The strategic situation in the Pacific in January 1945. The red shaded area was controlled by the Allies and the remainder was controlled by Japan.
During 1941 and the first months of 1942, Japan conquered or established de facto rule over almost the entire South China Sea region. Control of the sea was vital to the Japanese economy and war effort, as it was the conduit through which essential supplies of oil and other natural resources passed from occupied Malaya, Borneo and the Dutch East Indies. The situation in French Indochina was particularly complex. After a short military confrontation in September 1940 the colonial government, which was loyal to the Vichy French collaborationist regime, permitted the Japanese to use ports and airfields in northern Indochina. In July 1941 the Japanese occupied southern Indochina and established airfields as well as an important naval base at Cam Ranh Bay. The French authorities remained in place as a puppet government. After the liberation of France in 1944, the colonial government sought to make contact with the new Free French government in Paris, and began preparations to stage an uprising against the Japanese. The Japanese also developed plans in 1944 to forcibly disarm the French forces and formally take over Indochina, and their intelligence services rapidly learned of the French authorities' intentions.
As the war turned against Japan, convoys of ships passing through the South China Sea frequently came under attack from Allied submarines and – by late 1944 – aircraft. These attacks were guided by information gained from signals intelligence and long-range air patrols, supplemented by reports from coast watchers along the Chinese coast and other observers in Asian ports. The United States Army Air Forces' (USAAF) Fourteenth Air Force, which was stationed in China, regularly attacked Japanese shipping in the South China Sea area. The command also made periodic attacks on Japanese-held ports in southern China and military installations in Indochina. The Allied clandestine services undertook few activities in Indochina until the second quarter of 1945.
While losses of oil tankers and freighters were increasingly heavy, the Japanese Government continued to order ships to make the voyage through the South China Sea. In an attempt to limit losses, convoys and individual ships took routes well away from the established sea lanes, or sailed close to the shore and operated only at night.
The United States began the liberation of the Philippines on 25 October 1944, with a landing at Leyte island in the central Philippines. After a base was established at Leyte, American forces landed at Mindoro island on 13 December. This operation was conducted to secure airfields that could be used to attack Japanese shipping in the South China Sea and support the largest element of the liberation of the Philippines, a landing at Lingayen Gulf in north-western Luzon that was scheduled for 9 January 1945. The Imperial Japanese Navy (IJN) suffered heavy losses in its attempt to attack the Allied fleet during the Battle of Leyte Gulf in October 1944 which, when combined with the losses during the Battle of the Philippine Sea in June 1944, left it unable to conduct further major battles. However, it remained capable of raiding Allied positions.
During late 1944 Admiral William Halsey Jr., the commander of the United States Third Fleet, sought to conduct a raid into the South China Sea and led the development of plans for such an operation. On 21 November he asked Admiral Chester W. Nimitz, the head of the United States Pacific Fleet, for permission to begin the attack but was turned down.