On January 11, the Ministry of Foreign Affairs of China spokesman pointed out at a press conference regarding the recent expulsion of six Chinese fishing boats by the Philippine military in the adjacent waters of Huangyan Dao that Huangyan Dao was part of the Chinese territory, that the Chinese fishermen had been engaged in normal fishing operations in its vicinity for a long time, and that the action of the Philippine side seriously disturbed their peaceful production activities, which sparked the grave concern of China.
On January 28, the government of Chinese Taiwan Province set up the "Coast Guard Administration." Under the leadership of the Executive Yuan, it would be charged with patrolling the ports, coastal areas, islands, territorial waters, adjacent areas and exclusive economic zones. On February 1, the Coast Guard Administration announced the establishment of "Nansha Headquarters", which formally took over the defense of Taiping Dao.
In May, the Chinese fishing vessel "Qionghai 01068" drifted to the waters near the Philippine Palawan Dao, because of engine failure while fishing in the South China Sea. The vessel was besieged and fired upon by the Philippine Coast Guard. The captain was immediately shot dead, and seven crew members were detained. The Chinese Ministry of Foreign Affairs made solemn representations to the Philippines, which released the Chinese fishermen but refused to compensate.
On September 26, Chinese President Jiang Zemin expressed the hope in meeting with Vietnamese Prime Minister Phan Van Khai in Beijing that China and Vietnam would continue to cherish the overall interests in handling border issues and reach an agreement as soon as possible, so as to resolve the delimitation issue at the Beibu Bay within the year.
On December 25, China and Vietnam signed the Agreement between the People's Republic of China and the Socialist Republic of Vietnam on the Delimitation of the Territorial Sea, the Exclusive Economic Zone and the Continental Shelf of the Beibu Bay and Agreement between the Government of the People's Republic of China and the Government of the Socialist Republic of Vietnam on Fishing Cooperation in the Beibu Bay.
On December15, Vietnam issued licenses to foreign companies for the Kunshan Gas Field Project and Gas Pipeline Project in the southern section of the South China Sea, in defiance of China's representations and objections.
The Chinese State Bureau of Surveying and Mapping compiled The Standard Samples for the Drawing of National Boundaries of China (1:1000000), according to which, the area of waters within the dotted line of the South China Sea approximates two million square kilometers.
On April 1, one US Navy EP-3 spy craft was discovered in reconnaissance operations over the waters near the Chinese Hainan Dao, and two J-8II fighter jets were dispatched by PLA Naval Air Force to monitor and intercept it. One of J-8II fighter jet collided with the US aircraft over the exclusive economic zone of China about 70 nautical miles (110 km) to the southeast of Hainan, and crashed. Its pilot Wang Wei was missing after parachuting, and later was reported to have died a heroic death. The US military reconnaissance plane made an emergency landing at Lingshui Airport in Hainan.
In May, the 24th meeting of the Intergovernmental Coordination Group for the Pacific Tsunami Warning System adopted the Chinese proposal of "establishing a tsunami warning and mitigation system for the South China Sea region". In June, the proposal was formally adopted at the 26th Session of the Intergovernmental Oceanographic Commission in the form of a resolution.
In July, a joint communiqué was issued at the ASEAN Foreign Ministers' Meeting held in Hanoi, welcoming the establishment of codes of conduct by consultation between China and ASEAN for easing tensions in the South China Sea and encouraging the parties to continue to exercise self-restraint and confidence-building measures in the region.
On December 2, China and Vietnam issued a joint statement, pointing out that the determination of land boundaries between the two countries, the delimitation agreement for the Beibu Bay and the fishing cooperation agreement there were events of great significance, and saying that the two countries would accelerate the follow-up negotiations for the fishery cooperation agreement at the Beibu Bay, so that the two agreements could enter into force as soon as possible.
On September 14, the Standing Committee of the National People's Congress of China and the Philippine House of Representatives issued a joint press communiqué on the South China Sea issue. The two countries reiterated that efforts would be continued to seek a peaceful and friendly solution to the divergences over the South China Sea between them and other countries concerned.
