Tensions between China and the Philippines remain elevated in the South China Sea, driven by repeated close encounters involving coast guard vessels, maritime militia, and aircraft near Scarborough Shoal, Second Thomas Shoal, and Sabina Shoal. In September 2026, Manila tracked 101 Chinese vessels across disputed areas—nearly double the prior month—alongside incidents of ramming, water cannon use, and a Chinese J-16 fighter maneuvering near an unarmed Philippine patrol plane in early October. These reflect intensified grey-zone pressure and Chinese military exercises, yet both sides have avoided live-fire exchanges or sustained kinetic operations. The Philippines’ U.S. alliance and joint drills appear to factor into trader assessments that a full military clash remains unlikely before 2027, consistent with the 74.5% implied probability on “No.”