The International Tribunal at The Hague made an arbitral decision over the Philippines and China’s conflicting claims in the South China Sea dispute. It declared that China does not have grounds for its “historical claim.” It also found that the “islands” that China and Taiwan control are not “islands” and thus are not entitled to the 200-nautical-mile exclusive economic zone and continental shelf.
Since the Philippines filed the case, China has refused to participate in the arbitration proceedings and stated that it would not abide by the Court’s decision. Right before the decision was published, China increased its military combat readiness and conducted military drills. After the decision was announced, some military officials gave “hawkish” statements and numbers of people boycotted American and Japanese products.
So, is Xi Jinping a hawk on the South China Sea issue?
Actually, Xi appeared calm and restrained.
On July 12, right after the arbitration tribunal’s decision, Xi, during his meeting with President of the European Council Donald Tusk and the President of the European Commission Jean-Claude Juncker, stated, “Historically, the islands in the South China Sea have always been China’s territory. Under no circumstance will China’s sovereignty over territories and ocean rights in the South China Sea be affected by the tribunal’s decision. China will not accept any of the tribunal’s suggestions or actions. China has long supported international law, justice and righteousness, and insists on a peaceful development path. China is firm on keeping the peace and stability in the South China Sea; on working directly with the relevant parties, according to the historical facts; on following international law; and on solving the dispute peacefully through dialog.” 
Xi’s speech carried two messages: One, China will not give up its territorial claim. Two, he is looking for a peaceful solution instead of a war.
The first part is easy to understand. Territorial disputes are likely to be a win-lose rather than a win-win situation. He has to stay firm to win.
Throughout Chinese history, from the emperors of the past to the leaders of the past century, almost no one has wanted to give up China’s territory.
For example, Russia has taken over hundreds of thousands of square kilometers of land from China in the past few centuries, but neither Chiang Kai-shek (the top leader from the 1920’s to the 1940’s) nor Mao Zedong (the first top leader of Communist China, starting in 1949) conceded it, despite Stalin pressuring them to sign a treaty to formally acknowledge the loss of land to Russia. At that time, China was in a very weak position and desperately needed Stalin’s help.
Jiang Zemin was a rare exception. He signed a treaty with Russia in 1999 and accepted the loss of land. When this happened, China was much more powerful than it was previously; it was on par, if not superior to Russia economically. Though it was kept a secret, when the Chinese people heard about it, they called Jiang a traitor to China. Some have been expecting that Xi will take down Jiang eventually and this treaty will be considered one of Jiang’s crimes.
China has found its historical justifications and economic and strategic motivation to claim that the South China Sea and the islands are China’s territory. So, Xi is unlikely to back off from that position.
However, that does not mean Xi wants a war with the Philippines or with the U.S.
Xi has been very busy with internal affairs – continuing the anti-corruption campaign to purge Jiang’s faction so that he can take full control of China. This is the fourth year of his campaign. His close ally Wang Qishan, the head of the Central Commission on Discipline Inspection (CCDI), stated that the intensity of the anti-corruption campaign will not abate and the pace will not slow down. 
There has been speculation that Xi is aiming at some bigger tigers, such as Jiang’s followers (Liu Yunshan, Zhang Dejiang, and Zhang Gaoli) who have Politburo Standing Committee member seats, or even Jiang himself.
In addition, this year, the CCDI added another type of bad behavior for officials in order to punish them: 不作为 (Dereliction of duty).
China’s economy has been slowing down for the past several of years. It presents a big challenge to Xi Jinping, since the CCP has, in the past few decades, used its economic achievements to justify the legitimacy of its rule. Official’s dereliction of duty will definitely hinder the efforts to boost economic growth.
For a strong economic performance, only having domestic support is not enough. Xi also needs a stable international trade and transportation environment. He cannot afford to have a regional war, not to mention an altercation with the U.S.
While holding his position, Xi prefers a peaceful solution.
Then, why did Qiao Liang, a People’s Liberation Army (PLA) General make a hawkish statement about destroying U.S. aircraft carriers? Qiao said on July 14, “It is OK for the U.S. to have two aircraft carriers sail through the South China Sea, but when there is really a war [between China and the U.S.], the two aircraft carriers may not be able to return home.” 
That may simply be “talk.” The regime has long been using the South China Sea to build up “patriotism” among the public; it is a way to unite people together under the Party. For those hard-core “patriots,” the PLA needs to make them feel good. The talk is likely meant for an internal audience rather than an overseas audience.
