IN tropical waters off the coast of the Philippines, a standoff between half a dozen Chinese fishing boats, two Chinese law enforcement vessels and an aging Philippine navy ship recently attracted a lot of attention in Washington, Beijing and other capitals across Asia.

Superficially, the squabble was over some rare corals, clams and poached sharks that Philippine navy seamen were trying to retrieve in April from the fishing boats operating in the Scarborough Shoal of the South China Sea until two Chinese marine surveillance craft intervened.

After two tense days, the Philippine ship – a refitted Coast Guard cutter sent by the United States last year to beef up its ally’s weak defences – withdrew.

But the stakes were much larger, as the insistent claims ever since of sovereignty over the shoal by both the Philippine and Chinese governments made clear. The incident intensified longstanding international questions over the strategically critical, potentially energy-rich South China Sea that have become more urgent this year as the long-dominant United States and fast-growing China both seek to increase their naval power in the region.

“We’re just pawns,” said Roberto Romulo, a former foreign secretary of the Philippines who argues that China is showing its strength in a bid to gain unimpeded access to vast reserves of natural gas and oil believed to be buried under the South China Sea. “China is testing the United States, that’s all it is. And China is eating America’s lunch in Southeast Asia.” More recently, a senior Chinese military officer even dismissed any legitimate role for the United States in the South China Sea. “The South China issue is not America’s business,” General Ma Xiaotian, deputy chief of general staff of the People’s Liberation Army, said in a TV interview. “It’s between China and its neighbours.” The general’s statement appeared to throw down a challenge to the Obama administration, which has sought in the past six months to enhance US military strength around the western Pacific and East Asia, where the South China Sea serves as an essential waterway for not only the US Navy but also for a large portion of the world’s trade.

From placing Marines in the northern Australian port city of Darwin to increasing military relations with Vietnam, a country with an uneasy relationship with China, Washington has signaled its intention of staying, not leaving.

In the latest sign of its resolve to stand firm on Chinese assertiveness in the South China Sea, the administration sent Secretary of State Hillary Rodham Clinton and Defence Secretary Leon Panetta to testify last month before the Senate Foreign Relations Committee on the need for the United States to ratify the United Nations treaty that is intended to govern the world’s oceans.

China is one of 162 countries that has ratified the Law of the Sea treaty. But the United States has not done so, holding back from formal approval ever since President Ronald Reagan refused to sign it when it was completed in 1982.

A major goal of the joint appearance, administration officials said, was to strengthen the legal hand of the United States so that its Navy can be assured the freedom of navigation that the treaty recognises beyond any nation’s territorial limit of 12 nautical miles.

While China may have no interest in blocking shipping in the South China Sea, there is also no doubt that it has begun to project its power in the area. Vietnam, for example, claims that Chinese boats twice sabotaged oil exploration efforts last year by deliberately cutting ship cables in its waters. China said one of the cable-cutting incidents was accidental.

Meanwhile, China is expected to deploy its first aircraft carrier this year.

Two-thirds of the world’s natural gas trade passes through the waters of the South China Sea according to a report by Yang Jiemian, president of the Shanghai Institutes for International Studies. The sea is the main passageway for oil from the Middle East to China, Japan, South Korea and the rest of Asia.

Now the sea itself is believed to hold a substantial reservoir of energy, with some experts predicting that under the seabed lies as much as 130 billion barrels of oil and 25 trillion cubic metres of gas.

For China, the South China Sea is an integral part of its history. Days after the incident at Scarborough Shoal, known as Huangyan Island in China, the Chinese Foreign Ministry outlined some of the basic facts as interpreted by China. In 1279, the Chinese astronomer Guo Shoujing was commissioned by Emperor Kublai Khan to survey the seas around China. Huangyan Island was chosen as the starting point for the survey.

Romulo, the former foreign secretary, recalled that Zhou Enlai, the longtime second-in-command to Mao Zedong, had once pulled out a map to show his father, Carlos P Romulo, who also served as a Philippine foreign secretary, that the Philippines rightfully belonged to China.

According to officials in Manila, China’s line runs inside the 80-nautical-mile stretch of water between Palawan Island and Reed Bank, where a Philippine company says it has found significant deposits of natural gas. The Philippine government of President Benigno Aquino III backs a plan to begin drilling off Reed Bank in the next few months.

How China will react is an open question.

Nationalist sentiment within China is riding high on the South China Sea, and the government itself seems divided, on tactics at least.

Western diplomats say the Foreign Ministry, while remaining firm, would like to find a solution to the quarrel with the Philippines, perhaps involving joint ventures between companies from both countries. But People’s Liberation Army Daily, the military newspaper, has published strident editorials, stating that China will not stand for the Philippines or any other country claiming what is rightfully China’s.

“If China’s leaders follow the Chinese people, the policy on South China Sea and Southeast Asia will become very militant,” said Shi Yinhong, professor of international relations at Renmin University in Beijing.

Others are paying close attention. After China warned India this year about exploration by an Indian company in waters off Vietnam, the company pulled out, citing technical reasons. But that was not the last word from India.

“The South China Sea,” said SM Krishna, India’s foreign minister, “is the property of the world.”