U.S.-China Military Tensions in the
In early 2026, US and Chinese military exercises in the South China Sea overlapped in time and space, raising the risk of accidental collision to its highest level since the Cold War. Japan finds itself on the front lines geographically and by alliance, forced to fundamentally transform its post-war security framework.
── Understand in 3 points ─────────
- • From January to March 2026, the U.S. Navy conducted at least six Freedom of Navigation Operations (FONOPs) in the South China Sea, doubling the frequency compared to the same period last year.
- • The Chinese People's Liberation Army Navy conducted its largest-ever live-fire exercise across the entire South China Sea in February 2026, deploying a fleet including the aircraft carrier "Fujian."
- • In early March 2026, an incident occurred near Scarborough Shoal where a U.S. destroyer and a China Coast Guard vessel approached within approximately 45 meters of each other.
── NOW PATTERN ─────────
In the South China Sea, the "Spiral of Conflict" functions as a dominant structural pattern, where actions by both the U.S. and China fall into a self-reinforcing loop, each justifying the other's escalation. This is intertwined with "Alliance Strain" and "Overextension of Power," narrowing the room for crisis management.
── Probabilities and Responses ──────
• Base case 55% — Resumption of communication channels between US and Chinese military authorities, stabilization of FONOP frequency, realization of US-China foreign minister talks at ASEAN-related meetings, China's response to Philippine resupply operations limited to physical obstruction.
• Bull case 15% — Announcement of a confirmed date for a US-China summit, reduction in the scale of Chinese Navy exercises in the South China Sea, intentional reduction in US FONOP frequency, reports of concrete progress in COC negotiations, partial agreement between the US and China in trade.
• Bear case 30% — Escalation of China's use of force at Second Thomas Shoal, disruption of US-China military communication channels, rapid rise of anti-American nationalism in China, abnormally active Chinese military activities in the Taiwan Strait, moves in the US Congress for a resolution on the use of force related to the South China Sea.
📡 THE SIGNAL — What Happened
Why it matters: In early 2026, US and Chinese military exercises in the South China Sea overlapped in time and space, raising the risk of accidental collision to its highest level since the Cold War. Japan finds itself on the front lines geographically and by alliance, forced to fundamentally transform its post-war security framework.
- Military Trends — From January to March 2026, the U.S. Navy conducted at least six Freedom of Navigation Operations (FONOPs) in the South China Sea, doubling the frequency compared to the same period last year.
- Military Trends — The Chinese People's Liberation Army Navy conducted its largest-ever live-fire exercise across the entire South China Sea in February 2026, deploying a fleet including the aircraft carrier "Fujian."
- Military Trends — In early March 2026, an incident occurred near Scarborough Shoal where a U.S. destroyer and a China Coast Guard vessel approached within approximately 45 meters of each other.
- Diplomacy — The U.S. State Department reiterated its condemnation of China's militarization of artificial islands in the South China Sea as "violations of international law" and announced increased joint patrols with allies.
- Diplomacy — The Chinese Foreign Ministry characterized U.S. military navigation as "infringement of sovereignty" and issued a statement reserving the right to take countermeasures.
- Alliance Relations — The Japanese and U.S. governments, at the Japan-U.S. Security Consultative Committee (2+2) in February 2026, explicitly stated the South China Sea situation as a "serious concern" and confirmed a joint response policy.
- Alliance Relations — The Philippines expanded its EDCA (Enhanced Defense Cooperation Agreement) sites to nine locations based on the U.S.-Philippines Mutual Defense Treaty, enhancing U.S. military access to the South China Sea.
- Economic Impact — International trade passing through the South China Sea amounts to approximately $5.3 trillion annually, accounting for about one-third of global maritime trade.
- International Law — The 2016 Permanent Court of Arbitration ruling rejected China's claim of historical rights based on its "nine-dash line," but China has consistently rejected the ruling.
- Military Power — The Chinese Navy, with over 370 vessels, has become the world's largest navy, numerically surpassing the U.S. Navy's approximately 295 vessels.
