I agree with a formal warning, but not through words alone. Otherwise they'll dismiss it as "China is just a paper tiger going back to North Korea style rhetorical aggression". No, it has to be accompanied by physical escalation.
Plenty of legal opportunities to do this like next time their destroyers do a "FON" exercise just shadow them closely (<1 km) with coast guard and naval ships, light them up with gun (but not missile) radar, spam them with comms telling them to gtfo. If they approach within 12 nm of a Chinese island, physically remove them by ramming. If they sink, they sink, their problem. This shows that China doesn't fuck around with the legal rights it is entitled to, yet keeps escalation level below a shooting war.
That, plus rhetoric, works. Rhetoric alone is easily dismissed or twisted.