(Follow-on to https://philippinestrategies.com/articles/us-china-conflict-west-philippine-sea)
In the predecessor article, entitled, “How an Open Conflict between the US and China in the West Philippine Sea might Unfold and Manifest”, clash outcomes between the two major players were examined. This piece focuses on the Philippines in the event of a direct Chinese attack.
Increasing Tensions
The South China / West Philippine Sea remains one of the most volatile flash-points in contemporary international relations, where overlapping territorial claims intersect with vital economic lifelines. China’s expansive “nine-dash line” assertion, invalidated by the 2016 Permanent Court of Arbitration ruling in favor of the Philippines, has fueled escalatory gray-zone tactics, such as ramming incidents, water cannon assaults, and boarding operations, which test the boundaries of armed conflict.
A full-scale Chinese attack on Philippine assets, such as a naval blockade of disputed features like Second Thomas Shoal (Ayungin Reef) or strikes on resupply missions leading to fatalities, would represent a crossing of the “red line” from coercion to overt aggression. This scenario, while not inevitable, is increasingly plausible amid rising tensions, including China’s deployment of bladed weapons against Philippine personnel in June 2024.
Such an event would invoke the 1951 U.S.-Philippines Mutual Defense Treaty (MDT), obligating Washington to respond, potentially drawing in the superpower and reshaping regional dynamics. This analysis examines the immediate consequences for the Philippines, the likely U.S. reaction, broader geopolitical ripple effects, and the profound impacts on foreign investment, drawing on strategic assessments and economic modeling.
Nature and Immediate Consequences of a Chinese Attack
A Chinese attack would likely manifest as a calibrated operation to seize or neutralize Philippine-held features in the Spratly Islands, such as the grounded BRP Sierra Madre at Second Thomas Shoal, located within Manila’s exclusive economic zone (EEZ).
Beijing’s tactics would blend conventional naval assets – People’s Liberation Army Navy (PLAN) vessels and submarines – with paramilitary elements like the China Coast Guard (CCG) and maritime militia, avoiding immediate all-out war to exploit ambiguities in international law.
For instance, an escalation from recent incidents (e.g., CCG ramming and weapon confiscation in August 2024) could involve live-fire suppression of resupply boats, sinking a Philippine vessel, or a targeted airstrike on outposts, resulting in dozens of casualties.
The Philippines, with a modest navy (aging frigates and patrol craft) and limited air defenses, would suffer asymmetric losses: disrupted fisheries (vital for 1.6 million livelihoods), severed EEZ access to oil and gas reserves, and potential refugee flows from affected islands like Palawan. Manila’s response would emphasize invocation of the MDT, international appeals via ASEAN and the UN, and asymmetric defenses like drone swarms or U.S.-supplied BrahMos missiles deployed since 2024.
Domestically, President Ferdinand Marcos Jr.’s administration, already aligned with Washington, would rally national unity, but economic shocks (i.e., halted tourism in the West Philippine Sea or natural gas supplies from Malampaya) and humanitarian crises could strain governance. Regionally, ASEAN cohesion might fracture, with Vietnam bolstering defenses and Cambodia aligning closer to Beijing, exacerbating intra-bloc divisions.
U.S. Reaction: Obligations, Strategies, and Constraints
Under Article IV of the MDT, an “armed attack” on Philippine forces, vessels, or aircraft in the Pacific, including the South China Sea, triggers U.S. mutual defense obligations, a commitment reaffirmed by Secretaries of State Pompeo (2019), Blinken (2021) and Rubio (2025).
The U.S. Indo-Pacific Command’s unclassified guidelines expand “armed attack” to include willful injuries or fatalities from gray-zone actions, lowering the threshold for intervention. In response, Washington would likely surge assets, deploying carrier strike groups (such as the USS Ronald Reagan from Japan), activating nine Enhanced Defense Cooperation Agreement (EDCA) sites in the Philippines for missile defenses like Typhon systems, and conducting joint exercises to signal resolve.