- Technology — China has deployed HQ-9 anti-aircraft missile systems and YJ-12B anti-ship missiles on its artificial islands in the South China Sea, effectively establishing an A2/AD (Anti-Access/Area Denial) zone.
- Japan — The Japan Maritime Self-Defense Force dispatched the destroyer "Izumo" to the South China Sea in 2026 to participate in multilateral joint exercises. This marked Japan's largest post-war military presence in the region.
The US-China confrontation in the South China Sea did not emerge overnight. Its roots trace back to structural shifts in the balance of power in the Asia-Pacific region after the end of the Cold War.
Since 1945, the United States, backed by its overwhelming naval power in the Pacific, has maintained freedom of navigation and a maritime order based on international law. The "hub-and-spoke" alliance system, centered on the Japan-U.S. Security Treaty, the U.S.-ROK Alliance, and the U.S.-Philippines Alliance, has supported stability in Asia for over half a century. However, this order was predicated on the relative military superiority of the U.S., a premise that began to waver in the 2010s.
Around 2013, China began large-scale construction of artificial islands in the Spratly Islands in the South China Sea. In 2015, President Xi Jinping explicitly stated to President Obama at a summit that China would not militarize the artificial islands, but that promise was quickly broken, with runways, radar facilities, and missile launchers being built one after another. This was not merely a territorial dispute but part of China's grand plan to shift its naval strategy from "near-seas defense" to "far-seas defense."
The 2016 Permanent Court of Arbitration ruling unequivocally rejected China's historical rights based on the nine-dash line. However, international legal rulings lack enforcement mechanisms, and China dismissed it as "a piece of waste paper." At that time, the international community's failure to take action to guarantee the effectiveness of the ruling effectively set a precedent for the tacit acceptance of changing the status quo by force.
The first Trump administration (2017-2021) launched the "Free and Open Indo-Pacific" strategy and increased the frequency of FONOPs, but at the same time, it also created friction with allies. The Biden administration sought to repair alliances while strengthening AUKUS (Australia-UK-US security partnership) and QUAD (Quadrilateral Security Dialogue), building a multi-layered framework to contain China.
With the inauguration of the second Trump administration in 2025, US-China relations became even more complex. The re-imposition of tariffs on China, accelerated arms sales to Taiwan, and increased frequency of FONOPs in the South China Sea converged, leading to a sharper reaction from China. Particularly from late 2025 to early 2026, the Chinese Navy and Coast Guard escalated their demonstrative actions in the South China Sea in both quantity and quality.
For Japan, this situation is a matter of national survival. The South China Sea is a sea lane through which approximately 80% of Japan's crude oil imports pass, and its destabilization would shake the very foundation of the Japanese economy. Since the enactment of the Security-related Laws in 2015, Japan has made it possible to exercise the right of collective self-defense in a "situation threatening Japan's survival," but the possibility of this being invoked in a South China Sea contingency is no longer a theoretical discussion.
Why "now"? The answer is complex. First, China's military modernization has reached a qualitative turning point. With the operational deployment of the aircraft carrier "Fujian," the expanded deployment of DF-21D/DF-26 "carrier killer" ballistic missiles, and improved capabilities in space and cyber domains, the traditional superiority of the U.S. military is relatively diminishing. Second, political polarization within the U.S. has spilled over into foreign and security policy, with China policy taking on the appearance of a "hawk competition." An environment where a hardline stance is supported bipartisanship narrows the room for flexible diplomatic solutions. Third, the Marcos Jr. administration in the Philippines reversed the previous Duterte administration's conciliatory approach to China and strengthened its alliance with the U.S., changing the dynamics in the South China Sea. The dispute between China and the Philippines over resupply operations at Second Thomas Shoal could become a fuse for escalation involving the U.S.
These structural factors combine, bringing the South China Sea to a situation where an "accidental collision could happen at any time." The problem is that reliable communication channels for managing escalation are not sufficiently functioning between the two countries. During the Cold War, there were hotlines and arms control treaties between the U.S. and the Soviet Union, but the U.S. and China lack comparable safety valves.
