The prominence of the South China Sea comes from its wealth of energy resources, fisheries, and maritime trade that traverses through its waters. These assets entice many southeast Asian countries to stake their claims over the features of the sea. In recent years, China’s rising power has allowed the country to increasingly assert its authority in the territory without much of an opposing force. Of the few actors that are capable of policing China’s actions, the United States is the most promising, yet has failed to meet international expectations. Through two case studies and theoretical analysis, this thesis examines the failures of American deterrence policy through a two-part approach. First, it investigates the incident of the 2012 Scarborough Shoal standoff between the Philippines and China, analyzing the consequences of American policy failure. It then examines Chinese island reclamation efforts, and how the failures from the first case study can explain the new Chinese strategy and rationale behind Chinese activities. Lastly, the paper explores the deterrence theory and its applications to gray zone conflicts, pointing out components of successful deterrence in these types of engagements and why American deterrence policy was ineffective.

The South China Sea is a sea with strategically important shipping lanes, an abundance of maritime resources, and potentially large amounts of oil and gas deposits. Because of the significance of the sea, China has claimed almost all of it, which has caused the Association of Southeast Asian Nation members (ASEAN) whose countries surround the sea (Vietnam, Singapore, Indonesia, Malaysia, Brunei, and the Philippines) to take a stance against the encroachment. The most important non-Chinese claimant in the dispute is the Philippines, which shares a mutual defense treaty with the United States. The dispute has been analyzed from a bilateral perspective between China and the Philippines. A theoretical analysis of the dispute has been conducted through a Neorealist paradigm. How the two countries define international law and engage in diplomatic and military policies has also been closely examined. China has not sought foreign intervention whether from a nation or international organization, while the Philippines has preferred as much multilateralism as possible. A recent Scarborough Shoal dispute between the two countries has changed the dynamic of the dispute, and in examining the event and its outcome an inevitable conclusion of military action has been reached.