The risk of military conflict between China and the United States is rising, observers warn, after Washington hardened its position on the South China Sea and rejected most of Beijing’s claims to the resource-rich waterway.

The US rejected all Chinese claims beyond the 12-nautical mile territorial area around the Spratly Islands, citing in particular the waters surrounding Vanguard Bank off Vietnam, Luconia Shoals of Malaysia, the area within Brunei’s exclusive economic zone, and Natuna Besar of Indonesia. “We are making clear: Beijing’s claims to offshore resources across most of the South China Sea are completely unlawful, as is its campaign of bullying to control them,” Pompeo said in the statement.

Chinese foreign ministry spokesman Zhao Lijian called the US challenge “groundless” and an effort by Washington to sow discord between Beijing and Southeast Asian nations, which he said would fail.  “China is not seeking to become a maritime empire. China treats its neighbouring nations on an equal basis and exercises the greatest restraint,” Zhao said on Tuesday.  He said the US was the destabilising factor in the South China Sea, as it constantly sent naval vessels to its waters, even though it was not a claimant state.

Collin Koh, a Research Fellow with the S. Rajaratnam School of International Studies said Beijing may step up measures to challenge US military activities in the contested waters. “This could potentially result in a heightened risk of incidents – even if not premeditated, but inadvertent in nature – in the South China Sea that could raise tensions and inflame the situation,” he said.