No shots were fired, no one was injured, and the most potent weapon employed was a water hose. By the standards of modern war, Sunday's encounter between a US surveillance vessel and a group of Chinese naval ships, was a drop in the ocean — but 48 hours later the ripples were still spreading.

The Pentagon accused the Chinese of "harassment" in international waters; Beijing denounced the Americans for operating illegally in its exclusive economic zone. Most strikingly, the price of oil rose by $3 a barrel. What is it about this particular patch of ocean that generates such heat and anxiety over an apparently trivial incident?

On a map the South China Sea is a shallow tropical pond scattered with tiny desert islands, but geopolitically it is one of the most tense and complicated waterways in the world. Half a dozen countries squabble over the islands it contains; the world's richest and most powerful countries depend on the shipping lanes on the surface of the ocean, and gaze greedily at the oil which is believed to lie below.

If the military planners' nightmare scenario of a superpower war in Asia were ever to come true, the South China Sea might very well be where it all starts.

There have been military conflicts before, involving more than water hoses. In 1976, the Chinese forcibly seized the Paracel Islands, south of the site of Sunday's encounter, from Vietnam. In 1988 the same two countries fought a sea battle over Johnson Reef in which 70 Vietnamese sailors died.

Six countries, including China, claim some or all of the Spratly Islands, still further south. But two countries above all find themselves in long term rivalry: China and the United States. It was over the South China Sea that an American spy plane was involved in a mid-air collision with a Chinese fighter in 2001 — the rivalry will become even more pronounced as plans advance for the US anti-missile programme.

However vigorously the Pentagon planners may deny it, the principle object of the anti-missile shield is the long-term military power of China. A crucial element of it will be missiles launched from naval ships that will knock out enemy ballistic missiles during flight. In the event of an attack from anywhere in southern China, the naval element of missile defence would be in the South China Sea.

Half the world's merchant traffic by tonnage passes through it, two-thirds of it crude oil. Whoever controls sea passage through the South China Sea has power over some of the largest and fastest growing economies in the world. And it is this which makes even a water fight a matter not only of local, but of international concern.

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