On November 4, Declaration on the Conduct of Parties in the South China Sea (DOC) was signed by China and ASEAN member states countries at the 8th ASEAN Summit held in Phnom Penh, Cambodia.
In June, China made representations against the agreement between Vietnam and Indonesia on the delimitation of the continental shelf, encroaching on about 35,000 square kilometers of waters under Chinese jurisdiction.
On June 28, a decision was adopted at the Third Session of the Standing Committee of the Tenth National People's Congress of China to ratify the Treaty of Amity and Cooperation in Southeast Asia and its two amended protocols. In October, China formally joined the treaty at the 7th China-ASEAN (10+1) Summit held in Bali, Indonesia, and signed with ASEAN the Joint Declaration on ASEAN-China Strategic Partnership, in a bid to establish with it "a strategic partnership aimed at peace and prosperity."
In June, the Standing Committee of the National People's Congress of China and the Vietnamese National Assembly successively ratified the Agreement between the People's Republic of China and the Socialist Republic of Viet Nam on Delimitation of Territorial Waters, Exclusive Economic Zones and Continental Shelves in the Beibu Bay and Agreement between the Government of the People's Republic of China and the Government of the Socialist Republic of Vietnam on Fishing Cooperation in the Beibu Bay, which took effect on June 30 simultaneously.
On September 1, China National Offshore Oil Corporation and the Philippine National Oil Company signed Agreement for Joint Marine Seismic Undertaking in Certain Areas in the South China Sea, for joint exploration of oil and gas resources in the disputed areas. In March 2005, Vietnam agreed to join the agreement.
In October, the Maritime Safety Administration of China and the Philippine Coast Guard in Manila held the first Sino-Philippine sand-table exercise of joint search and rescues.
On November 29, Chinese Premier Wen Jiabao met with Malaysian Prime Minister Abdullah Ahmad Badawi, saying that China would be willing to explore ways and means of joint development in disputed waters of the South China Sea on the basis of mutual respect, equality and mutual benefit. Badawi noted that he recognized the principles proposed by Wen Jiabao for the joint development of the disputed waters of the South China Sea and that Malaysia was willing to work with China to explore cooperation in this regard.
Vietnam incorporated China's Xisha Qundao and Nansha Qundao into the territory of the Vietnamese Khánh Hòa Province as two counties in its administrative layout adjustment.
On March 14, China National Offshore Oil Corporation, Philippine National Oil Corporation and Vietnam Oil and Gas Corporation signed the three-year Agreement for Tripartite Joint Marine Seismic Undertaking in Certain Areas in the South China Sea.
In March, Taiwan Province launched the airport construction in Taiping Dao, and shifted garrisons to Taiping Dao in October and November 2006 respectively. In addition, its engineering corps widened and consolidated the original central road of Taiping Dao, turning it into a large military airport runway 1,150 meters long and 30 meters wide.
On August 25, pursuant to Article 298 of the United Nations Convention on the Law of the Sea, China submitted a written declaration to the Secretary-General of the United Nations, stating that the Chinese Government shall not accept any international judicial or arbitral jurisdiction provided for in Part II, Section 15 of the Convention for any dispute included in paragraph 1 (a), (b) and (c) Article 298 (that is, disputes concerning maritime delimitation, territorial disputes, military activities, etc.)
On December 25, the Work Committee of Xisha Qundao held a meeting of residents and fishermen of Yongxing Dao and elected three directors of the village committee, for managing the Neighborhood Committee of Yongxing Dao.
On January 19, "Ministry of the Interior" of Taiwan officially announced "The Plan for Dongsha Atoll National Park", and Dongsha Atoll National Park became the first marine national park of Taiwan.
In April, Vietnam further delineated Nansha oil and gas blocks for tendering, and said that it would work with British Petroleum (BP) to build natural gas transmission pipelines in Nansha Qundao, amid solemn protests by China. In June, BP announced a halt to the oil exploration plan in the coastal areas of Vietnam in view of the territorial dispute between China and Vietnam.
