The Arbitration body empowered to resolve disputes over where the water boundaries are has just ruled against China. This ruling was been coming for months and the decision was as expected. The subject is the South China Sea
The issue is mainland China claims that almost all of the South China Sea is their territorial waters. If that was true, it would influence mineral rights, fishing and the ability of China to exclude ships of other countries from international travel.
The thing circled in Red is Scarborough Shoals. China claims it as theirs based on an unofficial map that was drawn in 1947. The Phillipnes considers it to be theirs. Vietnam also is in this fight, which is why relations with the US are warming.
China has said they don’t care what the world says. The South China Sea is theirs. Such are the things that can quickly become large wars.