This study examines recent developments in the South China Sea through a case study of the China-Vietnam relationship. The study outlines and examines how China and Vietnam deal with tensions relating to their territorial disputes in the South China Sea. It looks specifically at the tension caused by incidents in late May and early June 2011 and how the tension was brought under control by the two countries. These developments are examined in the broader context of the Sino-Vietnamese approach to managing border disputes since full normalisation of relations in late 1991. The implications and lessons drawn from the developments in May-June 2011 as well as from the broader period since late 1991 are outlined. Furthermore, the challenges for China and Vietnam to properly manage their disputes and related tension in the South China Sea are discussed.