Abstract: The rise of China as a new superpower has resulted in an increased presence of Chinese power in the South China Sea. Even China’s action of building military installations in the Paracel Islands has had an impact toward Vietnam. This action has prompted Vietnam as a major actor in the region has taken a diverse approach to address the issue. The objective of this study is to identify the factors that contributed to China building military installations in the Paracel Islands, to study the impact on Vietnam Security and further analyse the approach used by the Vietnamese Government in addressing the impact of this China State action. The theory used in this study is realism and the concept is the Power Transition Theory, national interest, balance of power and power struggle