The chances of a full-scale war erupting which could drag in China, the US, the Philippines and Vietnam are not as remote as one may think.

In recent weeks China and the Philippines had a tense stand-off in the disputed waters of the South China Sea.

It involved fishing boats, armed coast guard vessels and eventually even warships.

It is not the first confrontation in the area but the International Crisis Group (ICG) says the situation is potentially getting worse.

A new ICG report, titled Stirring up the South China Sea, has identified key problems within China as making war in the sea potentially more likely.

The report says China's approach to the sea is marred by competing government departments, nationalist sentiment, unclear laws and a sense of a country being cornered.

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It warns those factors could one day push it into a regional war with Vietnam or the Philippines, drawing in the US.

The report found the Chinese government is actively trying to defuse tensions with its neighbours.

But it said that by having multiple Chinese agencies dealing with maritime disputes using armed coastguard vessels and competing for budgets and power, the situation has been made worse.

Clashes in the South China Sea have become more frequent.

Last year a Chinese fishing boat rammed the exploration cables of a Vietnamese ship and, as a result, both countries engaged in live fire exercises.

Just last week, armed Chinese vessels stopped the Philippine navy from detaining Chinese fishermen said to be poaching in contested waters.

Stephanie Kleine-Ahlbrandt, the ICG's north-east Asia project director, says China and other countries have been withholding their navies from getting involved in these incidents.

But she thinks it could increase the likelihood of major battles involving smaller armed policing ships.

"We worry in Crisis Group that the threshold for entry into conflict is much less by having all of these law enforcement and paramilitary vessels because it's seen as well they're just law enforcement vessels," she said.

"So they're more easily deployed and they're far less conscious of the rules; the rules of the road, international law, these types of things than would be the PLA navy.

"So they can be more careless and in fact there's some kind of a quasi-coastguard arms race going on in the region."

Ms Kleine-Ahlbrandt also raised the possibility that nationalism at home could push China and its neighbours closer to a dispute over competing waters.

She says her organisation is becoming more alarmed about the South China Sea.

"These five countries, China, Vietnam, the Philippines, Malaysia and Brunei have actually very overlapping claims and the incidents are increasing because you have essentially a sort of a proxy war going on through fisheries vessels where these countries don't want to engage through a major conflict through their navies," she said.

"These incidents, which are going to continue to happen, are getting harder to de-escalate because of the nationalist sentiment in the claimant countries, including, for example, Vietnam and China which makes it more difficult for these countries, particularly when the incident becomes international, to walk away from it because they don't want to be seen as weak vis-a-vis their own publics."

She says people might be surprised to know that the Chinese government has to pay attention to what its ordinary people think on issues like this.

"There's a Chinese Twitter called Weibo so the government has far less control over how to depict certain disputes," she said.

"The information that gets out there, it can be instantly available in minutes to hundreds of thousands of people.

"When the domestic environment is very heated on these issues it does make it difficult for China to be seen in any way as weak or compromising."

The report has called for the Chinese Foreign Ministry to take full control of South China Sea disputes but says that at the moment it lacks the authority and resources to manage the other Chinese ministries involved.