The South China Sea territorial dispute increasingly looks like a point of strategic friction between the United States and China after a recent nasty exchange between the two governments. The U.S. Department of State criticized China for its plan to base a new military garrison in the Paracel Islands, saying this would increase international tensions. Beijing shot back that the United States should mind its own business.

Many observers wonder why Washington and Beijing are allowing a new irritant to emerge in the incalculably important U.S.-China relationship. Unfortunately, there is widespread misunderstanding about the U.S. rationale for America's diplomatic intervention in a territorial dispute to which the United States is not a party.

Although U.S. officials have named several specific U.S. concerns about China's policies and activities in the South China Sea, the U.S. concern most widely understood and repeated is the potential threat to "freedom of navigation": the PRC might be moving toward imposing restrictions on foreign ships sailing in the South China Sea. This, however, is not the real issue. It is really about bullying.

To be sure, the United States is a strong proponent of freedom of navigation in international waters. This stance reflects not only America's commitment to the general principle of liberty but also the interests of a trading nation with the world's most capable navy. There should be no doubt that if freedom of navigation was in jeopardy in the South China Sea, the United States would spring to its defense. At present, however, freedom of navigation is not at issue.

The Chinese say they do not interfere with international navigation in the South China Sea and do not intend to in the future. Their position has some merit.

China has a particular beef with surveillance by U.S. ships and aircraft near the Chinese coast. This has resulted in Chinese harassment, with several incidents reported in the press. The UN Law of the Sea Treaty allows for spying in the region between a country's internal waters limit-12 nautical miles-and its exclusive economic zone limit which is usually 200 nm.