(Bloomberg) — The professionalism displayed by China’s navy in some of the world’s most contested seas is masking an underlying challenge to the existing order in the East China Sea and South China Sea that must be resisted, according to a report by an Australian security think tank.

“Beijing’s newly acquired taste for maritime ‘rules of the road’ is lowering the risk of accidental conflict,” wrote Ashley Townshend and Rory Medcalf in a report published Friday by the Sydney-based Lowy Institute for International Policy. “In turning away from tactical aggression, Beijing has refocused on passive assertive actions to consolidate a new status quo in maritime Asia.”

China’s strategy is based around its island-building program, which has created more than 3,000 acres (1214 hectares) of land on seven features it occupies in the Spratly Islands of the South China Sea. Though its actions have sparked tensions with other claimants including the Philippines and Vietnam, and prompted the U.S. to carry out naval transits to defend freedom of navigation in the waters, China has still managed to expand its maritime influence.

“As it is virtually impossible to compel China to roll back its outposts, the current policy imperative — aside from defending freedom of navigation — is to deter further militarization or the creation of a new air defense identification zone, particularly in relation to the Spratly Islands,” the authors wrote.

China declared an air defense identification zone in November 2013 over part of the East China Sea covering islands contested with Japan, and said its military would take “defensive emergency measures” if aircraft enter the area without reporting flight plans or identifying themselves. While China has rarely attempted to enforce the restrictions, analysts speculate that China may attempt to establish a similar zone above the South China Sea.

U.S. Rear Admiral Marcus Hitchcock this week underlined one of the themes of the Lowy report, praising the People’s Liberation Army Navy for abiding by a code set up for unplanned encounters at sea, “no matter what their nations are going through diplomatically.”

Scarborough Shoal

Even as China’s navy adheres to those rules of conduct, U.S. officials are concerned that China may start creating an island on Scarborough Shoal, which it seized from the Philippines in 2012. On April 19 the U.S. sent six U.S. Air Force planes into the vicinity of the shoal, which lies about 230 kilometers (143 miles) from the Philippines coast. An airstrip there would add to China’s existing network of runways and surveillance sites that Admiral Harry Harris, head of U.S. Pacific Command, said last year “creates a mechanism by which China would have de facto control over the South China Sea in any scenario short of war.”

The authors dub Beijing’s current strategy as “passive assertion,” where China uses the cover of the region’s relative stability to push ahead with island building, militarization, and the expansion of its naval and law enforcement patrols to create new zones of military authority.

Part of the strategy is to portray the U.S. and its allies as the aggressors, the authors wrote. That tactic was displayed Thursday at the monthly press conference of China’s Ministry of Defense. “It is the so-called ‘freedom of navigation’ operations of the U.S. that have plunged the situation in the South China Sea into disorder, undermined regional stability and harmed the security interests of littoral states,” ministry spokesman Wu Qian said.

“China’s statement is the latest example of its public relations efforts to portray the U.S. as Asia’s main maritime provocateur,” said Townshend, a research fellow at the United States Studies Centre at the University of Sydney. “By consistently portraying the United States and its partners as destabilizing forces, China’s public relations campaign could muddy the international narrative about who is actually driving Asia’s maritime tensions.”

New Recommendations

To combat China’s strategy, interested nations should adopt measures aimed at imposing direct and indirect costs on China. The recommendations include:

  • Strengthening and widening maritime and aerial confidence-building measures to bring China-Japan and China-Association of Southeast Asian Nation codes to the same level as China-U.S. rules. Codes on unplanned encounters at sea should also include coast guards and other civilian maritime law enforcement agencies.
  • Countries should execute freedom of navigation flights and voyages within the 12-mile zones of the islands China claims and its 200 nautical mile (230 miles) exclusive economic zone.
  • Maritime capacity building should also be expanded to enable all countries to respond to China’s growing presence. This should involve the transfer of ships, aircraft and surveillance technologies to allow countries like the Philippines and Malaysia to patrol their regional waters.
  • Expansion of diplomatic criticism to target its reputation as a good international citizen, including strengthening support for the Philippines’ case against China at the Permanent Court of Arbitration.

Townshend is also currently a visiting fellow at the Asia-Pacific Center at Fudan University, Shanghai. Medcalf is head of the National Security College at the Australian National University in Canberra.