The Chinese military has dramatically increased the size of some reefs and islets in the South China Sea, including putting airstrips and buildings on former reefs that were often under water. It is all part of their claim that they are their possessions. They have also released a map showing what they call the "12-segment dotted line," which shows a dotted line from Hainan Island down the coast of Vietnam, around the South China Sea and to just northeast of Taiwan, which they say represents Chinese territorial waters. Most nations in the region as well as the U.S.A.--and especially Taiwan!--vociferously disagree. I don't think there has been any buildup on Scarborough but it is certainly within the claimed Chinese territory. But it does muddy the water (pun intended) politically and DXCC-award wise.
I'm not familiar enough with DXCC rules, but I'd figure if China does have a flag on every reef, shoal and turtle in the South China Sea, then none of them would be a separate entity. Even if somebody is willing to risk his life and go operate from a scaffold on a hunk of coral out there. Hams have been killed in that area, you know.
(I'm currently writing a submarine thriller set in the area and watch with great interest. Of course, still needing about 20 countries confirmed to get to DXCC Honor Roll makes me follow developments there, too. I'm for making anything that would hold a vertical an "entity." I figure if United Nations Headquarters is a "country" then why not Staten Island and the upper peninsula of Michigan? [I hope you all know I'm not serious. Because some of you do take this stuff wayyyyy too seriously.])
Don Keith N4KC