On May 18, China and Vietnam issued a Sino-Vietnamese Joint Press Communiqué, in which both sides agreed to continue implementing the Agreement between the People's Republic of China and the Socialist Republic of Vietnam on Delimitation of Territorial Waters, Exclusive Economic Zones and Continental Shelves in the Beibu Bay and Agreement between the Government of the People's Republic of China and the Government of the Socialist Republic of Vietnam on Fishing Cooperation in the Beibu Bay, to speed up the implementation of the Framework Agreement on Oil and Gas Cooperation in the Agreement Area in the Beibu Bay, to steadily advance the delimitation negotiations on the waters off the Beibu Bay and actively promote negotiations on their joint development.
On February 2, the airport expansion project of Taiping Dao was completed, and Chen Shuibian the leader of Chinese Taiwan arrived at the Dao by plane, hosted the commissioning ceremony, and put forward four points of "Nansha Initiative."
On July 20, Vietnam and the US Exxon-Mobil Corporation reached a preliminary agreement on cooperation in oil and gas exploration, in disputed waters between China and Vietnam in the South China Sea. On July 22, the spokesman of the Ministry of Foreign Affairs of China said the move constituted a violation of China's sovereignty and requested Exxon-Mobil to terminate the agreement.
On February 17, the Congress of the Philippines adopted the Act to Define the Baselines of the Territorial Sea of the Philippines, including China's Huangyan Dao and some of the islands and reefs of Nansha Qundao as Philippine territory.
On February 18, the Ministry of Foreign Affairs of the People's Republic of China issued a statement on the adoption of the Act to Define the Baselines of the Territorial Sea of the Philippines by the Congress of the Philippines, saying that "The Chinese Government hereby reaffirms that Huangyan Dao and Nansha Qundao have always been part of Chinese territory, and that the People's Republic of China has an indisputable sovereignty over those Dao and their adjacent waters. Claims by any other country for territorial sovereignty over Huangyan Dao and any island and reef of Nansha Qundao shall be illegal and void."
On March 10, Philippine President Gloria Macapagal Arroyo signed the No. 9552 Act to Define the Baselines of the Territorial Sea of the Philippines.
On May 6, Vietnam and Malaysia jointly submitted to the United Nations a proposal for joint delimitation of the outer boundary of the continental shelf 200 nautical miles beyond the southern part of the South China Sea.
On May 7, Vietnam submitted to the United Nations a proposal for delimitation of the continental shelf 200 nautical miles beyond the northern South China Sea.
On May 7, the Permanent Mission of China to the United Nations submitted a note to UN Secretary-General Ban Ki-moon regarding the delimitation proposal jointly by Malaysia and Vietnam for the continental shelf beyond 200 nautical miles on May 6 and the delimitation proposal submitted by Vietnam for the continental shelf beyond 200 nautical miles on May 7, unequivocally stating the solemn position of the Chinese Government and solemnly requested the Commission on the Limits of the Continental Shelf do not consider the two proposals in accordance with relevant provisions.
On May 12, the "Ministry of Foreign Affairs" of Chinese Taiwan issued the so-called Declaration of the Republic of China on the Outer Limits of Its Continental Shelf, stressing that in terms of history, geography and international law, Diaoyu Dao, Nansha Qundao, Xisha Qundao, Zhongsha Qundao, Dongsha Qundao and the surrounding waters were the inherent territory and territorial waters of the "Republic of China".
On June 3, Chinese Premier Wen Jiabao pointed out in talks with Malaysian Prime Minister Najib Tun Razak that the DOC should be effectively observed. China and Malaysia should strengthen dialogue and cooperation to properly handle relevant issues, and jointly safeguard peace and stability in the South China Sea. Najib said that the Malaysia would be willing to solve the South China Sea issue through friendly consultation under the guidance of international law.
On November 8, villagers' meeting of Yongxing Dao and Zhaoshu Dao were held, and their respective villagers' committee was elected, under the Administrative Office of Xisha Qundao, Nansha Qundao and Zhongsha Qundao.