develop and assess its approach to and public diplomacy pertaining to maritime affairs, it will eventually have to respond to the growing perceptions of its stance and swagger – both in the South China Sea and in the waters further northeast.  This is especially so if China wishes to reassure the world that its rise is indeed peaceful.