Editor's Note: This story was originally published on April 13 and has been updated to include the latest developments.
China and six other countries have competing and overlapping claims to islands, fishing rights and other resources in the South China Sea. The United States is also deeply involved. It has long been the leading naval power in Asia and has alliances with several countries at odds with China.
The Permanent Court of Arbitration at The Hague ruled on Tuesday that China's extensive claims to the South China Sea were invalid, but Beijing immediately rejected the ruling.
The Philippines brought the case against China, and while the decision is considered legally binding, there is no mechanism for enforcing it.
The Hague ruling was the first of its kind, but there was no immediate indication it would help resolve a standoff that has grown increasingly complicated.
Here are four key things to know about the dispute.
1. What's At Stake
The South China Sea holds immense resources, from the oil and gas located underneath the seabed to the lucrative fishing.
"It's a race to build and bolster presence," says Andrew Scobell, a senior political scientist at the Rand Corp. "Control over the sea means greater access to fisheries and more leverage over its shipping lanes."
More than $5 trillion worth of trade passes through these waters every year, from Middle East oil bound for Asian markets to plastic lawn furniture on its way from China to Home Depot stores across the U.S.
But the dispute is not just about economic assets. The sea's strategic location near half a dozen East and Southeast Asian countries means those countries want to control the military and civilian activities in the area.
Hence the overlapping claims.
2. Whose Waters?
Seven different states claim parts of the South China Sea — China, Brunei, Taiwan, Malaysia, Indonesia, Vietnam and the Philippines. Many of these claims overlap, spurring the race for control over the sea's islands, reefs and rocks.
Taiwan's government in March flew journalists to Taiping, an all-but-invisible patch of sand in the Spratly Island formation. Taipei wants to prove the formation is "not just a rock" but an island capable of sustaining people.
The Hague ruling on Tuesday said Taiping is not an island, a decision that Taiwan rejected as "completely unacceptable."
The distinction between island and rock is important. Owners of islands are entitled to an "exclusive economic zone" out to 200 nautical miles. Rocks receive a 12-nautical-mile territorial claim.
With this in mind, Vietnam and the Philippines have raced to set up shop on contested rocks, coral reefs and sandbars, turning them into islands through dredging and military fortification.
But no country has built as feverishly as China. And to U.S. Pacific Command Chief Adm. Harry Harris, the reason for China's push is clear.
"China seeks hegemony in East Asia," he said. "Simple as that."
3. China's Strategy
"In essence, China sees the sea as a big Chinese lake," said Rand's Scobell. "The precise contours of its claims are vague, but it is clear China claims the majority of the islands, reefs and territorial waters within the infamous 'nine-dash line.' "
The nine-dash line marks a claim of sovereignty that scoops into the South China Sea from the Luzon Strait between Taiwan and the Philippines, south to Malaysia, and northeast into the waters of Vietnam. It dates from a 1947 claim by the then-Republic of China, now Taiwan.
China has avoided making a formal claim of sovereignty, possibly to give itself more room to maneuver in international negotiations.
"There are dubious grounds in international law for claiming the nine-dash line," Scobell said.
In its ruling, the Hague tribunal found there "was no legal basis for China to claim historic rights to resources within the sea areas falling within the 'nine-dash line.'"
If China formalizes its claims, it risks undermining a status quo that allows it to build with relative impunity and establish sovereignty over the sea's economic assets.
The Association of Southeast Asian Nations has called for the enforcement of a 13-year-old Code of Conduct in the South China Sea. Beijing, however, is unlikely to get behind a multiparty deal where its influence is diminished.
"China would much rather negotiate with Southeast Asian nations on a bilateral basis than with ASEAN as a whole," says Victor Cha, director of Asia studies at Georgetown University. "Beijing very much took a page from the U.S. playbook in this case — you're better off cutting smaller deals where you wield a lot more influence."
Focusing on smaller deals with individual countries plays well with China's piecemeal approach to the South China Sea. Slow and steady construction can eventually turn a few airstrips and outposts into a vast military complex able to dominate the sea and airspace alike.
4. Despite alliances, the U.S. is hesitant to do much
Washington's fear of unintended confrontations with China plays into Beijing's grand strategy in the South China Sea, analysts say.
"China knows the United States will not go to war over atolls and coral reefs," Cha said. "These are not critical U.S. security interests."
But the United States does maintain vital alliance structures in the Western Pacific, which could pull it into direct confrontation with China.
For example, the 1979 Taiwan Relations Act could require the U.S. to intervene militarily if China invades or attacks Taiwan. Both China and Taiwan claim to be the official government of China. Their claims over the South China Sea are almost identical.
The potential for deteriorating cross-strait relations puts the United States in a tough spot — it must uphold its security commitments to Taiwan while avoiding confrontation with Chinese vessels patrolling Taiwanese islands.
Beijing has taken advantage of Washington's careful balance in the South China Sea by continuing its slow and steady construction and militarization.
"The question remains unanswered as to how Washington will find a way to deter China from continuing to build," Georgetown's Cha said. "Until then, the status quo is primed to continue."
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