South China Sea Tensions: Reviving Philippine-China Diplomacy

There is a specter haunting Asia – the specter of armed conflict in the world’s most important waterway. The South China Sea serves as a transit point for $3.4 trillion of global trade and hosts billions of dollars in fisheries and hydrocarbon resources.   Crucially, the waterway serves as a de facto boundary among several littoral states with conflicting coordinates and foundations of claim. Arguably, the most troubling dispute is between the Philippines and China, who have been at loggerheads over the past decade.

The situation in recent months, however, has become particularly alarming, thus raising the fears of direct armed confrontation. On at least five occasions, Chinese maritime forces have allegedly used water cannons to disrupt Philippine resupply missions and patrols to contested land features, most dramatically in the Second Thomas Shoal,  which hosts a de facto Philippine naval facility atop the grounded vessel, BRP Sierra Madre. More worryingly, Chinese and Filipino maritime forces  have thrice collided in the contested waters, raising fears of armed confrontation.

What makes the bilateral conflict particularly high-stakes is thatAmerica could get involved under the terms of the 1951 U.S.-Philippine Mutual Defense Treaty. The Biden administration had made it clear that its mutual defense treaty covers Philippine naval forces in the disputed waters, thus its obligations extend to the Sierra Madre. Having pledged “ironclad support” for the Philippines in the event of an armed attack in the disputed areas, the U.S. is an indirect party to the disputes.

Crucially, the Philippines has doubled down on its joint exercises with Western allies, most notably the 2024 Balikatan exercises, which saw unprecedented wargames in the South China Sea, as well as joining a new ‘Squad’ alliance along with the US, Australia and Japan. The Southeast Asian nation has further raised the stakes by welcoming a growing American military presence in, and conducting drills with Western allies in northernmost provinces close to Taiwan’s shores.

This has gone hand in hand with the Philippines’ growing scrutiny of Chinese online casinos, tourists and suspected influence agents as well as calls for expulsion of Chinese diplomats allegedly involved in illegal activities. China has sought to justify its more assertive actions by accusing the Philippines of betraying prior agreements in the disputed waters. The upshot is a perilous brinkmanship with potentially dire consequences for the whole region.

A Toxic Dynamic

It’s hard to understate the profound deterioration in bilateral relations. Just a few years ago, China’s Foreign Minister Wang Yi described then Philippine President Rodrigo Duterte as “the most respected and the most important friend for President Xi Jinping and the Chinese people.” Shortly after the election of Ferdinand Marcos Jr., the Chinese diplomat met the then newly-elected Filipino leader to usher in a “new golden era” in bilateral ties.

Barely two years later, bilateral diplomatic ties are on the verge of collapse, with each side pressing its own advantage despite risks of armed confrontation. China insists the Philippines is unilaterally violating prior arrangements, namely "temporary special arrangements" with the former Duterte administration as well as   a ‘new model’ of conflict-management with the Marcos Jr. administration.

The Philippines, however, is adamant that either those agreements were either non-binding, surreptitiously unconstitutional, or non-existent, since they would be tantamount to surrender of Manila’s sovereign claims and rights in the disputed waters. A senior Philippine admiral was recently relieved after China implicated him in an alleged de-escalation pact.

With top Philippine defense officials calling for expulsion of Chinese diplomats allegedly involved in wiretapping and illegal activities, and top Filipino diplomats wary of leakage of any confidential conversations, bilateral communications are on the verge of collapse. In fact, even overall people-to-people relations is also suffering, with Manila stepping up scrutiny of the large influx of Chinese students into strategically-located provinces as well as sensational senate hearings on Alice Guo, a Chinese-descent Filipino mayor accused of acting as an influence agent for Beijing.

If current trendlines continue, both the Philippines and China will be sleepwalking towards conflict. On its part, the Philippines has to consciously avoid a full alignment with the United States in favor of a proactive hedging strategy, which allows the Southeast Asian nation to preserve its strategic autonomy. Instead of getting dragged into a Pentagon-led plan to contain China, the Philippines should instead prioritize its own national interest by smartly leveraging its alliances and geography.

Responsible Statecraft

The Philippines can draw inspiration from its neighbors, most especially Vietnam, as well as fellow U.S. allies from South Korea to Türkiye, which have deftly hedged their bets in dealing with the superpowers. Notwithstanding its treaty alliance with America, Manila should stick to a “hedging” strategy, where it remains committed to “not taking sides or being locked into a rigid alignment” with any superpower against another in favor of diversifying its strategic options and “cultivat[ing] a fallback position.”[1] The aim is to offset risks of either overreliance on any superpower or overly confrontation policy towards another.[2] 

From Vietnam to Singapore and Indonesia, Southeast Asian nations have relied on  “limited deference and selective defiance” when dealing with superpowers in order to preserve their core interests and strategic autonomy while maintaining generally stable ties with competing superpowers.[3] By a proactive hedging strategy, they have managed to cope with  “diffuse, fluid, and myriad” sources of risk[4].

At its current predisposition, the Philippines is increasingly embracing[5] a “soft balancing” strategy, namely more overt military and diplomatic countermeasures against China in tandem with Western allies.[6] While this is an understandable position given the severity of tensions in the South China Sea, the Marcos Jr. administration can still recalibrate its alliance with the US in order to avoid total collapse in diplomatic ties with China.

For instance, the Philippines can reconsider granting the Pentagon additional access to northernmost Philippine bases near Taiwan as well as limit American military presence and weapons deployment under the Enhanced Defense Cooperation Agreement (EDCA) in exchange for concessions from China in the South China Sea. China should reconsider its more aggressive tactics, most especially usage of water cannons and/or reliance on militia forces, who lack the full professionalism of the People’s Liberation Army (PLA) forces.

China must also change its tone on the Philippines’ strategic agency and stop dismissing the 100-million-strong nation as just an American ‘puppet’. All authoritative surveys show that a super-majority of Filipinos prefer their government to take a robust stance in the South China Sea, thus the impossibility for any democratically-elected Filipino leader to appear as compromising the country’s core interests.

Thus, it’s crucial for both sides to proactively restore diplomatic channels by, inter alia, refraining from provocative actions, appreciating each other’s core interests, and pursuing mutually-acceptable de-escalation regimes. Beijing must respect Manila’s strategic agency and exercise self-restraint, while the Philippines should avoid full alignment with the West in a New Cold War against China.