Observing vessel entering China (7)
I believe the answer is:
marking
'observing' is the definition.
(marking is a kind of observing)
'vessel entering china' is the wordplay.
'vessel' becomes 'ark' (ark is a kind of vessel).
'entering' indicates putting letters inside.
'china' becomes 'ming' (Chinese porcelain from the Ming dynasty).
'ark' put inside 'ming' is 'MARKING'.
(Other definitions for marking that I've seen before include "assessment" , "Staying close to an opposing player" , "Labelling" , "Becoming stained" , "Rating (school work)" .)