With tensions rising in the South China Sea, China’s use of its economic leverage over Southeast Asian countries has recently come into focus. With increasing economic and trade ties between China and Southeast Asia, the question being asked is whether China can successfully impose economic sanctions to gain policy concessions in the South China Sea disputes. This paper examines China’s relations with the Philippines and Vietnam and analyses the possibility of a successful economic sanction by China against these two countries in future disputes. The article concludes that Vietnam may be more vulnerable economically to Chinese sanctions than the Philippines. However, political factors would offset that vulnerability in the case of Vietnam and amplify it in the case of the Philippines, making the Philippines more likely to concede to modest political demands.