Sea dispute escalates as China and the Philippines deploy more warships

The standoff in the South China Sea between the naval forces of the Philippines and China is in danger of escalating, as the U.S. continues to watch anxiously.

China has now sent a third ship to support its claim to the area known as Scarborough Shoal off the northwestern Philippines.

Philippine warships attempting to arrest the crews of a Chinese fishing fleet that had entered the territory sparked the latest dispute between the two Asian countries.

They were stopped from doing so by the arrival of two Chinese surveillance ships, which then ordered the Philippine warships to leave the area.

They refused arguing that its Philippine territory and have since sent a second warship to the area.

"We're not retreating from our own territory," Alexander Pama, Chief Vice Admiral of the Philippine navy said.

China also claims the rich fishing ground as its own despite it being within 200 nautical miles of the Philippines.

"The timing of the dispute suggests China is keen to send a message to the Philippines and the U.S. ahead of their bilateral military exercise, and to assert its authority in the disputed area," Maria Patrikainen, a global insight analyst at IHS told Fox News.

The escalation in naval forces has caused consternation in capital across the Asian region and further afield.

"We urge all parties to exercise full restraint and seek a diplomatic resolution," a State Dept. spokesperson said.

On the surface this would seem to be a minor dispute between two countries but it is in fact part of a much wider problem that may lead to U.S. military involvement.

On any map you buy in China of the country you will see a huge bulge down in the south showing the territory it claims in the South China Sea.

It's an enormous area, which spreads near to the shores of the Philippines, Indonesia, Taiwan, Vietnam, Brunei and Malaysia.

It even spreads nearly as far as Singapore.

No other country in the region recognizes China's sovereignty, but that hasn't stopped Beijing from marking its claim by any means it can.

This includes building concrete forts, occupied by troops on isolated coral reefs and placing concrete markers in other areas, even underwater, to support their claim.

And China has been prepared to take military action in the past to take control of some islands.

Back in 1974 China and Vietnam fought a battle over the Paracel Islands in the South China Sea. Beijing's overpowering force including submarines won and they have remained under the control of China since then.

The two countries also have an ongoing dispute over the Spratly Islands which last year was in danger of escalating.

Vietnam accused China of cutting cables to their survey ships.

The U.S. military continues to watch China's actions in the South China Sea closely.

It continues to send surveillance planes and ships into the area even at the risk of provoking China.

In 2009 a U.S. ship in the area had a confrontation with Chinese naval forces that claimed the U.S. vessel had entered its waters.

And in 2001 a U.S. intelligence aircraft was intercepted over the South China Sea and was involved in a midair collision that left one Chinese pilot dead and forced the U.S. plane to land in China.

The reasons behind all this interest by competing powers in the South China Sea are twofold.

Outside powers like the U.S. view the area as a key international waterway in which a large part of world trade passes through. Last year the U.S. said maintaining stability in the area is part of its "national interests."

U.S. aircraft carriers regularly pass through the South China Sea on their way to and from the Middle East.

And the second reason is it is widely believed that under the South China Sea there are huge quantities of oil and gas.

China and other nations who claim all, or part of, the area are hoping it will give them energy security.

The difficulty at the moment is that China is seen in many Asian capitals as a bully who wants to grab all of it and will only negotiate with each country separately.

President Obama announced last year that the U.S. would turn its strategic attention more towards Asia to ensure stability there.

The first of the 2,500 U.S. marines that are to be based in Australia have already started arriving.

It has long been feared that this could be the next area in Asia where there may be armed conflict, and the disputes, if not handled properly threaten to lead to a confrontation between Beijing and Washington.