With the incoming administration likely to grapple early with South China Sea issues, the CSIS Southeast Asia Program, directed by Dr. Amy Searight, worked in collaboration with other Asia colleagues at CSIS—Dr. Michael Green, Senior Vice President for Asia and Japan Chair; Dr. Zack Cooper, Fellow, Japan Chair; Bonnie Glaser, Senior Adviser for Asia and Director, China Power Project; Andrew Shearer, Senior Adviser on Asia-Pacific Security; and Greg Poling, Director Asia Maritime Transparency Initiative—to provide the analytical context and some fundamental principles that should guide strategic thinking on South China Sea policy.

A critical and early Chinese test of U.S. resolve is likely to come in the South China Sea, where Washington has struggled to respond effectively to assertive Chinese behavior. Enduring U.S. interests—freedom of navigation and overflight, support for the rules-based international order, and the peaceful resolution of disputes—are at risk in the region. U.S. goals to uphold regional alliances and partnerships, defend international rules and norms, and maintain a productive relationship with China remain valid. China has seized the initiative in the South China Sea, however, and the United States needs to revamp its strategy to reverse current trends and escape the trap of reactive and ineffectual policymaking. To this end, the new administration should perform an early, top-down, and thorough strategic review to enable greater consistency and effectiveness in U.S. South China Sea policy.

China is undertaking a persistent, long-term effort to establish control over the South China Sea. Under President Xi Jinping, Beijing has undertaken more assertive policies that have greatly improved Beijing’s position in the South China Sea. China remains uncompromising on sovereignty, has increased its capability to enforce its de facto control in disputed areas, and has sought to advance its claims while staying below the threshold for direct military conflict with the United States.

China has steadily built capabilities and infrastructure, most notably military facilities on artificial islands, that enable greater control of the South China Sea. The growing size and capability of the Chinese air force, navy, and coast guard allow Beijing to consistently monitor and exercise de facto control over most of the South China Sea. China’s island outposts will increase this advantage as Chinese aircraft, ships, and paramilitary vessels will be able to rest and resupply in the southern portion of the South China Sea.
China is already providing indications of how it might act when it controls the South China Sea. China has harassed U.S. Navy ships operating in the South China Sea, warned military flights to stay away from its artificial islands, and recently seized a U.S. drone operating in the exclusive economic zone of the Philippines. These actions suggest that China might undermine freedom of navigation and overflight, principles of fundamental importance to the United States.
China has shown it is willing to accept substantial risk to achieve its ends, and has engaged in outright coercion against weaker neighbors like the Philippines and Vietnam. U.S. allies and partners in the region are drawing lessons from Chinese coercive behavior and the limited U.S. response to it, and some are beginning to doubt U.S. resolve and adjust their foreign policies in response.

https://www.csis.org/analysis/south-china-sea-some-fundamental-strategic-principles