Tensions between China and the Philippines over the South China Sea are cooling as the incoming Philippines president takes a more positive approach towards Beijing, paving the way for possible talks between the two nations over their territorial disputes.

In a move seen as both sides extending an olive branch to each other, Philippines’ President-elect Rodrigo Duterte called China’s Xi Jinping a “great president” after Xi told him in a congratulatory note that bilateral ties should “get back on the track of sound development”.

Chinese Foreign Minister Wang Yi also welcomed the potential warming of relations with Manila.

Duterte’s conciliatory stance towards Beijing is a sharp departure from his predecessor Benigno Aquino, analysts say. Ties between the two nations soured in Aquino’s term, especially after Manila took the South China Sea disputes to the Permanent Court of Arbitration in The Hague.

Beijing has refused to participate in the case and said it would not accept the decision, which is expected this month.

Duterte was not likely to drop the arbitration case but he “doesn’t consider [its ruling] to be an obstacle for improving ties with China”, said Chito Sta Romana, president of the Philippine Association for Chinese Studies.

“The key is that Duterte is realistic and he knows that resolving sovereignty disputes takes time.”

In dealing with China, Duterte was more likely to focus on promoting “economic diplomacy”, according to Romana.

“Duterte has a vision of building a railway in Mindanao – this [seems to be a key] driver of his approach to China,” said the analyst.

During Duterte’s presidential election campaign in April, he vowed to reverse the Aquino administration’s policy on the South China Sea dispute with China.

He would demand economic concessions from Beijing in exchange for Manila’s backtracking on its claim in the region, the Philippine Daily Inquirer reported.

“If you want, let’s do a joint exploration. Just give me my part [of the agreement] whatever it is, [it may be] a train system from Manila to Mindanao. For six years, I will shut up,” Duterte was quoted as saying.

Richard Javad Heydarian, a political science professor at De La Salle University in Manila, said the Duterte sees China as a key partner in national development, particularly in terms of infrastructure investment.

“His government will most likely focus on repairing frayed ties by finding a modus vivendi in the South China Sea, probably through informal agreements if not a formalised deal on joint exploitation of resources,” he said.

Duterte’s administration was also likely to shift the focus of overall bilateral relations away from the maritime disputes by emphasising areas of common interest rather than conflict, he said.

How will the new Philippine president tackle the South China Sea issue?

Political observers in China agree that a joint development between the two claimant countries could be a way out.

“Joint exploration is possible. China has always wanted joint exploration even during Aquino’s term,” said Xu Liping, a professor at the Chinese Academy of Social Sciences’ Institute of Asian-Pacific Studies.

China, the Philippines and Vietnam in 2005 signed a joint marine seismic cooperation in Reed Bank, a large underwater volcanic mountain, in the South China Sea during former Philippine president Gloria Macapagal-Arroyo’s administration.

But the project was scrapped after controversies over whether it was in line with the Philippines’ constitution.

In a sign of warming ties last month, the Philippine authorities said local fishermen could now fish freely in the disputed Scarborough Shoal as the Chinese coastguard had scaled down its operations in the area.

This shows that China is flexible in handling disputes with the Philippines,” Xu said.

Romana said Beijing should build on this positive move and further improve ties, especially in addressing the strong public sentiment against China in the Philippines.

“China has to weigh its actions carefully … and take advantage of this opportunity to give some immediate benefits,” Romana said.

Still, the United States will remain a key power player for Manila even though Duterte is expected to be more circumspect in granting America additional basing access, analysts say.

Last Thursday, US Defence Secretary Ashton Carter said Washington expected to maintain its strong security alliance with the Philippines – one of its closest allies – after Duterte suggested that he would chart a more independent course that relied less on the US.

“Relations with America are unlikely to be as warm as in recent years, but Washington will remain as a key ally in counterterrorism and other long-standing areas of security cooperation,” Heydarian said.

“What I expect is a more equilateral balancing strategy towards China and America, a departure from current counterbalancing strategy of the outgoing Aquino administration.”

Xu said China and the Philippines’ warming ties did not necessarily mean that the Philippines’ long-standing alliance with the US would be affected.

By CATHERINE WONG June 8 2016 in South China Morning Post