Sea surface height (SSH) variations in the South China Sea are examined using results from a data assimilation model. After the SSH data have had the annual cycle removed, principal component analysis illustrates two distinct anomaly patterns. The first mode, strongest off Vietnam, would affect the basin-wide gyre intensity. The second mode consists of a meridional dipole feature with a nodal line around 12¿N and is related to the development of the eastward jet and upwelling off Vietnam. Both EOF modes have significant interannual variations and are highly correlated to the ENSO events. The leading phase of mode 2 coefficient provides preliminary evidence for the air-sea interaction and the Pacific-East Asian teleconnection. An innovative mechanism is proposed to describe a weakened upwelling off Luzon in winter 1998. An extra-strong basin-wide warming in summer 1998 persists into fall and winter, preventing the formation of winter upwelling off Luzon in that year.