China has won the first round of its contest for control in the South China Sea by completing construction of an archipelago of artificial islands, say senior Australian sources.

And there is little that will stop China from winning the next round, too, as an indecisive US Administration and allies including Australia struggle to follow through on earlier promises to challenge unlawful Chinese claims with "freedom of navigation" exercises, the sources say.

By 2017, military analysts expect China will have equipped its new sand islands with ports, barracks, battlements, artillery, air strips and long-range radar systems that will enable it to project military and paramilitary power into the furthest and most hotly-contested reaches of the South China Sea.

Those facilities would give China the ability to obstruct other claimant countries and potentially disrupt sea lanes that carry more than three-fifths of Australia's merchandise trade, according to military analysts.