China, Philippines make rival claims in disputed South China Sea

In recent days, both Chinese and Philippine personnel have planted their national flags on Sandy Cay, a collection of sandbars close to two key military outposts controlled by Beijing and Manila. China’s claims to much of the South China Sea—a thoroughfare for about a third of global maritime trade—overlap with those of some of its neighbors, including the Philippines.

The dispute threatens to escalate a standoff between the two nations just as the U.S. holds its annual military exercises in the Philippines, an American treaty ally.

Sandy Cay has geopolitical significance because parts of it remain above water even at high tide, entitling it to 12 nautical miles of territorial sea under international maritime law.

Chinese state media said last week that Chinese coast-guard personnel landed on Sandy Cay, known as Tiexian Reef in Chinese, in mid-April, where they “enforced maritime management and exercised sovereign jurisdiction." The reports said the coast guard had cleaned up debris, investigated reports of Philippine activity on the island and taken photos of personnel holding a Chinese flag.

The permanent occupation of Sandy Cay by either the Philippines or China could have implications for both countries’ claims to more important South China Sea features.

Located within 12 miles of Sandy Cay is Subi Reef, an artificial island that is one of China’s most important military outposts in the disputed waterway. However, it doesn’t generate its own territorial sea because its original features are submerged at high tide.

The Philippines, meanwhile, controls nearby Thitu Island, where it has garrisoned soldiers and expanded the runway.

Jonathan Malaya, the assistant director of the Philippines National Security Council, said Monday that China hadn’t seized Sandy Cay. “We found no evidence of alleged Chinese occupation," he told local broadcaster ABS-CBN.

The U.S. and Philippines are currently conducting joint military drills that include some 9,000 American troops and 5,000 personnel from the Philippines, along with smaller contingents from Australia and Japan. On Monday, U.S. and Filipino forces were scheduled to hold an exercise on the Philippine island of Palawan, about 300 miles from Sandy Cay, aimed at countering an attempted landing by enemy forces.

Beijing has responded to the exercises, known as Balikatan, or “shoulder-to-shoulder" in Tagalog, by projecting its force. Last week, it sailed one of its aircraft carriers near the Batanese Islands in the Luzon Strait, the waterway between Taiwan and the Philippines, where U.S. and Philippine personnel are also conducting drills.

“I always see this as a positive when China reacts to us," said Philippine Army Brig. Gen. Michael Logico. “It only means that we have probably done something worthy of their attention."

Sandy Cay was at the center of a previous standoff between the Philippines and China in 2017 after the Philippines started building a shelter for its fishermen on one of the sandbars. China protested, saying the two sides had agreed not to occupy new features in the South China Sea. The Philippines’ then-president, Rodrigo Duterte, who maintained a close relationship with Beijing, scrapped the hut building.

The Philippines has remained a notable exception to a recent charm offensive by Chinese leader Xi Jinping as he confronts new tariffs from the U.S. He didn’t visit the Philippines during a trip to China’s Southeast Asian neighbors earlier this month. Ferdinand Marcos Jr., the current president of the Philippines, has intensified ties with the U.S.

Analysts say the Sandy Cay standoff signals China’s increased efforts to assert its claims to the South China Sea.

“This is part of trying to continue to push that narrative, that despite everything the Philippines has done to push back, China’s march continues," said Raymond Powell, director of the SeaLight project at Stanford University, which tracks Chinese maritime activity.

“We can expect to see China push that forward in ways big and small, usually small enough that it doesn’t generate an aggressive U.S. or international backlash, but just enough to keep reminding, especially the Philippines but also all the neighboring countries, that resistance is futile," he said.

The tit-for-tat over Sandy Cay appeared to continue after the Philippine teams visited on Sunday. Philippine authorities said their teams had spotted what they called the “illegal" presence of vessels from the Chinese coast guard and maritime militias nearby. China’s coast guard countered that the Philippine personnel had landed “illegally" despite warnings from the Chinese side.

Chinese coast-guard officers subsequently visited the island to investigate, it said.

Write to Gabriele Steinhauser at Gabriele.Steinhauser@wsj.com and Austin Ramzy at austin.ramzy@wsj.com