This is clearly a serious and embarrassing operational failure on the part of PLAN and/or CCG, likely involving loss of life and with considerable propaganda value for PCG, the Philippines, and all who would question the professionalism and competence of China's maritime forces. Looking at the range of possible responses and dynamics from this point forward, I see three basic postures for China and two basic postures for the Philippines.
China #1: the Baseline Response. The first response involves incremental adjustments to existing operational procedures while preserving broader objectives. The focus here is on identifying the specific factors that contributed to the collision, and to eliminate or at least greatly reduce them going forward. Likely lines of inquiry concern the involvement of PLAN assets in what has generally been understood to be CCG-led operations, the specific involvement of such a large and relatively cumbersome PLAN combatant in pursuit of a dramatically smaller and more agile vessel, situational awareness and decision-making aboard the CCG vessel, possible failures or shortcomings in communication and coordination between PLAN and CCG assets. Looking further afield, consideration would also be given to the ship characteristics that are desirable for these kinds of operations.
China #2: Building upon the first response, this response would significantly revise the operating directives given to CCG and/or PLAN maritime assets, with the objective of more categorically eliminating the risk of further embarrassing "blue on blue" incidents, perhaps also with an eye to reducing the risk of inadvertent "blue on red" incidents. This would necessarily imply greater freedom of movement for PCG and other Philippines assets and potentially undermine Beijing's ability to pursue its objectives in the area.
China #3: Also building upon the first response, this "face saving" response would also seek to more categorically eliminate the risk of further such incidents but, rather than achieving this by altering PLAN/CCG behaviour as in #2, would do so by attempting to coerce changes in PCG behaviour. This would likely involve revising operating directives and rules of engagement to include a broader ranger of kinetic responses, including lethal responses, across a broader range of circumstances.
Philippines #1: This response celebrates this incident as a spectacular propaganda coup, and evaluates the PCG crew's conduct as both daring and effective, providing a blueprint for future operations.
Philippines #2: While recognising the propaganda value of this incident, this response is more wary of escalatory dynamics, recognising that this was nearly an incident of another kind entirely, i.e. a catastrophic collision between the PCG ship and PLAN 052D. PCG crews are counselled accordingly.
Clearly, the combination of China #3 and Philippines #1 would be the most escalatory going forward, while the combination of China #2 and Philippines #2 would be the least. I make no comment on the relative likelihood of each prospect.