The delta: The core of the situation change in early 2026 is that US and Chinese military activities in the South China Sea have undergone not only a "quantitative" increase but also a "qualitative" transformation. China demonstrated its blue-water operational capability with the operational deployment of the aircraft carrier Fujian, and the U.S. not only doubled the frequency of FONOPs but also normalized joint patrols with allies. As a result, physical contact opportunities between the two militaries have dramatically increased, structurally raising the probability of accidental collisions. At the same time, the development of crisis management mechanisms has not kept pace, and a structure where the "spiral of conflict" self-reinforces is becoming entrenched.
🔍 BETWEEN THE LINES — What the News Isn't Saying
Behind the official statements emphasizing "freedom of navigation" and "defense of sovereignty," what both countries are truly contending for is leadership over the Indo-Pacific order from the 2030s onward. The U.S. wants to solidify the "rules" before China's naval power irreversibly surpasses that of the U.S. military, while China wants to accumulate faits accomplis while it still has economic leeway. This "sense of urgency regarding time" is the biggest driving force behind both sides' escalatory actions and is not officially discussed. Furthermore, behind Japan's dispatch of destroyers being positioned as "multilateral training," there is an implicit understanding between Japan and the U.S. to gradually normalize Japan's military presence in the South China Sea while effectively circumventing constitutional restrictions.
NOW PATTERN
Spiral of Conflict × Alliance Strain × Overextension of Power
In the South China Sea, the "Spiral of Conflict" functions as a dominant structural pattern, where actions by both the U.S. and China fall into a self-reinforcing loop, each justifying the other's escalation. This is intertwined with "Alliance Strain" and "Overextension of Power," narrowing the room for crisis management.
Intersection of Dynamics
The three structural patterns of "Spiral of Conflict," "Alliance Strain," and "Overextension of Power" form a dangerous trinity that mutually reinforces each other in the South China Sea.
As the spiral of conflict accelerates, demands for commitment from allies increase. The U.S. not only raises the frequency of FONOPs but also asks Japan and the Philippines to "act shoulder to shoulder." However, allies have their own constraints, such as economic ties with China and domestic political considerations, making it difficult to fully meet U.S. demands. These "unmet demands" exacerbate alliance strain, reinforcing the perception among the U.S. that allies are "free riders" and encouraging further unilateral actions.
Alliance strain creates exploitable gaps for China. Strategies to deepen divisions within ASEAN, extract favorable terms through bilateral negotiations with individual countries, and weaken the U.S.-led multilateral order are rational for China. However, this "divide and conquer" strategy further accelerates the spiral of conflict. This is because the U.S. perceives China's influence operations as a threat and feels a stronger need to strengthen alliances.
Overextension of power adds temporal pressure to this vicious cycle. If both the U.S. and China feel that "now is the last chance," the time available for diplomatic solutions is lost. If the U.S. feels insecure about its future naval power due to shipbuilding capacity constraints, it will lean towards "showing force" by leveraging its current superiority. If China anticipates a prolonged economic slowdown, it will rush to create faits accomplis while it can still afford to invest in defense.
Japan is at the intersection of these three patterns. As an ally, Japan faces pressure to follow the U.S., while needing to maintain economic ties with China, and also urgently strengthen its own defense capabilities. These triple demands contradict each other, pushing Japanese policymakers into a structural dilemma. Should an accidental collision occur in the South China Sea, this dilemma will immediately surface, making a fundamental review of Japan's post-war security framework inevitable.
📚 PATTERN HISTORY
1914: The Sarajevo Incident and the Outbreak of World War I
Spiral of Conflict and Alliance Chain
Structural similarities with the present: The rigidification of alliance networks between two major blocs led to an accidental incident (the assassination in Sarajevo) triggering uncontrollable escalation. Military automatic mechanisms (mobilization plans) superseded diplomatic judgment, and a "war nobody wanted" broke out. This lesson directly applies to the risk of accidental collisions in the South China Sea.
1962: Cuban Missile Crisis
Spiral of Conflict and Risk of Accidental Collision
Structural similarities with the present: The conflict between the U.S. and the Soviet Union over nuclear weapons created the ultimate escalation crisis. It was ultimately averted through back-channel diplomacy, but during the process, on-site accidental incidents such as depth charge attacks on submarines and U-2 aircraft airspace violations nearly triggered nuclear war. The establishment of hotlines and arms control treaties after the crisis demonstrates the importance of crisis management mechanisms.
