Based on the CTD and meteorological data obtained by R/V Xiangyanghong No.14 in the South China Sea (SCS) in the summer of 1998, both current velocity and volume transport are calculated by using a modified inverse model. Circulation in the SCS is analyzed by combining the calculated results with ADCP data. The following results are obtained. (i) The most important feature of the circulation in the northeastern SCS is that a branch of the Kuroshio intrudes into the SCS with a small volume transport. It flows anticyclonically through the Bashi Strait and towards the southwest off the Taiwan Island, and it does not intrude into the inner SCS. (ii) The northern SCS is dominated mainly by a cyclonic circulation system with two cold eddies. (iii) The central and southwestern SCSs are mainly occupied by anticyclonic circulation systems, including three anticyclonic and one stronger cyclonic eddies. (iv) In the southeastern SCS, there is a large scope of cyclonic circulation extending in the SW-NE direction. (v) There is a "multi-eddy phenomenon" in the SCS, and a larger eddy contains several small eddies. (vi) There is western intensifying of the currents and eddies in the SCS.