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China has seized a disputed reef just kilometres away from the Philippines’ most important military outpost in the South China Sea, raising the risk of a new stand-off between the two rival claimants.

The China Coast Guard “implemented maritime control and exercised sovereign jurisdiction” over Sandy Cay this month, the military channel of state broadcaster CCTV reported on Saturday. It said coastguard officers had unfurled the Chinese flag to declare sovereignty over the reef in the Spratly Islands, showing a photograph of the act.

The move marks the first time in many years that Beijing, which claims the South China Sea almost in its entirety, has officially planted its flag on another previously unoccupied land feature.

It comes as the Philippines and its ally the US are conducting Balikatan, their largest annual military exercise, which will include coastal defence and island seizure drills. They will be held from next week on the Philippine territory closest to the Spratlys.

Although just a sand bank measuring little more than 200 square metres, Sandy Cay has strategic value for China because international law grants it a territorial sea. That 12-nautical-mile radius overlaps with Thitu Island, the South China Sea reef the Philippines uses to track Chinese moves in the area.

The White House said the reports of China seizing Sandy Cay were “deeply concerning if true”.

“Actions like these threaten regional stability and violate international law,” said James Hewitt, National Security Council spokesperson. “We are consulting closely with our own partners and remain committed to a free and open Indo-Pacific.”  

Beijing’s official declaration of sovereignty over Sandy Cay will raise fears that Beijing intends to build up unoccupied reefs and banks.

Over the past two years, Manila has increased coastguard patrols and sent scientific teams to investigate reports of Chinese reclamation activity at Sandy Cay and three other reefs further south.

Some maritime experts argue new Chinese reclamation is unlikely because artificial islands built and militarised by Beijing over the past decade have given its military and coastguard sufficient presence and reach.

There is so far no sign of a permanent Chinese occupation of Sandy Cay or construction on it. A Philippine maritime security official said on Saturday that the Chinese coastguard had left after unfurling the flag.

But the official declaration of sovereignty indicated China could “increase their harassment against us at Pag-Asa”, he added, using the Philippine name for Thitu.  

The Philippine coastguard has been operating a monitoring base on Thitu since late 2023, but Manila is now upgrading a runway and other infrastructure on the island. The building is part of efforts to make its South China Sea reefs more habitable and push back against increasingly aggressive Chinese activity.

Lyle Morris, a former Pentagon China expert now at the Asia Society Policy Institute, said Sandy Cay had been a source of tension for years between China and the Philippines.

“China has established a near constant presence around Sandy Cay for years, mostly using their maritime militia vessels to surround nearby waters,” said Morris. “They have stepped up their presence ever since the Philippines began to fortify Pagasa island [Thitu] and its runway.”

Morris said the Chinese action did not pose a test for the US, saying it was more a “tactical move” targeting the Philippines.

“This puts more pressure on the Philippines to respond in some way,” Morris added. “If China were ever to physically occupy the feature, the Philippines would likely feel compelled to respond. What kind of response is unclear.”

The Chinese move comes as Washington and Beijing are mired in a deepening trade war. US allies are also watching closely to see how the Trump administration will deal with Chinese actions in the South China Sea.

“The People’s Republic of China has been increasing its pressure on Philippines outposts for years. But it’s notable that this action comes amidst an escalating US-China trade war and is exactly the sort of action that is hard for the US to respond to, while spooking its Philippines ally,” said Mira Rapp-Hooper, former National Security Council senior director for east Asia in the Biden administration.

China’s law gives its coastguard a mandate to board and inspect foreign vessels “intruding” into waters claimed by Beijing and detain their crews. That raises the risk of clashes with Philippine military and coastguard at Thitu, in waters China now treats as its territorial sea.

China’s military assets are far stronger than the Thitu outpost. Its installations on nearby Subi Reef include surface-to-air missiles, hangars, a runway, radar and a deepwater shelter port. But because it is categorised only as a low tide elevation, Subi lacks a territorial sea under international law.