This study assesses the economic impact of the People's Republic of China's Distant Water Fleet (DWF) on small-scale fisheries (SSFs) in the South China Sea (SCS), a vital area for marine biodiversity and the livelihoods of coastal communities. Through analysis of vessel tracking and local fisheries statistics from 2012 to 2020, the research investigates the effects of DWF activities on marine fish capture rates and socio-economic indicators in Indonesia, Malaysia, the Philippines, and Vietnam. Results indicate that a 1 % increase in PRC DWF activity leads to a 0.1 % decrease in SSF marine capture in Indonesia's FMA 711, a 0.05 % reduction in Malaysia, a 0.01 % drop in the Philippines, and a 0.04 % decrease in Vietnam. These findings highlight the significant negative impact of PRC's DWF presence on local marine fish captures, suggesting adverse effects on SSF livelihoods. The study underscores the importance of implementing sustainable fishing practices and strengthening regional cooperation to mitigate the negative consequences of foreign DWF activities on local economies and ecosystems. This research contributes to the discourse on marine policy and sustainable fisheries management in the SCS, emphasizing the critical need for international collaboration to address the challenges of DWF operations.