**Ongoing gray-zone confrontations in the South China Sea, including repeated water-cannon incidents, vessel blocking, close aircraft approaches, and a near-doubling of Chinese maritime presence around disputed features like Second Thomas Shoal and Scarborough Shoal in recent weeks, have not escalated into direct military exchanges.** Philippine officials continue resupply and medical missions despite interference, while both sides trade diplomatic protests and maintain some economic and communication channels. Manila’s emphasis on managing disputes through alliances, legal assertions, and ASEAN processes, alongside Beijing’s focus on enforcement without triggering broader conflict, supports the current trader consensus reflected in the 72.5% probability assigned to no clash before 2027. External deterrence from U.S. and partner naval activity further shapes expectations of continued low-intensity friction rather than open hostilities in the near term.