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Last week’s revelation by Fox News ^[2] that China has placed two batteries of its HQ-9 air defence missile system on Woody Island in the Paracels has ignited arguments over possible responses within and beyond the Obama administration. Coming just at the close of the US-hosted ASEAN summit on South China Sea security issues, China’s move can be viewed as a defensive response to its continued perception of encirclement ^[3] by a US-led coalition of regional powers. The move is also a veiled threat to any nation which may consider emulating the US Navy’s recent freedom of navigation operations (FONOPs).

How, then, should the US and its allies respond? Outraged defence hawks in the US will no doubt demand ^[4] that steps be taken to punish China for what they perceive to be Chinese President Xi Xinping’s duplicity ^[5]—most likely in the form of economic sanctions ^[6]. Sanctions, however, could potentially hurt the US economy as badly as China’s, and will have little appeal for nations such as Vietnam, Malaysia or Australia, all of which are deeply engaged with China economically. Even less appealing would be any attempt to respond militarily ^[7], given China’s burgeoning anti-access/area-denial capabilities.

Acknowledging that China’s actions are diametrically opposed to the Americans’ understanding of Xi’s October pledge not to militarise its artificial islands ^[8], it’s useful to remember first, the pledge referred only to the Spratly Islands, and second, the clarification ^[9] issued shortly after Xi’s return home. Xi’s announcement explicitly stated that ‘necessary defensive facilities’ would be put in place—a statement reiterated ^[10] again yesterday by Chinese Foreign Minister Wang Yi. Ministry spokeswoman Hua Chunying when questioned about the missiles.

Given these facts, the worst possible response would be an open confrontation based on the (likely correct) assumption that China’s move resulted from a desire to pre-empt an expected finding ^[11] against China’s claim by the UN Permanent Court of Arbitration (PCA). While the PCA’s ruling will address only the China–Philippines dispute over the Spratly Islands, its impact as a precedent with wider application in the South China Sea is no doubt raining on the parade of many a Chinese leader.

As an alternative, Admiral Harry Harris, commander of the US Pacific Command, could simply acknowledge that China’s projection of forces to the islands represents a successful exercise for the PLA, but one that undermines the rule of international law and that underscores the need for speedy adjudication of competing claims. Doing so offers China’s leaders a way to move beyond a potential military confrontation at no great cost; their failure to do so would then expose China’s true motives, setting the conditions for a better coordinated and regionally supported response. Such a course of action would also give the US and its allies a way to downplay the significance of this development.

Unfortunately, should the Chinese fail to respond to such an opening, few additional good options exist for the US. Continued FONOPs would demonstrate US resolve to confront China but pose the risk of accidental or deliberate confrontation (CUES ^[12] be damned!) leading to a kinetic exchange from which neither side will find it easy to back away. But to do nothing undermines US credibility and influence in a region that already questions ^[13] America’s commitment to the ‘pivot’ strategy.

A possible way to influence Chinese behaviour would be to invite the PLA to observe the combined US–Australia military exercise Talisman Sabre 2017 ^[14]. Our regional allies and partners already involve the PLA in exercises where the US is a participant, so the precedent exists. Giving PLA leaders a ringside seat in the ground, air, naval and joint forces headquarters in the US and Australia to see just how far behind China lags when it comes to planning and executing complex joint and multinational operations poses manageable risks and offers good potential for behaviour modification. The Chinese are anxious to build a truly joint operations capability and might be tempted by this offer to de-escalate tensions in the Paracels.

Another possible dilemma the US could present to China would be a UN Security Council resolution to internationalise the disputed islands. That course of action would require an official change of US policy, which currently takes no sides and encourages peaceful settlement through arbitration. It would also require considerable backroom diplomacy among ASEAN states as well as with South Korea and Japan owing to the significance of the precedent it would set. The certainty that China would exercise its veto power wouldn’t diminish the moral effect such a proposal and its resulting veto would have on world opinion. Conceivably, China could find itself further isolated ^[15] given the EU ^[16] preference for diplomatic settlement of disputes. With China’s economy ^[17] already on shaky ground this would create a significant challenge to the regime. In any event, current US policy offers little flexibility if China refuses to play, so this is one issue where President Obama’s penchant for ‘evolving’ core principles would be welcomed by Republicans as well as America’s allies and partners in the region.

Continued highly-visible improvement of US relations with other principal stakeholders in the region (e.g., Vietnam, which will host a state visit ^[18] by President Obama later this year) as well as continued support for implementation of the Trans-Pacific Partnership free trade agreement would further demonstrate US resolve to remain a western economic as well as military Pacific power. Finally, stepped-up bilateral and potential multilateral military exercises with Japan in the wake of last year’s changes ^[19] to the national security laws, and continued discussions to emplace a Theatre High Altitude Air Defence system in South Korea, would show China that the US doesn’t lack other options in the event deterrence falls short. Taken together, the above actions wouldn’t in all likelihood deter China from continuing to proclaim its territorial goals but would be sufficient to deflect Xi and his immediate subordinates from continuing their provocative behaviour.

While not quite the 21st century equivalent ^[20] of the remilitarisation of the Rhineland, China’s deployment of defensive weapons on islands in the South China Sea threatens to permanently alter the balance of power in the region. How the US and its regional allies and partners respond will have a significant bearing on China’s willingness to moderate its expansionist and revisionist territorial policies.