China-Philippines: A Case for "New" Type of Relations?

       Soon after the visit of President Duterte to Beijing, the Chinese moved with considerable dexterity to "allow" Filipino fishermen to once again resume fishing near the Scarborough Shoal/Huangyan island. The Chinese were conscious that with this move, opinion in South East Asian countries, would be considerable allayed about their aggressive intentions. The Chinese were also aware that fishing in the Philippines is an important industry, with about 1.61 million people employed in it. Although the total fish catch by Filipino fishermen is not excessively large, principally because they use only small boats with an average displacement of about three tons only, yet this industry plays a significant role in the economic life of the country. The Chinese decision has obviously gone down very well with the Filipino authorities and the ruling elites. It has certainly eased tensions in the South China Sea [SCS] area. It has also demonstrated to the South East Asian states that co-operation with China had certain positive benefits.
     However the Chinese have not rested their diplomatic initiative with this decision only. In what can be termed as a game changer, a proposal has been forwarded to the Philippines authorities for "joint exploitation" of the natural resources of the area in the SCS; claimed by both the Chinese and the Philippines governments. It would be recalled that Bloomberg in 2011 had put the crude oil reserves in the SCS area at 213 billion barrels, exceeding those of Saudi Arabia. The Chinese assessment was that the existence of such large oil reserves was one of the principal causes that triggered tension in the SCS area. It was felt that if Chinese diplomacy, by adopting very reasonable policies, could induce "co-operation" or "joint development", than this area could also become an area of peace and prosperity where the "peaceful" rise of China would not attract adverse reaction.

  It is in this context that the Chinese referred to the Power Development Plan [2009-2030] released by the Philippine Energy Department. In this plan the Philippines plans to produce 759 million barrels of oil and 2,694 trillion cubic feet of natural gas by 2030. Reaching this goal requires that, at the very least, 16 new oil and gas fields be discovered in the South China Sea region. Several years ago, the Philippine Forum Energy PLC opted for joint exploitation of oil with foreign enterprises, particularly in the Reed Bank area. The Philippine Energy Department also said that it expected China to bid for the joint exploitation. Statistics available suggest that Reed Bank has a reserve of at least 4.67 trillion cubic feet of natural gas. However, as the Chinese had claimed sovereignty over the Reed Bank, no third country was prepared to exploit this field for fear of offending China. Although this has not been confirmed by the Chinese authorities, warming Sino-Philippine relationship suggests that the two sides may be inching towards "joint co-operation"; just as the Chinese had hoped. The Filipinos know that China leads the world in offshore drilling technology and has sufficient funds to exploit the oil and gas resources of the region.

      If  the Chinese diplomatic initiative for "joint exploitation" of the oil and natural gas resources of the SCS area with the Philippines succeeds, it may also alleviate the need for the Chinese to import large quantities of oil from the Middle-East in the future. It would also mean that the Malacca "dilemma" referred to by the previous Chinese President Hu Jintao would also be adequately addressed. Perhaps this is the reason why the Chinese authorities are being so very reasonable with the Philippines!