The incident took place in the context of the East Indies campaign of the French Revolutionary Wars, the allied squadron attempting to disrupt a valuable British merchant convoy due to sail from Qing Dynasty China.

The British commander in the East Indies, Rear-Admiral Peter Rainier was concerned about the vulnerability of the China convoy and sent reinforcements to support the lone Royal Navy escort, the ship of the line HMS Intrepid under Captain William Hargood.

Both sides subsequently claimed that the other had refused battle, although it was the allied squadron which withdrew, Hargood later successfully escorting the China convoy safely westwards.

Early each year, a large convoy of East Indiamen would assemble at Whampoa Anchorage in preparation for their six-month journey across the Indian Ocean and through the Atlantic to Britain.

[4][5] British interests in the East Indies were protected by a large but scattered Royal Navy squadron under the overall command of Rear-Admiral Peter Rainier.

He also had to maintain a watch on hostile warships, particularly a French force at the remote island base of Île de France (now Mauritius), the Dutch at Batavia (now Djakarta) and the Spanish at Manila.

[6] The French had been the greatest threat, with a powerful squadron assembled in 1796 under Contre-amiral Pierre César Charles de Sercey menacing British shipping in the East Indies in 1796 and 1797.

Hargood reported that the Franco-Spanish squadron then turned and fled into the Wanshan Archipelago, where they anchored as darkness fell before withdrawing before dawn.

[15] In historian C. Northcote Parkinson's assessment "It is perhaps fair to conclude that neither squadron was spoiling for a fight", although he describes Lhermitte's subsequent reaction as "disgust" and Sercey's as "fury".

[16][11] Richard Woodman considered that by this action the French threw "away at a stroke the chance not only of seizing a valuable convoy, but of establishing Franco-Spanish dominance in Indo-Chinese waters".