2001: Hainan Island Incident (EP-3 Incident)
Accidental Military Collision between the US and China
Structural similarities with the present: A U.S. Navy EP-3 reconnaissance aircraft and a Chinese fighter jet collided in the airspace over the South China Sea, killing the Chinese pilot and forcing the U.S. aircraft to make an emergency landing on Hainan Island. Although this incident was resolved diplomatically, U.S.-China relations were extremely tense for 11 days. The current situation is more serious than 2001 in that the frequency of such accidental incidents is orders of magnitude higher.
2012-2014: Scarborough Shoal Standoff and Annexation of Crimea
Changing the Status Quo by Force and Creation of Fait Accompli
Structural similarities with the present: China seized effective control of Scarborough Shoal from the Philippines in 2012, and Russia annexed Crimea in 2014. In both cases, the limited reaction from the international community reinforced the perception that "changing the status quo by force is possible." The militarization of artificial islands in the South China Sea is an extension of this.
1930s: Japan's Southern Expansion Policy and the Road to the Pacific War
Overextension of Power and Conflict over Resources
Structural similarities with the present: Japan's Southern Expansion Policy, aimed at securing resources and expanding its sphere of influence, made conflict with the U.S. and Britain inevitable, ultimately leading to the Pacific War. The competition over energy resources and strategic sea lanes in the South China Sea can be read as a variation of this historical pattern.
Patterns Revealed by History
Historical precedents consistently demonstrate the following structural lessons. First, when the confrontation between two major powers combines with the rigidification of alliance networks, the risk of an accidental incident escalating into a system-wide conflict dramatically increases. 1914 Europe is an extreme example, and its signs are observed in the Indo-Pacific of 2026. Second, the presence or absence of crisis management mechanisms is a decisive turning point. The Cuban Missile Crisis did not lead to nuclear war because back-channel diplomacy functioned as a "safety valve." The U.S. and China currently structurally lack this safety valve. Third, once a change in the status quo by force succeeds, it sets a precedent and induces the next change. This pattern, from Scarborough Shoal to Crimea, and then to the militarization of artificial islands in the South China Sea, shows the gradual erosion of international order. Fourth, conflicts over resources and sea lanes activate a logic of national survival that transcends economic rationality, making compromise difficult. Synthesizing these lessons, history warns that an accidental collision in the South China Sea is approaching a matter of "when" rather than "if."
🔮 WHAT'S NEXT
Throughout 2026, military tensions between the U.S. and China in the South China Sea will remain high, but without leading to direct military conflict. Accidental close encounters and near misses will continue to occur, but both sides will avoid intentional escalation. Several deterrent factors underpin this scenario. First, the recognition of the catastrophic consequences of a direct conflict between nuclear-armed states will serve as a final brake. Second, the economies of the U.S. and China remain deeply interdependent, and for China in particular, Western markets as export destinations are irreplaceable. Third, with the U.S. midterm elections approaching in 2026, the Trump administration may lean towards emphasizing economic achievements rather than the risk of military conflict. In this scenario, tensions will remain within the framework of "managed competition." The China-Philippines dispute over Second Thomas Shoal will intermittently intensify but will not lead to direct U.S. intervention. Japan will continue to dispatch destroyers to the South China Sea but will not engage in actual combat operations. A military communication agreement between the U.S. and China may be reached within the year, but its effectiveness will be limited. Markets will price in intermittent geopolitical risk premiums but will not experience major shocks.
Implications for Investment/Action: Resumption of communication channels between US and Chinese military authorities, stabilization of FONOP frequency, realization of US-China foreign minister talks at ASEAN-related meetings, China's response to Philippine resupply operations limited to physical obstruction.
