This reorganization reflects the Chinese tactic of asserting its claims to control most of the South China Sea by avoiding the use of military vessels. Instead it sends out these “police” ships to harass and threaten foreign ships operating in what international law considers the high seas but that China considers its territorial waters. If any of these intruders call in warships, then China will defend itself by calling its own warships and aircraft.
As part of this policy, China began enforcing new rules that have Chinese coast guard vessels escorting, or expelling, foreign ships from most of the South China Sea. This move has mobilized a lot of resistance from the neighbors. At the time China announced that it was not planning on having grey painted navy ships do the intercepting and harassing but white painted coast guard vessels. White paint and vertical red stripes on the hull is an internationally recognized way to present coast guard ships. This is much less threatening than warships. China also calls in civilian vessels (owners of these privately owned ships understand that refusing to help is not an option) to get in the way of foreign ships the coast guard wants gone. Thus, if foreign warships open fire to try and scare away these harassing vessels they become the bad guys.
CMS was the most recent of these maritime police agencies, having been established in 1998. It was actually the police force for the Chinese Oceanic Administration, which was (and still is) responsible for surveying non-territorial waters that China has economic control over (the exclusive economic zones or EEZ) and for enforcing environmental laws in its coastal waters. The CMS already had 10,000 personnel, 300 vessels, and ten aircraft. Personnel were recently increased from 9,000 and more ships and aircraft are being added.
When there is an armed confrontation over contested islands in the South China Sea it's usually CMS patrol boats that are frequently described as "Chinese warships." The CMS and the other coastal police forces have several hundred large ships (over 1,000 tons, including several that are over 3,000 tons) and thousands of smaller patrol boats. China is also building small bases in the disputed islands that can serve as home port for the small patrol boats. It should be noted that many of these patrol vessels are designed to be equipped with heavier weapons (missiles, torpedoes) in wartime.
The current consolidation of Chinese police forces is mostly about the EEZ and patrolling it more frequently and aggressively. International law (the 1994 Law of the Sea treaty) recognizes the waters 22 kilometers from land as under the jurisdiction of the nation controlling the nearest land. That means ships cannot enter these "territorial waters" without permission. However, the waters 360 kilometers from land are considered the EEZ of the nation controlling the nearest land. The EEZ owner can control who fishes there and extracts natural resources (mostly oil and gas) from the ocean floor. But the EEZ owner cannot prohibit free passage or the laying of pipelines and communications cables. China has already claimed that foreign ships have been conducting illegal espionage in their EEZ. But the 1994 treaty says nothing about such matters. China is simply doing what China has been doing for centuries, trying to impose its will on neighbors or anyone venturing into what China considers areas under its control.
For the last two centuries China has been prevented from exercising its "traditional rights" in nearby waters because of the superior power of foreign navies (first the cannon armed European sailing ships, then, in the 19th century, newly built steel warships from Japan). However, since the communists took over China 60 years ago, there have been increasingly violent attempts to reassert Chinese control over areas that have long (for centuries) been considered part of the "Middle Kingdom" (or China, as in the "center of the world").
China is particularly concerned about the nearby Spratlys, a group of some 100 islets, atolls, and reefs that total only about 5 square kilometers of land but sprawl across some 410,000 square kilometers of the South China Sea. Set amid some of the world's most productive fishing grounds, the islands are believed to have enormous underwater oil and gas reserves. Several nations have overlapping claims on the group. About 45 of the islands are currently occupied by small numbers of military personnel. China claims them all but occupies only 8, Vietnam has occupied or marked 25, the Philippines 8, Malaysia 6, and Taiwan one.
China prefers to use non-military or paramilitary ships (like those of the new coast guard) to harass foreign ships it wants out of the EEZ or disputed waters. This approach is less likely to spark an armed conflict and makes it easier for the Chinese to claim they were the victims. These claims of being a victim come across as a bad joke to China’s neighbors. That’s because the new rules mean offshore areas of the Philippines, Malaysia, Taiwan, Brunei, and Vietnam that international law does not recognize as Chinese are now formally claimed by China. India and the United States have both announced that they will not obey and that Indian and American warships expect to move unmolested through the South China Sea in 2013.