The U.S. reaction would initially prioritize de-escalation to avoid nuclear thresholds. Analysts describe a “defend without provoking” posture, intelligence sharing, cyber countermeasures, and freedom-of-navigation operations (FONOPs) rather than preemptive strikes on Chinese mainland targets.
Diplomatic salvos, condemning Beijing via the UN Security Council and rallying Quad partners (U.S., Japan, Australia, India), would accompany sanctions on Chinese entities involved. Constraints include domestic political fatigue (post-Ukraine wariness), China’s anti-access/area-denial (A2/AD) capabilities with its DF-21D “carrier killer” missiles, and the risk of spillover to Taiwan, where Batanes Province serves as a staging ground.
As former Singaporean Foreign Minister George Yeo warns, U.S.-China nuclear parity could render prolonged conventional war untenable, pushing toward negotiated ceasefires. Ultimately, U.S. involvement would affirm alliance credibility but at the cost of heightened great-power rivalry, potentially catalyzing an Asian NATO-like pact.
Broader Geopolitical Implications
A Chinese attack would reverberate across the Indo-Pacific, accelerating alliance realignments. Japan and Australia, bound by U.S. treaties, would provide logistical support, while South Korea – preoccupied with North Korea – might limit involvement to sanctions. India, via the Quad, could counter with Andaman-Nicobar deployments to secure Malacca Strait chokepoints. For China, short-term gains such as EEZ dominance would yield long-term isolation: SWIFT exclusions, tech export bans, and deteriorated Belt and Road Initiative (BRI) credibility.
Globally, it risks “sleepwalking toward World War III,” as miscalculations (accidental U.S. vessel strikes ordered by rogue PLAN officers) cascade into multi-domain warfare. Positive Peace frameworks suggest de-escalation via multilateral codes of conduct could avert this, fostering “Chinese commonwealth” models for Taiwan and the Philippines.
Disruption to Foreign Investment and Global Trade
The economic fallout would be catastrophic, centered on the South China Sea’s role as a conduit for $5.3–7.4 trillion in annual trade (24–33% of global maritime volume). A blockade or skirmishes would spike shipping insurance premiums by 20–50%, reroute vessels via Indonesia’s Lombok Strait (adding 1,000+ nautical miles, or $1 million per voyage), and inflate energy prices. Southeast Asian claimants (Philippines, Vietnam, Malaysia) face 10–33% GDP losses from trade stoppages, with the Philippines’ $100 billion export sector (electronics, garments) grinding to a halt.
Foreign direct investment (FDI) would plummet amid uncertainty: geopolitical risk indices (Duke University models) predict a 15–25% FDI drop in ASEAN, as insurers and multinationals (Maersk, ExxonMobil) divest from exposed assets. The Philippines, reliant on $10 billion annual FDI (U.S. and Japan lead), would see tourism (8% of GDP) and BPO sectors evaporate, deterring greenfield projects in semiconductors and renewables.
China, despite domestic buffers, loses 0.7% GDP from export disruptions but gains in energy rerouting (increased low-risk overseas oil investments post-2010 disputes). Globally, supply chain shocks – 5.72% of U.S. goods trade affected – would fuel inflation, with stock sell-offs in exposed equities in Singapore and Hong Kong. Conversely, “winners” like Australian LNG exporters or Indian ports could capture newly routed flows, underscoring the zero-sum trade rewiring.
What to Expect
A Chinese attack on the Philippines would precipitate a cascade of military, diplomatic, and economic crises, with the U.S. compelled to intervene under the MDT yet constrained by escalation risks. While bolstering deterrence through alliances and missile deployments is prudent, the true imperative lies in preventive diplomacy through ASEAN-mediated confidence-building measures or commonwealth frameworks to harness the “peace dividend” of heightened FDI and trade stability. Absent such efforts, the region risks not only sovereignty erosion but a $5 trillion trade chokepoint becoming a global economic black hole. Policymakers must prioritize de-escalation, recognizing that unchecked aggression undermines the very prosperity China – feigned or not – states it seeks to secure.
