Cover image via Reuters

Chinese President Xi Jinping said on Thursday that he hoped Philippine President Rodrigo Duterte’s “milestone” visit to China could help “fully improve” ties, which have suffered from to a territorial dispute in the South China Sea.

Duterte arrived in Beijing on Tuesday with at least 200 top business people to pave the way for what he calls a new commercial alliance, as relations with longtime ally the United States deteriorate.

On Wednesday, to the cheers of hundreds of Filipinos in Beijing, Duterte said Philippine foreign policy was veering towards China.

“I will not go to America anymore. We will just be insulted there,” Duterte said. “So time to say goodbye my friend.”

The same day, about 1,000 anti-U.S. protesters gathered outside the U.S. embassy in Manila calling for the removal of U.S. troops from the southern Philippine island of Mindanao.

Duterte’s efforts to engage China, months after a ruling in the Hague over South China Sea disputes in favor of the Philippines, marks a reversal in Philippine foreign policy since the 71-year-old former mayor took office on June 30.

Xi told Duterte at Beijing’s Great Hall of the People that China and the Philippines were brothers and that the two sides could “appropriately handle disputes”, though Xi did not specifically mention the South China Sea row in comments in front of reporters.

“I hope we can follow the wishes of the people and use this visit as an opportunity to push China-Philippines relations back on a friendly footing and fully improve things,” he said.

The two countries would return to the track of dialogue and consultation in seeking a proper settlement of the South China Sea issue, Chinese Vice Foreign Minister Liu Zhenmin said.

“The two sides briefly mentioned the South China Sea. Both sides agreed that this issue is not the sum total of bilateral relations,” Liu told reporters after the Xi-Duterte meeting.

China claims most of the energy-rich South China Sea through which about $5 trillion in ship-borne trade passes every year. Neighbors Brunei, Malaysia, the Philippines, Taiwan and Vietnam also have claims.

SEA ROW TAKES “BACK SEAT”

In 2012, China seized Scarborough Shoal – claimed by Beijing as Huangyan island and by Manila as Panatag – and denied Philippine fishermen access to its rich fishing grounds.

Liu said the issue of Scarborough Shoal was not mentioned and did not answer a question about whether Philippine fishermen would be allowed to fish there.

He did say both countries agreed on coast guard and fisheries cooperation. He did not give details.

Beijing has welcomed the Philippines’ efforts to embrace China, even as Duterte has vowed not to surrender any sovereignty to Beijing, which views the South China Sea maritime ruling as null and void.

Duterte on Wednesday said the South China Sea arbitration case would “take the back seat” during talks, and that he would wait for the Chinese to bring up the dispute rather than doing so himself.

Duterte’s congenial tone in Beijing is in contrast to the language he has used with Washington, having called U.S. President Barack Obama a “son of a bitch” and railed against U.S. criticism of his war on drugs which has led to the deaths of 2,300 people.

His hard-line drug war tactics have raised concerns in Western capitals about extrajudicial killings, but China has expressed support.

Beijing will also restore Philippine agricultural exports to China and provide financing for Philippine infrastructure, Liu said.

On Wednesday, Philippine Trade and Industry Secretary Ramon Lopez said Bank of China (601988.SS) had agreed to provide a $3 billion credit facility for infrastructure investment in the Philippines.

“The Chinese people are passionate about peace,” the Chinese foreign ministry said in a statement, citing Xi.

Xi said that issues which can’t immediately be resolved should be temporarily set aside, according to the statement.

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