- China is unlikely to back down after losing court case on South China Sea dispute
- Beijing’s options include military posturing, economic carrots and back-channel diplomacy
- Main risk for China is strained regional relations and international outsider status
China’s territorial ambitions in the South China Sea suffered a crucial setback in early July, when an international court in The Hague ruled overwhelmingly in favor of the Philippines in the two countries’ territorial dispute. While the ruling is unenforceable, it will have an indirect impact on Chinese foreign policy and the geopolitics of the Asia-Pacific region for years to come.
Manila had filed a complaint against Chinese activity in the South China Sea after Beijing made territorial claims to about 90 percent of the area, and built artificial islands to further those claims. Perhaps the most important part of the tribunal’s ruling was its statement that any possible historical Chinese claims to the South China Sea under the country’s so-called “nine-dash line” became invalid when the country signed up to the United Nations Convention on the Law of the Sea (UNCLOS).