Ruling seen as a victory for the Philippines, which filed the case before the tribunal at The Hague.
The Chinese government has vowed to take all necessary measures to protect its sovereignty in the South China Sea and said it reserved the right to set up an air defence zone, a day after an international tribunal ruled China had no legal basis for its expansive claims in the region.
“On whether China will set up an air defence zone over the South China Sea, what we have to make clear first is that China has the right to,” Liu Zhenmin, the vice foreign minister, told reporters in Beijing on Wednesday.
“But whether we need one in the South China Sea depends on the level of of threats we face.”
US officials have previously said that they feared China may respond to the ruling by declaring an air defence identification zone (ADIZ) in the South China Sea, a move that would sharply escalate tensions in the disputed territory.
In 2013, China declared an ADIZ in the East China Sea. That zone is not recognised by the US and others.
Liu also said that the Philippines was to blame for “stirring up trouble”, as he introduced a policy paper calling the islands in the strategic sea lane “China’s inherent territory”.
His comments came a day after, the Permanent Court of Arbitration in The Hague rejected China’s claims to economic rights across large swaths of the South China Sea.
The tribunal also found that Beijing had aggravated the seething regional dispute and violated the Philippines’ maritime rights by building up artificial islands that destroyed coral reefs, and by disrupting fishing and oil exploration.
“There was no legal basis for China to claim historic rights to resources within the sea areas falling within the ‘nine-dash line’,” the Court said on Tuesday, referring to a demarcation line on a 1947 map of the sea.
The South China Sea is a resource-rich strategic waterway through which more than $5 trillion of world trade is shipped each year.
China, which boycotted the case brought by the Philippines, rejected the ruling, saying its islands had exclusive economic zones and the Chinese people have more than 2,000 years of history of activities there.
Chinese President Xi Jinping said his country “will not accept” the decision, adding that China “under any circumstances, will not be affected by the award”, Xinhua state news agency reported.
Al Jazeera’s Adrian Brown, reporting from Beijing, said: “It’s fair to assume that the Chinese government knew which way this was going to go.
“Within minutes of the decision, the Chinese government released a fairly detailed statement restating why China always believes these islands belong to them, so now the question is really what is going to happen in the coming days.”
China has sovereignty over the islands in the South China Sea, including the Spratlys and Paracels, and Beijing’s position is consistent with international law and practice, the Chinese foreign ministry said.
The United States, which China has accused of fuelling tensions and militarising the region with patrols and exercises, said the ruling should be treated as final and binding.
“We certainly would urge all parties not to use this as an opportunity to engage in escalatory or provocative action,” White House spokesman Josh Earnest told reporters in a briefing.
Al Jazeera’s Marga Ortigas, reporting from Manila, said the Philippine government has “called for calm in terms of how to move forward after the decision despite now having gained leverage with this court ruling.
“President Rodrigo Duterte seems to want to retain friendly relationship and open ties with China. However, there is concern among many Filipinos here that its current government might be a little too friendly,” Ortigas said.
Perfecto Yasay, the Philippine foreign secretary, said in Manila that the “milestone decision” was an important contribution to efforts in addressing disputes in the sea.
“The Philippines reiterates its abiding commitment to efforts of pursuing the peaceful resolution and management of disputes with the view of promoting and enhancing peace and stability in the region,” he said.
The ruling is expected to further increase tensions in the region, where China’s increased military assertiveness has spread concern among its smaller neighbours and is a point of confrontation with the US.
It could also spur Taiwan, Vietnam, Malaysia and Brunei, which also have overlapping claims in the South China Sea, to file similar claims.
“This award represents a devastating legal blow to China’s jurisdictional claims in the South China Sea,” Ian Storey, of Singapore’s ISEAS Yusof Ishak Institute, told the Reuters news agency.
“China will respond with fury, certainly in terms of rhetoric and possibly through more aggressive actions at sea,” he said.
US diplomatic, military and intelligence officers told Reuters that China’s reaction to the court’s decision would largely determine how other claimants, as well as the US, respond.
In China, social media users reacted with outrage to the ruling.
“It was ours in the past, is now and will remain so in the future,” wrote one user on microblogging site Weibo. “Those who encroach on our China’s territory will die no matter how far away they are.”
Spreading fast on social media in the Philippines was the use of the term “Chexit” – the public’s desire for Chinese vessels to leave nearby waters.
Al Jazeera’s Jamela Alindogan, reporting from Northern Luzon, near the disputed Scarborough Shoal, said Filipino fishermen affected by the dispute have welcomed the decision, but are awaiting for Philippine President Duterte’s help in improving their livelihood.