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It's illegal fishing, not a ballistic missile submarine. Nobody needs to die over this.

Send in the coast guard, impound the ship, assess big fines. If the fines go unpaid, sell the ship.

Unless you’re able to impound a significant % of their fleet, their profits would still cover the losses and this wouldn’t serve as an effective deterrent. Sinking the ship, on the other hand, would make the crews really uneasy about going into your coastal waters. People don’t weigh probability of dying against a survivability of the whole fleet.

They often target countries that are not able to effectively police or defend their waters.

The ocean is so vast, few, if any, countries are able to monitor, let alone defend, their share of it at all times.

Not that simple: Most of these Chinese fishing boats are classified as Chinese Merchant Marines, a devision of the Chinese Military, so sinking them is an act of war. This is a real headache for managing illegal Chinese Fishing of Vietnam waters and other countries within the 9 and 11 dashed lines.

Yeah, let's cut the arm out so the finger does not itch

It would only take a few examples to change behavior.