Both the U.S. and China take concrete steps towards de-escalation in the South China Sea, and the risk of accidental collision significantly decreases. The realization of this scenario requires multiple conditions to be met simultaneously. The most important condition is the realization of a U.S.-China summit and concrete agreements reached there. A summit could take place in the first half of 2026, utilizing platforms like the G7 or G20, potentially leading to agreements on the effective implementation of the Code for Unplanned Encounters at Sea (CUES) and the continuous operation of military hotlines. For China, easing external tensions is a rational choice amid economic slowdown, and the Xi Jinping administration may prioritize domestic stability. On the U.S. side, the Trump administration has an incentive to leverage a U.S.-China "deal" as a political achievement. If a trade-off is reached, where de-escalation in the South China Sea is exchanged for some concessions on trade, both sides can claim "victory." Progress is also seen in the Code of Conduct (COC) negotiations led by ASEAN, potentially reaching an agreement on at least a provisional framework. If this scenario materializes, Japan's sea lane risk will decrease, and defense spending discussions will proceed in a more moderate direction. The overall investment environment in the region will improve, benefiting Asian currencies and stock markets.
Implications for Investment/Action: Announcement of a confirmed date for a US-China summit, reduction in the scale of Chinese Navy exercises in the South China Sea, intentional reduction in US FONOP frequency, reports of concrete progress in COC negotiations, partial agreement between the US and China in trade.
A direct accidental military collision actually occurs between the U.S. and China in the South China Sea. This scenario materializes if the current spiral of conflict loses control. The most probable collision scenario revolves around the resupply mission to Second Thomas Shoal (Ayungin Shoal) in the Philippines. This could involve the China Coast Guard physically obstructing a Philippine resupply vessel, and in response to the U.S. military providing escort, China escalating from water cannons to live ammunition, or dangerous interference with U.S. warships escalating. Another scenario is a close encounter between U.S. and Chinese vessels or aircraft near Scarborough Shoal or the Paracel Islands escalating into a collision. The risk of unintended use of force due to on-site judgment, especially compounded by bad weather or communication failures, cannot be ignored. The ripple effects of a collision would be immense. First, escalation management would be the biggest challenge. Whether a "limited conflict" can be maintained or if a chain of retaliation escalates into full-scale military conflict depends on the judgment of both leaderships. Spillover into the Taiwan Strait is also a significant risk, with China potentially intensifying military activities around Taiwan under the pretext of a South China Sea collision. For Japan, this would be a moment to test the true value of the Japan-U.S. alliance. The political decision regarding the exercise of collective self-defense (designation of a situation threatening Japan's survival) would fundamentally shake Japan's post-war system. Economically, a surge in insurance premiums due to increased navigation risks in the South China Sea, soaring energy prices, and supply chain disruptions would occur in sequence. Global financial markets would be hit by a massive risk-off event, Asian currencies would plummet, and the Nikkei 225 could record a decline of several thousand points.
Implications for Investment/Action: Escalation of China's use of force at Second Thomas Shoal, disruption of US-China military communication channels, rapid rise of anti-American nationalism in China, abnormally active Chinese military activities in the Taiwan Strait, moves in the US Congress for a resolution on the use of force related to the South China Sea.
Key Triggers to Watch
- Escalation of China's response to the Philippine resupply mission at Second Thomas Shoal (use of live ammunition or physical damage to vessels): April–June 2026
- Realization or breakdown of a US-China summit (on the sidelines of international conferences such as the G7 Hiroshima successor summit, G20): June–September 2026
- Conduct of simultaneous large-scale exercises by the Chinese Navy in the Taiwan Strait and the South China Sea: May–August 2026
- Sharpening of China policy or signals of rapprochement ahead of the US midterm elections: September–November 2026
- Occurrence of a situation where a Japanese destroyer directly confronts a Chinese vessel in the South China Sea: Throughout 2026
🔄 TRACKING LOOP
Next Trigger: Second Thomas Shoal Philippine resupply mission scheduled for April 2026 — The level of China Coast Guard response (water cannon → physical obstruction → forceful prevention) is the most important indicator of the escalation threshold.
Continuation of this Pattern: Tracking Theme: US-China Military Tension Escalation Path in the South China Sea — Next milestones are the Second Thomas Shoal resupply mission and China's response in April-May 2026, followed by the presence or absence of US-China contact at ASEAN-related foreign minister meetings in June-July.
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