Over recent weeks, the US has increased its military presence in the highly contested region in a bid to counter China’s dominance despite having no claim over the area.
China has constructed military bunkers on some of the atolls in the region, sparking fears of a World War 3 outbreak.
Last month, US Secretary of State, Mike Pompeo, issued an alarming warning to Beijing and called on other nations to counter against the Communist nation.
He wrote on Twitter: “The United States’ policy is crystal clear: the South China Sea is not China’s maritime empire.
“If Beijing violates International law and free nations do nothing, history shows the CCP (Communist Party of China) will simply take more territory.
“China Sea disputes must be resolved through International law.”
Now, Washington has announced a series of sanctions on Chinese entities, including the state-owned China Communications Construction Company (CCCC).
Visa restrictions will now apply to individuals and businesses “responsible for, or complicity in, either the large-scale reclamation, construction, or militarisation of disputed outposts in the South China Sea, or [the People’s Republic of China’s] use of coercion against Southeast Asian claimants to inhibit their access to offshore resources”.
In the statement, Mr Pompeo went on to say: “CCCC and its subsidiaries have engaged in corruption, predatory financing, environmental destruction and other abuses across the world.
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The Communist nation claimed the US had sent a U-2 reconnaissance plane into a no-fly zone over Chinese live-fire military drills on Tuesday.
In response to this, the Pentagon claimed the flight was “within the accepted international rules and regulations governing aircraft flights”.
Greg Poling, a South China Sea expert at Washington’s Center for Strategic and International Studies, said: “This is the first time the US has levied any type of economic sanction against Chinese entities for behaviour in the South China Sea.
“It probably doesn’t make much impact on those entities directly – I doubt that there is much CCCC needs to buy from the US that it can’t get from other suppliers.
“And these certainly aren’t the financial sanctions that some might have expected.
“But it could be a start at trying to convince Southeast Asian partners the new policy is more than just rhetoric.”
The South China Sea region is a highly disputed territory, facing rival ownership claims from China, Vietnam, Brunei, Malaysia, the Philippines and Taiwan.
Diplomatic relations between the nations, which have laid claim to the islands, are already extremely strained.
The islands and surrounding reefs have been the subject of a bitter and long-running territorial dispute.