Philippine Marines deployed on the Philippine Navy ship LT 57 Sierra Madre practice the "relieving the watch" ceremony near Second Thomas Shoal in the South China Sea. (Bullit Marquez/Associated Press)

China suffered a significant setback this month in its bid for dominance in the South China Sea, and its leaders are following a familiar script after such reversals: They’re making angry statements but taking little action while they assess the situation.

The United States is playing a characteristic role in such a flare-up, too. Rather than crowing about victory, it’s trying to talk Chinese leaders off the ledge before they do something rash. The chief hand-holder in this case has been national security adviser Susan Rice, who said in a blog post Tuesday after a visit to Beijing that she had urged Chinese leaders “to manage our significant differences constructively.”

“I reiterated that our overriding interest is the peaceful resolution of conflicts and sustaining the rules-based international order,” Rice wrote. This rules-based order was precisely what Beijing had been challenging in its recent moves to seize territory in disputed waters.

The rebuke to China came in a ruling July 12 by the Permanent Court of Arbitration in The Hague that shredded China’s territorial claims in the South China Sea. The case had been brought by the Philippines, and it challenged China’s assertion of sovereignty within what Beijing calls the “nine-dash line.” The panel held unanimously that “there was no legal basis” for these claims.

“The fact that it went against China was not a surprise, but the degree to which it went so comprehensively against them was,” said Christopher Johnson, a leading China analyst with the Center for Strategic and International Studies in Washington.

The Permanent Court of Arbitration in The Hague ruled that China does not have historic rights to justify its expansive claims. The verdict, which strongly favored the Philippines, will undermine China's claim to sovereignty under the nine-dash line it draws around most of the sea. (Simon Denyer,Jason Aldag/The Washington Post / Satellite photos courtesy of CSIS)

Kurt Campbell, who was the State Department’s top Asia expert in the Obama administration’s first term, agreed that the arbitration ruling was “clear as a ringing bell.” Although the Chinese had said beforehand that they would ignore the panel, and called the ruling “trash paper,” the rejection was so sweeping that the Chinese seem to have paused. The Politburo is gathering for its seaside retreat next month at Beidaihe, where leaders will assess policy before taking new steps.

The Chinese have refrained, at least initially, from one specific challenge of the ruling: U.S. officials had feared that if the Philippines case went against them, the Chinese would announce an air defense identification zone for the South China Sea, to further assert their sovereignty. The United States is said to have warned that Washington would sharply oppose such a declaration.

So far, no zone has been announced, but some U.S. analysts suspect this may partly reflect China’s reluctance to make a decision about the scope of such an area. Claiming the entire territory within the nine-dash line as theirs would be provocative, but trimming back the sovereignty claim to something more manageable would be a loss of face. For now, it may be easier for Beijing to remain silent.

One success for China this month is that it persuaded some of its Southeast Asian allies to block a resolution affirming the arbitration panel’s ruling. Secretary of State John F. Kerry sought such a consensus at a meeting of the Association of Southeast Asian Nations in Laos on Monday, but he came away empty-handed. Most Southeast Asian nations strongly oppose China’s maritime expansion in the region, but allies such as Cambodia are said to have sided with China and blocked any official endorsement of the ruling.

A senior U.S. intelligence official offered this assessment recently: “The arbitration decision was, I think, huge. The news came, and [the Chinese] are doing their damnedest to get people not to say anything about it. But it’s out there, and there’s nothing that they can do about that.”

The deeper problem underlying the South China Sea dispute is the increasingly assertive nationalism of Chinese President Xi Jinping. But here, too, the Chinese appear to have taken a step back from the public anti-U.S. agitation that immediately followed the ruling. State-run media initially blamed the United States, and there were scattered demonstrations in which Chinese protesters smashed iPhones and demonstrated at KFC franchises.

One leading China analyst noted that the media agitation has eased, with some commentators even criticizing “irrational” anti-U.S. fervor. “That’s a signal the Chinese want to cool things down — a good sign indicating that diplomacy is working behind the scenes,” the analyst said.

What a contrast there is between this delicate, real-life diplomacy and the blunderbuss approach advocated by Donald Trump and other critics of China. Despite Rice’s calming visit, Chinese leaders know that their U.S. relationship is entering an interregnum — and that Beijing can’t predict what comes next.

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