Another issue is that Xi, despite being the Chairman of the Central Military Commission (CMC), did not have full control over the military when he took the office in 2012. Over time, after taking down former CMC Vice Chairmen Xu Caihou and Guo Boxiong and starting to cut the military staff, Xi has been gradually tightening his grip on the PLA.
On the South China Sea issue, Xi is an inheritor, rather than the creator, of China’s aggressive military strategy. As Xi is shaking up the PLA, he cannot appear weak on military positions, especially when it comes to “defending national territory.” Otherwise, he would lose respect from the military and would also give his opponents a reason to attack him.
The South China Sea has then become a touchy issue for Xi. On the one hand, he wants the territory for China. On the other hand, he does not want to start a war. He therefore might choose a policy mid-way between over-aggressiveness and peace. That does not mean that, over time, Westerners will not hear some of the PLA’s extreme voices.
An example can be seen in Xi’s handling of Hong Kong’s “Umbrella Movement.” Xi might not like the approach of C.Y. Liang, Hong Kong’s Chief Executive, who is connected to Jiang Zemin’s loyalists Zeng Qinghong and Zhang Dejiang (Xi’s rivals), but he might not have full control over Liang either. So, while Xi has let Liang handle the situation, he has kept one thing firm: that there would absolutely be no military clash.
Another message that is confusing to Westerners is the demonstration of strong anti-U.S. sentiments over the Internet after the publication of the tribunal’s findings. In some cities, there were scattered protests against American and Japanese products. Some Chinese protested at the Kentucky Fried Chicken (KFC) restaurants  and some smashed their iPhones.
However, questions have been raised as to whether it was actually Xi’s opponents who stirred up this turmoil trying to create trouble for him.
The Chinese Youth League, which Xi has been criticizing since the beginning of this year, may have encouraged people’s patriotism during this time.
Some people also suspected that Liu Yunshan, a Politburo Standing Committee member who is in charge of Party development and propaganda work, worked behind the scene to promote this response. Since the Communist Party has a tight control over the media, anti-U.S. sentiment might not be able to spread over the Internet without the Party’s permission.
A Chinese term 高级黑 (gaojihei) is loosely translated as “high-level smear.” Liu Yunshan is known for creating events to “gaojihei” Xi Jinping, including the CCTV 2016 Chinese New Year’s Gala  and the bombardment of Ren Zhiqiang who questioned whether the “state media should be loyal to the Communist Party” . Both events stirred up public annoyance for the purpose of making Xi Jinping look bad.
It seems that Xi fought back against the “gaojihei.”
Xinhua published an article on July 18, saying that to call for a boycott of KFC was a misunderstanding of patriotism: it is “not the right way to express patriotism.” 
People’s Daily also had an article that stated, “If one just wants to show patriotism through a gesture or thinks he can do anything for a ‘patriotic’ purpose, and [he] then hurts fellow citizens’ interests, damages public property, or destroys the public order, [then what he did] was not patriotic; rather, it damaged our country.” 
So, not only does Xi have a game to play with other countries on the South China Sea; he also has a game to play with his opponents in China. That is the way that Chinese politicians struggle for survival given the nature of the in-fighting in the Communist Party.
 People’s Daily, “What Did the Party’s General Secretary Xi Jinping Say about the Territory Sovereignty and South China Sea Issue,” July 13, 2016.
 Phoenix, “Wang Qishan Stressed That the Anti-Corruption Campaign Will not Abate Its Intensity or Slow Down Its Pace,” June 21, 2016.
 Huanqiu, “Qiao Liang: The Sky of the South China Sea Will not Collapse. If a War Breaks Out, the U.S. Aircraft Carriers Will not Be Able to Return Home,” July 14, 2016.
 ChinaScope, “VOA: “Patriots” Boycott KFC.”
 ChinaScope, “The CCTV 2016 Chinese New Year’s Gala Propaganda Disaster.”
 ChinaScope, “Political Rivalry in China – Part 2, ‘Should the State Media Be Loyal to the Party?’”
 Xinhua, “Creating Trouble for Ourselves Is not Patriotic,” July 18, 2016.
 Xinhua, ‘People’s Daily on Boycotting KFC: Patriotism Is Not a ‘Confused Love,’” July 19, 2016.