Ayungin Shoal lies 105 nautical miles from the Philippines. There’s little to commend the spot, apart from its plentiful fish and safe harbor — except that Ayungin sits at the southwestern edge of an area called Reed Bank, which is rumored to contain vast reserves of oil and natural gas. And also that it is home to a World War II-era ship called the Sierra Madre, which the Philippine government ran aground on the reef in 1999 and has since maintained as a kind of post-apocalyptic military garrison, the small detachment of Filipino troops stationed there struggling to survive extreme mental and physical desolation. Of all places, the scorched shell of the Sierra Madre has become an unlikely battleground in a geopolitical struggle that will shape the future of the South China Sea and, to some extent, the rest of the world. … It was hard to imagine how such a forsaken place could become a flash point in a geopolitical power struggle. … To understand how Ayungin (known to the Western world as Second Thomas Shoal) could become contested ground is to confront, in miniature, both the rise of China and the potential future of U.S. foreign policy. It is also to enter into a morass of competing historical, territorial and even moral claims in an area where defining what is true or fair may be no easier than it has proved to be in the Middle East. … The Spratly Islands sprawl over roughly 160,000 square miles in the waters of the coasts of the Philippines, Malaysia, Brunei, Taiwan and China — all of whom claim part of the islands. Since the 18th century, navigators have referred to the Spratlys as “Dangerous Ground” — a term that captures not only the treacherous nature of the area but also the mess that is the current political situation in the South China Sea. … Why the fuss over “Dangerous Ground”? Natural resources are a big piece of it. According to current U.S. estimates, the seabed beneath the Spratlys may hold up to 5.4 billion barrels of oil and 55.1 trillion cubic feet of natural gas. On top of which, about half of the world’s merchant fleet tonnage and nearly one third of its crude oil pass through these waters each year. They also contain some of the richest fisheries in the world. … What China has done with Mischief, Scarborough and now with Ayungin is what the journalist Robert Haddick described, writing in Foreign Policy, as “salami slicing” or “the slow accumulation of actions, none of which is a casus belli, but which add up over time to a major strategic change.”
Why isn't the rest of Asia afraid of China? … Are tensions high in Asia? It certainly appears so. Over the last few months, North Korea has tested missiles and threatened the United States with nuclear war. China spars regularly with Japan over ownership of a group of disputed islands, and with several Southeast Asian countries over other sparsely inhabited rocks in the South China Sea. Meanwhile, the United States is in the midst of a well-publicized "pivot" to East Asia, and continues to beef up its military deployments to the region. … Yet as of 2012, military expenditures in East and Southeast Asia are at the lowest they've been in 25 years -- and very likely the lowest they've been in 50 years (although data before 1988 is questionable). While it's too early to factor in recent tensions, as China's rise has reshaped the region over the past two decades, East and Southeast Asian states don't seem to have reacted by building up their own militaries. If there's an arms race in the region, it's a contest with just one participant: China.