China, Philippines agree to handle disputes peacefully, boost cooperation

© Reuters. National flags are placed outside a room where Philippine Finance Secretary Carlos Dominguez and China's Commerce Minister Gao Hucheng address reporters after their meeting in Beijing, China, January 23, 2017. REUTERS/Damir Sagolj/Files

By Yew Lun Tian and Neil Jerome Morales

BEIJING/MANILA (Reuters) -China and the Philippines have agreed to set up a direct communications channel between their foreign ministries on the South China Sea to handle disputes peacefully, they said on Thursday.

Their agreement, which contained 14 elements aimed at cooling security tensions and boosting economic cooperation, comes as they strive to mend a relationship hurt after the Philippines won a 2016 arbitral ruling that invalidated China's expansive claims in the South China Sea.

The Philippines has previously raised concerns over reported Chinese construction activities and the "swarming" of its boats by dozens of Chinese vessels in disputed waters of the South China Sea, an area rich in oil, gas and fishery resources.

In a joint statement issued after Philippine President Ferdinand Marcos met Chinese President Xi Jinping in Beijing on Wednesday, both leaders reaffirmed that their countries would respect each other's sovereignty and territorial integrity.

The Philippines will pursue an independent foreign policy, and was willing to cooperate for regional peace and the two countries' national interests, Marcos said in a speech upon arriving back in Manila.

"We agreed that maritime issues between the two countries do not comprise the entirety of our relations," Marcos said, while adding that maritime rivalry remained a "significant concern and priority" for the Philippines and the region.

Both sides also agreed to resume talks on oil and gas exploration in the South China Sea and discuss cooperation on areas including solar, wind, electric vehicles and nuclear power.

Coastguards from China and the Philippines would also meet "as soon as possible" to discuss "pragmatic cooperation".

Both countries would consider informing each other when firing rockets and cooperate on the retrieval of rocket debris, they said in their joint statement.

Last November, when debris from a Chinese rocket fell in the South China Sea, a Chinese coastguard ship stopped a Philippine boat from trying to tow it away.

Both countries reaffirmed the importance of peace and stability as well as freedom of navigation and overflight and would hold an annual dialogue on security, they said.

On economic cooperation, China agreed to let in more Philippine imports, with the aim for bilateral trade to revert to or surpass pre-pandemic volume.

Both sides also promised to boost tourist numbers and flights between their capitals to pre-pandemic level.

They also said that both sides would cooperate on vaccine procurement. China is among the world's top exporters of COVID-19 vaccines.

Marcos's three day visit to China comes as it re-emerges from a self-imposed border shut-down since the pandemic started in 2020, which has disrupted trade and hurt its economy.

Both sides also renewed an agreement on the Belt-and-Road Initiative, Xi's signature strategy on overseas infrastructure investment.

Chinese investors have committed $22.8 billion in investment pledges following a business meeting with Marcos, the Philippine press secretary said.

The pledges included $13.76 billion for renewable energy, mainly in solar and wind, $7.3 billion for strategic monitoring including electric vehicles and mineral processing, and $1.7 billion for agribusiness.

"I assure you that our government is committed to support your business activities," Marcos told Chinese business executives before his return to Manila.