The standoff in the Scarborough Shoal between China and the Philippines not only demonstrated Manila’s commitment to defend its maritime territory, but also Beijing’s determination to maintain its territorial aspirations at all costs.

For its part, Manila internationalized the issue in a bid to draw international opinion against China, with mixed fortunes. Indeed, while Philippine naval vessels eventually left the Shoal, their Chinese counterparts stayed behind and continue to prevent Filipino fishermen from fishing in the area.

So, just as it was for previous Philippine administrations, the South China Sea (SCS) issue will provide numerous challenges for the Aquino government, particularly when it comes to dealing with China. Accordingly, a carefully calibrated mix of political, security, and diplomatic tools must be employed to engage more effectively with Beijing. These will, in turn, need to ensure that territorial and maritime disputes do not dictate the future trajectory of Manila-Beijing relations.

Economics in command

In recent years, China had begun to gradually dislodge the US and Japan in their prime positions as major trading partners of most Southeast Asian countries. China had become Malaysia’s biggest trading partner in 2011, Indonesia’s biggest importer and second largest export market (as of 2010) and Thailand was just elevated to become China’s biggest trading partner after Japan. The presence of unresolved disputes did not prevent South Korea and even Japan from establishing good trade and investment with China.

In marked contrast, Manila’s trade relations with China is among the least developed among ASEAN member-states. Even Vietnam, which fought two major conflicts with China on the SCS, has a bigger and more productive economic partnership with China than the Philippines. The significance of maintaining these lucrative economic ties makes it increasingly difficult for ASEAN to arrive at a consensus on how to confront or engage China over the SCS disputes.

Most member-states have deep commercial, aid, investment and security ties with Beijing that make it hard to adopt a stance that may complicate their relations with one of their foremost patrons and partners. Accordingly, it is time that Manila also develops a comprehensive China strategy that does away with reactive and ad-hoc responses. It may help to confine the disputes in a certain corner and look at the bigger picture.

Moving Beyond the Shoal

Indeed, the SCS dispute should not constitute the main talking point in Philippines-China relations. Instead of magnifying differences, both countries (as developing nations) should look at areas for collaboration, such as market access, investments and technology transfers. Quiet and astute diplomacy may even achieve what publicized defense build-ups, and heated exchange of words cannot. Naval and coast guard modernization and maintaining an alliance with the US as a hedge against China are still important, but the need to engage in a manner that would lead to positive gains should not be lost on Manila’s leaders.

If only territorial and maritime disputes could be managed well and not allowed to spill over in the normal course of bilateral relations, both countries can engage in mutually beneficial economic ties which can even set the tone for an amicable settlement of their differences in the future. Fellow SCS claimants and ASEAN states Malaysia and Brunei can  attest to the fruits of maintaining cordial ties with China.

Malaysian and Bruneian offshore wells are located well within China’s sweeping “nine dash line” and yet these two countries are able to proceed with production without encountering harassment or vocal protests from Beijing! Incidents at sea (e.g.  arrests for foreign illegal fishing or poaching, “intrusions,” “illegal entry”) do occur but there must be some lessons in the handling of such cases by Malaysia  or Brunei that Manila can learn from.

As a country embarking on a journey to reclaim its old glory and power, China is sensitive about how it projects its influence, as well as how it is perceived by other countries. This raises a number of questions as to whether the Philippines’ national interests are best served by Manila’s current strategies for dealing with the SCS dispute. Indeed, those who argue differently should simply be reminded of the facts.

As of 2011, based on figures from the Philippines’ Department of Trade and Industry, China is the third largest export market, third largest import supplier, fourth biggest tourist market and second biggest donor (as of 2008)  after Japan and surpassing the US. These figures do not even count Hong Kong, which is the Philippines’ fifth largest export market and fourth largest investor as of 2011.

In addition, Manila also has to consider that Hong Kong is among the top destinations of Overseas Filipino Workers. However, notwithstanding these positive gains, bilateral trade between the two countries remain far from the level of China’s bilateral trade and investment volume with other ASEAN countries, notably with Indonesia, Malaysia, Thailand, and even Vietnam among others.

China, for its part, should also exert more effort. Philippine investment in China which stands at US$2.78 billion is still bigger than Chinese investments in the Philippines (US$125.41 million). Chinese investments outside extractive industries, such as mining, should also be fostered. Furthermore, aside from increasing investments, reassurances of peaceful intentions in the SCS should be translated to more control over the ground and restraint from engaging in actions deemed provocative on the part of other claimants.

More is expected from Beijing as the bigger responsible power, known for its patience, prudence and strategic thinking. How China behaves in its immediate neighborhood may give a glimpse of how China will conduct itself beyond so Beijing should be cautious and prudent with its actions.

In conclusion, one cannot choose her neighbors but one can choose the appropriate course for diplomatic relations. A sound China strategy is no longer an option for Manila, but rather an imperative. This requires Manila to understand the goals and forces that drive Chinese foreign policy in a bid to find confluences where national interests of both nations can be mutually served in a win-win solution.

The views expressed here are the author’s own and do not represent the official views of his affiliation. This article has been updated since original publication in Sharnoff’s Global Views.

Lucio Blanco Pitlo III is an MA Asian Studies student from the University of the Philippines Asian Center. His areas of interest includes Philippines-China and China-ASEAN relations, territorial and maritime disputes and energy security. He can be reached at lucioatacup@rocketmail.com. Read other articles by Lucio.