Your point about nomenclature is well-made. China also calls the Sea of Japan the East China Sea, another example of their naming of geographical features to connote their right to ownership of the feature itself. The dispute over the Senkaku/Diaoyu Islands is likely going to be a similar flashpoint to the reefs we're discussing in this thread, but I believe that China is far more concerned about dealing with Japan's formidable Self-Defense Forces and their treaty allies in the US than they are with the relatively puny militaries of the nations bordering the South China Sea.
On your last points of the Japan Self-Defense Force and the armed forces of the Asean countries, CCP Boyz in Beijing have caused an arms buildup throughout the region. Asean countries know that singularly or as a whole they cannot match or equal the CCP armed forces so it's not an arms race, i.e., scrambling for parity. Rather the Asean nations are individually arming up to the point of critical mass, i.e., to make CCP military action against any of 'em too costly to Beijing to attempt seriously or to consider realistically.
Number one is among the Asean countries. Since 2008 when CCP began its bellicose maritime moves Asean countries have been ordering submarines by the pack. Vietnam bought six Russian Kilo Klass diesel subs armed with the Klub missile that can reach deep into the CCP-PRC. The PLA Navy South Fleet at Hainan island in the SCS is a quick lob for the Kilo Klubs. VN Kilo sub crews are trained in India by Indian Navy personnel who know the subs. Hanoi rebuilt the naval base at Camranh Bay to accommodate aircraft carrier groups, i.e., US, UK, France, India. In June the U.S. 3rd Fleet Vinson carrier strike force will be the first to dock there to include delivering more reserve equipment and supplies to include armaments. Hanoi continues purchasing from USA state of the art coastal defenses -- new radars, recon craft air and sea and shoreline missile batteries. Vietnamese have known the Chinese well for thousands of years so they're familiar with the drill but this time VN is upgraded significantly to include strategic partners USA, India, Australia, Japan.
Malaysia is bringing on six new navy frigates, six new corvettes, and six new medium patrol craft plus three new Damien-class 86-foot patrol craft; this is in addition to two Coast Guard cutters donated by Japan last year and which are fully operational. Kuala Lumpur has increased its maritime force tonnage by 61%. KL is now prepared to modernize its Air Force. Most Asean countries are doing naval and air buildups. Australia has committed $40 million for 11 new
Barracuda French submarines being constructed in Oz. India has new and massive naval and air bases at the north end of the Malacca Strait and is building its third aircraft carrier.
In Japan it is entirely different. Japan Self-Defense Forces are modern, high tech, well equipped and trained; JSDF gets a higher quality of recruits, its commanders are steeped in naval history to include aircraft carriers and its officer corps is highly educated and trained. The Maritime Self-Defense Force (Navy) is formidable and coming out of the closet. U.S. Naval War College estimates that although the MSDF is smaller than the PLA Navy in number of ships and tonnage, PLA Navy would need a good day between 'em to call it a draw, never mind to score a victory. Japan is the only US allied government in Asia authorized and receiving the F-35 stealth attack fighter.
USN admirals don't speak in such terms without direct authorization of the Pentagon and its higher ups...
US admiral warns of risk of arms race in South China Sea
A senior American naval commander has implicitly accused China of creating "so-called military zones" close to artificial islands it has built in the South China Sea, declaring that such actions are eroding the security of one of the world's busiest waterways.
In a speech in Honolulu, Hawaii, on Monday, Admiral Scott H. Swift of the US Pacific Fleet said commercial ships that had previously sailed freely through international shipping lanes were being diverted from areas deemed to be too close to the artificial islands built by China in the Spratly archipelago.
Adm Swift, who visited China last month, said that routine commercial and military operations in the area had become subject to warnings, interrupting freedom of navigation, as well as air rights, to such an extent that the "unilateral assertiveness" was becoming a trend that was "unacceptable".
US admiral warns of risk of arms race in South China Sea, SE Asia News & Top Stories - The Straits Times