Competition and conflict in the South China Sea involves many nations due to its resources and vital sea lanes. However, it is China which increasingly serves as a common denominator of intensifying anxiety for its South China Sea maritime neighbours due to the aggressive scope of its claims to the sea and its islands. Among those states, Vietnam is most affected as it is first in the path of Chinese ambitions – ambitions which authorities fear would give China significant tactical military and economic advantage. For China, there are similar fears over threats to the sea lanes and sea bed resources. Leaders of both states also perceive their diplomatic and martial actions in the sea in historical terms as well. However, enforcement actions taken by either state may lead to a worsening security dilemma in which reactive security strategies could dangerously destabilise relations. This article discusses the motivations and strategies of both states as well as the consequences of such and applies realism, its tenets of defensive and offensive realism, and neoliberalism to examine their security concerns and perceptions. The article further proposes that the most valuable insights can be provided by defensive realism and neoliberalism, which together can encourage security, cooperation and conciliation in order to best promote the improvement of relations.