Yesterday, in a stunning admission that already frigid relations between China and the US (because according to the lying White House it is Russia that is "isolated", even as Putin was sitting next to Chinas president on May 9) are getting worse, if not outright hostile, by the day we learned that US Defense Secretary Ash Carter has asked his staff to look at military options to rebuke Chinese ambitions in the South China Sea area around the Spratly Islands, which has recently become a topic of contention between China and most of its neighbors, especially the Philippines and Vietnam.

And while apparently the US does not have its hands full already with orchestrating (and profiting from) two proxy regional wars, one in Ukraine and one in the Middle East, and feels compelled (by shareholders of US "defense" companies) to prove to the world it has long since lost its globocop status when China roundly ignores American threats, China wasted no time to do just that and overnight Beijing strongly condemned a proposed U.S. military plan to send aircraft and Navy ships near disputed South China Sea islands to contest Chinese territorial claims over the area.

As cited by the WSJ, China Foreign Ministry spokeswoman Hua Chunying said that “we are severely concerned about relevant remarks made by the American side. We believe the American side needs to make clarification on that."

One can hope. Then again, the US State Department may just dispatch some potatoes to China courtesy of John Kerry and that may be the end of it.

China however will demand more than just vegetables: the unusually strong comments came after U.S. officials said Defense Secretary Ash Carter had asked his staff to look at options to counter China’s increasingly assertive claims over disputed islets in the South China Sea. Those options, officials said, include flying Navy surveillance aircraft over islands and sending U.S. Navy ships within 12 nautical miles of reefs that have been built up in recent months around the Spratly Islands.

“We always uphold the freedom of navigation in the South China Sea,” Ms. Hua said. “But the freedom of navigation definitely does not mean the military vessel or aircraft of a foreign country can willfully enter the territorial waters or airspace of another country. The Chinese side firmly upholds national sovereignty and security.”

But the biggest slap in the face of the US yet came when China explicitly told the US not to meddle in Chinas own affairs.

Ms. Hua said Beijing urged “relevant countries to refrain from taking risky and provocative action.”

The proposed U.S. military maneuvers and China’s swift response have raised the stakes in an already tense regional showdown over who controls the disputed waters. Six governments–China, Vietnam, Brunei, Malaysia, Taiwan and the Philippines—claim the South China Sea waters, islands, reefs and atolls in whole or in part.

And while Chinas immediate neighbors who stand to lose the most once China begins flexing its territorial expansion muscle quickly gravitated toward the US outburst which will now cost the US dearly if it is unwilling or unable to further escalate with China, the biggest loser is Australia which is between a rock, i.e., its biggest trading partner China, and a hard case, i.e., the US which demands that Australia remain in its sphere of diplomatic influence:

Australian Foreign Minister Julie Bishop told The Wall Street Journal that Canberra doesn’t take sides on competing territorial claims in the South China Sea, but is in close contact with the U.S. on regional tensions.

“We are concerned that land reclamation activity by China and other claimants could raise tensions in the region,” Ms. Bishop said.

The expansion of South China Sea shoals has put Canberra in an uncomfortable position between Washington, its longstanding security ally, and China, its largest trade partner. Defense Minister Kevin Andrews is expected to discuss regional tensions with his U.S. counterpart, Mr. Carter, in Singapore in a few weeks.

What makes it even worse for Australia is that the US is forcing it to decide: U.S. military commanders have in recent months urged Australia to consider joining multinational patrols in international waters north of Indonesia, while also increasing the frequency of U.S. warship and aircraft visits through Australian bases on the periphery of regional tensions.

At this rate China will simply take matters into its own hands and outsource all Australian exports to some other nation, in the process leading to a depression for Australia which will at least have cordial relations with what is perhaps the most incompetent US State Department in history.

But the biggest wildcard is Japan: "Security experts are closely watching whether Japan will start sending surveillance planes and naval vessels to the contentious waters of the South China Sea to aid the U.S.’s efforts to patrol the region."

Japan, as a reminder, was in a comparable state of utter economic catastrophe a little over 70 years ago when it had little to lose and potentially much to gain when it entered World War II against the US in the process dragging America into the global conflict.

According to many Japan is the same loose cannon now, and with its inevitable demographic disaster, an economy that will implode the second the BOJ loses control over the Nikkei, and production that is no longer competitive on the global arena absent massive currency devaluation every month, if there is anyone who could and would see to provoke another global conflict, it is Tokyo yet again.

As for the US, we doubt the US State Department is dumb enough to engage China openly as this would inevitably lead to another world war, although one has learned to never bet against the stupidity of US government workers, especially when there is an unlimited amount of neocon blood money urging them on to an outcome that would lead to the death of hundreds of millions of innocent people or, as it is better known in the US military industrial complex, record profits.

Meanwhile, those curious to see if the US will indeed engage China and resort to anything more than a mere war of words, here is the latest naval update. If US ships find themselves in the vicinity of the Spratlys, then indeed human stupidity - and greed - is unlimited.