These developments require China to deploy better detection systems, like the so-called “Great Undersea Wall” and the “Great Wall of Sand”. China also needs breakout points to the Pacific and the ability to dodge US detection when leaving the Sanya ( 三亞 ) base on Hainan Island ( 海南 ). Naval experts believe, for example, that American hunter submarines sit on China’s coast and track all PLA Navy activities, which hampers Chinese abilities to mitigate local security threats and those further afield.

In this sense, the South China Sea, with its vast underwater canyons, not only offers a sanctuary for Chinese subs and breakout points, but also provides the key nodes of a defensive line that China is reputedly building to maintain its nuclear deterrence. These concerns are likely to be the ultimate – although hidden – reason behind the island reclamation and China’s more aggressive stance in the South China Sea. However, China’s efforts to counter US threats have had the undesired effect of threatening its South China Sea neighbours.

A Sino-US deal on the South China Sea is difficult, but not impossible

Fortunately, real security is never a zero-sum game, and in the case of the South China Sea, there are constructive ways forward for China and at least some, if not all, of its neighbours. While reconciliation with the Philippines presents a difficult step at this moment, creating close security cooperation with Vietnam is possible and would be a game changer. Although there are a great number of obstacles, not least Vietnam’s century-long mistrust, the benefits would trump them all. Of course, as Truong-Minh Vu, an influential foreign policy expert in Vietnam, has suggested in conversations with us, efforts would need to start with smaller steps to lay a foundation in maritime areas, and could include a bilateral agreement demarking the waters off the Tonkin Gulf and joint development of some areas of the Spratly Islands.

Such an agreement could include: joint naval patrols and shared military technology; joint exploration of resources, leveraging access to Chinese capital, technology and markets. Further inland, progress could be made on unresolved headwater disputes along the Mekong River. Other opportunities could sweeten the pot, including offering Vietnam a role in China’s space programme, an increase in cultural and educational exchanges, as well as emphatic public statements assuaging historical suspicions.

A joint command centre, perhaps established in Hainan, Hanoi or some other neutral ground and equipped with cutting-edge tracking technology, could identify all vessels operating in the area, coordinate responses, and therefore reassure all actors.

Steps to reshape the Asian security environment do not have to alienate or provoke the US or countries that lean in its direction. The fact that the US and China agreed on concrete steps to de-escalate tensions around some reefs in the South China Sea and the PLA navy participated in the 2016 Pacific Rim naval drills appears to indicate that broader coordination, if not accommodation, is possible.

While China favours bilateral negotiations and Vietnam might fear them, given the inequality between the two positions, the advantages for such an alliance outweigh the risks of alternatives. Increasingly drawing closer to the US or perpetually hedging between two great powers will prove hard to sustain and offer no firm security guarantees. In fact, Vietnam’s leaders have delicately balanced all recent advances towards the US while offering clear signals to Beijing that it has not yet leaned completely to one side.

How Vietnam has kept China at bay over thousands of years

The Vietnamese government, though under strong pressure of nationalist sentiments at home, has not yet declared its official position concerning The Hague tribunal’s ruling. Hanoi took a wait-and-see approach.

It supported a joint China-Asean statement that called for self-restraint, and pledged to avoid “actions of inhabiting … the presently uninhabited islands, reefs, shoals, cays, and other features”. In the statement, a significant Chinese diplomatic success, all signatory parties aim at establishing cooperation in fields of navigation safety, maritime research, environmental protection, and criminal law enforcement.

The unexpected statement, reached after a contentious meeting of Southeast Asian foreign ministers, shows that China’s current regional diplomatic stance is more productive than meets the eye. Beneath the cloak of a stern rejection of any conclusions of the international tribunal, Beijing has shown a more flexible approach than at first thought.

China ‘may need a rethink’ as Vietnam moves closer to US

Advancing a security mechanism with Vietnam could become the cornerstone of a regional, Nato-like alliance between South China Sea stakeholders whose primary security concerns are China and each other, as well as insurgencies and piracy. The advantages are obvious. It could forestall a regional arms race that would create more insecurity, and be coordinated with broader Chinese initiatives such as the Belt and Road initiative and project funding by the Asian Infrastructure Investment Bank.

Ultimately, it could create a comprehensive security complex that establishes a rules-based regional order that – binding Chinese power into durable institutional arrangements – reunites, to a certain degree, the split between economic and security dynamics in Southeast Asia. In Vietnam, particularly, many have waited for China to come up with a form of regional leadership that weaves economic and security issues together.

Despite many viewing The Hague ruling as a loss for China, it creates incentives for confronting concerns more directly, and in ways that would satisfy policymakers in Beijing and Hanoi.

Josef Gregory Mahoney is professor of politics at East China Normal University. Maximilian Mayer is a research professor at Tongji University