The South China Sea has received renewed attention this month courtesy of China’s actions in locating a deep sea drilling platform in disputed waters 119 nautical miles from the Vietnamese coast. Video images show Chinese vessels using water cannon and damage to boats. On Tuesday a Vietnamese fishing boat sunk nearby, with predictable recriminations, while some Chinese airlines have cancelled flights to Vietnam. It’s not war; but it’s not precisely peace either.

Ambassador Dang Dinh Quy, President of the Diplomatic Academy of Vietnam, has described it as a “hot peace”: not a cold war of tensions held in check but a putative peace where “every year there is an incident.” Ambassador Dang was in Australia this month for a roundtable hosted by Asialink at the University of Melbourne and sought Australia’s support for freedom of navigation and the rule of law over the seas. The question is what Australia or, for that matter, any other country can or will do in response. It’s a telling example of the current international situation.

Brendan Taylor has argued that the South China Sea doesn’t meet the definition of flashpoint and it’s true that it seems unlikely that either side will escalate to full-scale hostilities. But Le Hong Hiep is right to describe the situation as the biggest test for Sino-Vietnamese relations since 1991. It’s certainly hard to describe the situation as calm.

One distinctive element of the current situation is that the three layers of China’s maritime “cabbage strategy” – civilian forces, para-military and navy – all seem to be working together. This suggests high-level coordination and intentional behaviour rather than, as has been thought with some previous incidents, a particular agency off on a frolic of its own.

So what do China’s actions mean? Hugh White has eloquently explained his interpretation: that China is working towards its aim of wielding more power and influence in Asia through weakening the US system of alliances and partnerships. Certainly the timing (just after President Obama’s visit to Asian allies) and the target (a country which is not a treaty ally) are both suggestive.

I recall being in Kunming at the time that China announced its Air Defence Identification Zone which couldn’t realistically yet be enforced. From a Western standpoint this might be seen as counter-productive, so I asked Chinese experts to explain the strategy. The response: you push and see the reaction. Then there is a new reality: a reality in which you have asserted the way that you wish the international system to work. In this “salami slicing” model, China gradually and systematically accumulates, through small but persistent acts, evidence of its enduring presence and thus legitimacy for its claims.

In the South China Sea, China bases its claim on historical right, not on the law of the sea. There is a fundamental disagreement about how to discuss, let alone resolve, the different claims. Interestingly, Sam Bateman has argued that the current drilling might well be within China’s exclusive economic zone if China conceded the law of the sea as the basis for calculation rather than its nine-dash line (of course this has been contested). The lack of common starting point for discussion means that disputes about oil exploration and fishing will inevitably continue.

The broader question is what it means for international order. Like events in Ukraine over recent months, incidents in the South China Sea will have countries in Asia thinking deeply. China’s display of big power mentality undermines its stated attempts at good neighbourliness; it reminds countries of the words of Foreign Minister Yang Jiechi that “China is a big country and other countries are small countries, and that’s just a fact.” Countries that are not US allies will feel concerned about how much the international order will protect their interests; even allies will find themselves wondering how much they can rely on US guarantees. It’s a portent of a much more insecure world.

For Vietnam, there’s no obvious alternative to the “hot peace”. Carl Thayer notes that avenues could include legal action, diplomatic efforts and deterrence. However trade with China is crucial to Vietnam’s economy. In Ambassador Dang’s words, “We have to live with China.” What Vietnam wants is for China to become a responsible stakeholder; however he fears that this is a long time away.

Interestingly, Ambassador Dang thought Australia had a role in this process: as a host to so many Chinese students, Australia could contribute to socialising Chinese elites by helping them to think differently about international issues.

In the meantime, the hot peace will continue.

Melissa Conley Tyler is the National Executive Director with the AIIA.