The United States, as a global power, must necessarily be mindful of a range of dangerous situations around the world. Potentially the most dangerous of these centers on the South China Sea, a narrow waterway wedged between the Asian continent and the Philippines archipelago. One-third of all global shipping passes through its waters, as does close to 90 percent of the energy imports to the industrial powerhouses of Japan, China, Korea and Taiwan.

Two sets of disputes make the South China Sea more dangerous and unpredictable than the standoffs over Taiwan or the Korean peninsula. The first are overlapping territorial claims by China and four Southeast Asian states: Vietnam, the Philippines, Malaysia and Brunei. All except Brunei have occupied islands in the South China Sea, and there are regular maritime clashes between fishermen, oil-exploration ships and naval or coast-guard vessels as the claimants refuse to concede ground to their competitors.

The other standoff is between China and the United States. Since 1992, Beijing has claimed much of the South China Sea as its territorial waters—meaning that foreign ships and aircraft should seek its permission before entering the waterways it claims. As China’s naval power has grown, so has its willingness to challenge shipping in the South China Sea—including the U.S. Navy ocean-surveillance ship Impeccable in 2009. The United States rejects China’s claim and maintains that the shipping lanes in the South China Sea are international waters and therefore open to free navigation.

The result is a complex and tangled dispute that is escalating by the month. In recent weeks, Beijing has included three island groups in the South China Sea under its domestic administration, established a forty-five-member legislature to represent the 1100 people who live on the islands and approved the deployment of a People’s Liberation Army garrison to the islands. Vietnam has passed a law claiming two of those island groups as its sovereign territory. And the Philippines and China have just avoided an ugly standoff after a Chinese ship ran aground on an island claimed by both Beijing and Manila.

Washington faces a difficult juggling act in the South China Sea. It is trying to maintain a position of principle on the freedom of navigation, while reassuring Beijing that this isn’t a form of containment. At the same time, it is trying to reassure allies, such as the Philippines, and newer security partners, such as Vietnam, that it will back their stands against their giant northern neighbor. Manila in particular has made it clear that it is the United States in its corner that has stiffened its resolve.

There is a familiar alliance dilemma here for the United States. On the one hand, the credibility of its commitment to the Pacific is being watched closely by all of its allies and partners. On the other, it needs to be watchful that its allies and partners in the dispute do not use Washington’s commitment to prosecute their own narrow interests. And overlaying all of this is the growing strategic tussle between the United States over the control of the western Pacific.

The South China Sea is the place that will most test American strategic thinking and resolve as it rebalances its attention and forces towards the Pacific.

Michael Wesley is an independent scholar and author based in Sydney, Australia.