Across Asia, diplomats and analysts said they were perplexed at the inability of the Obama administration to devise a strong response to China’s challenge. It did not even dispatch an American destroyer to the spot near Subic Bay, a former American Navy base that is still frequented by American ships, some noted.  After discussions at the National Security Council on how to deal with the issue, the Obama administration sent a démarche to China demanding the return of the drone. On Saturday, China said it would comply with the request but did not indicate when or how the equipment would be sent back.  The end result, analysts said, is that China will be emboldened by having carried out an act that amounted to hybrid warfare, falling just short of provoking conflict, and suffering few noticeable consequences.  “Allies and observers will find it hard not to conclude this represents another diminishment of American authority in the region,” said Douglas H. Paal, the vice president for studies at the Carnegie Endowment for International Peace.  Significantly, the Chinese grabbed the drone not only in international waters but outside even the “nine-dash line” that China uses as a marker for its claims in the South China Sea. In so doing, analysts said, Beijing was making the point that the entire sea was its preserve, even though it is entirely legal for the United States to conduct military operations in waters within 200 miles of the Philippines, an area known as an exclusive economic zone.  In the last dozen years, China has steadily showed off its growing military prowess to the countries around the South China Sea, which carries trillions of dollars of world trade and which China values for its strategic access to the Western Pacific and the Indian Ocean.  As China has built up its navy and its submarine fleet in the last decade, it has also emphasized what it calls its “inherent” right to dominate the regional seas, and to challenge the presence of the United States, its allies and partners in Asia.  The drone episode, which occurred on Thursday and was first broadcast by CNN despite efforts by the Obama administration to settle it quietly, was of a different nature and just as disquieting as past confrontations with China that involved bigger ships and more dangerous maneuvers, analysts said.  In 2001, soon after President George W. Bush came to office, an American spy aircraft, an EP-3, was forced to land on Hainan Island after colliding with a Chinese fighter jet. The Chinese stripped the plane of its assets and returned it broken down to its parts and packed in boxes.  In 2009, two months after President Obama took office, Chinese vessels swarmed a United States Navy reconnaissance ship, the Impeccable, in what the Pentagon said were dangerous and unprofessional maneuvers.  This time, China chose a more unconventional method to challenge the United States and hastened the timetable, challenging a president-elect rather than a newly installed president as it has in the past.  The drone itself, known as an unmanned underwater vehicle, was not a particularly important piece of equipment. Such drones are deployed to gather military oceanographic data and are available over the counter for about $150,000, the Pentagon said. Data from the drone would no doubt be used to help track China’s growing submarine fleet, naval experts said.  More important than the equipment was the principle of freedom of navigation in international waters, and whether China was in the process of imposing its own rules in the South China Sea — more than 800 miles away from its coastline, said Alexander Vuving, a specialist on Vietnam at the Asia-Pacific Center for Security Studies in Hawaii.  “This is China showing that it is in the process of setting the rules in the South China Sea, imposing its own view in the South China Sea and saying the South China Sea should be its own backyard,” Mr. Vuving said.  “If China can get away with this incident with impunity,” he added, “this will send a chilling message to countries in the region.”  Some leaders, like President Rodrigo Duterte of the Philippines, will feel validated in a pivot away from the United States toward China, Mr. Vuving said. “Others, like the Vietnamese, will have to seriously rethink their regional outlook.”  Vietnam — always fearful of China, its neighbor to the north, but also careful not to alienate Beijing — has tried in the last few years to draw closer to the United States, while still maintaining a careful distance.  In 2011, as China became more assertive in the South China Sea, Vietnam accused China of instructing three high-speed patrol boats to cut the cables of a Vietnamese oil and gas survey ship.  The authoritarian Vietnamese government was so furious that it allowed anti-Chinese demonstrations in Hanoi.  In 2014, China moved a billion-dollar oil rig to waters close to the Paracel Islands that both Vietnam and China claim, and then blasted a flotilla of Vietnamese ships with water cannon.  Since then, China has hardened its position, sometimes referring to the South China Sea a “core interest” in which there is no room for compromise, though others in the region call it bullying by the Chinese president, Xi Jinping.  Under that vision, China would be in control from the waters of Indonesia to Brunei, Malaysia, the Philippines and up to Japan.  In the East China Sea, China and Japan are at odds over an uninhabited island chain, known as the Senkaku in Japan and the Diaoyu in China. In June, China sent a warship for the first time into the waters around the islands, further escalating tensions.  Japan has been more outspoken than other Asian countries in its support for the Obama administration’s objections to China’s construction of military facilities on seven artificial islands in the South China Sea.  But in Tokyo, the government was watching the outcome of the drone episode with some anxiety. So far, Washington’s restrained response has not been reassuring.
The episode is seen as one more reason to fear Beijing — and to doubt whether the American Navy will rise to the defense of allies in the region.