May 15, 2012 1:03 pm

Philippine business warns on China stand-off

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Anti-China protesters shout slogans during a rally in front of the Chinese consulate in the financial district of Manila on May 11, 2012. Hundreds of Filipinos demonstrated outside the Chinese embassy in the Philippines on May 11, over an escalating territorial row, with the protesters denouncing China's rulers as arrogant bullies©Getty

Philippine businesses are calling for a quick resolution to the month-long stand-off with Chinese ships in the South China Sea, warning that a prolonged political impasse could hurt tourism and cost thousands of export-related jobs.

The warning followed signs that the confrontation was beginning to have an economic impact, with Chinese tour groups cancelling trips to the Philippines and shipments of Philippine bananas blocked from entering China for food safety reasons.

“We have more to lose than them”, Sergio Ortiz Luis, head of the Philippine Confederation of Exporters, told local television.

China is the Philippines’ third-biggest trading partner and its fastest-growing source of foreign tourists.

The warnings are increasing pressure on Benigno “Noynoy” Aquino, Philippine president, to find a temporary solution to the dispute, which began last month when a Philippine navy ship attempted to detain eight Chinese fishing vessels near Scarborough Shoal, about 120 nautical miles west of the Philippines’ main island of Luzon.

Scarborough Shoal, which the Chinese call Huangyan, is claimed by both countries, and is just one of many territorial disputes across the South China Sea. The foreign ministries of the two governments have been trying to calm tensions but the incident has sparked strong nationalist rhetoric in both China and the Philippines.

“On both sides there are people hoping the incident will escalate, and others who want to contain it. It is very hard to tell which side has the upper hand,” said Jin Canrong, an international relations expert at Renmin University.

China and the Philippines resumed talks late last week, and Mr Aquino said on Tuesday that negotiations were yielding positive results. “It’s too early to say the situation has cleared up but we’re getting there,” he told journalists after a speech in the southern Philippines.

That would be much welcomed by Philippines businessmen. The Pilipino Banana Growers and Exporters Association warned that up to 200,000 banana farmers and ancillary workers could lose their livelihood if China, the industry’s second biggest export market, stops importing bananas from the Philippines.

China Southern Airlines has said it plans to cut flights between Guangzhou and Manila in May and June due to a large number of cancellations by Chinese tour groups to the Philippines, after Beijing issued a travel advisory following small anti-Chinese protests in Manila last week.

Territorial flashpoint

Slideshow: Local fishermen care little about politics but find themselves caught in clashes between China and its neighbours over rival territorial claims in the South China Sea

One opportunity for a resolution would come on Wednesday, when China begins its annual fishing ban in parts of the South China Sea including the waters currently under dispute. The Philippines said it did not recognise China’s fishing ban but would impose its own ban to slow down the rapid depletion of fish stocks in the area.

A fishing ban would in theory lower tensions by keeping fishing boats from both sides away from the disputed area, but could also have the opposite effect as official vessels from both countries are likely to patrol the waters to enforce the ban.

“If no path to a solution can be found during the fishing ban, the next opportunity could be even more distant,” said Zhang Mingliang, a professor at the Institute of Southeast Asian Studies at Jinan University.

Additional reporting by Gwen Chen and Zhao Tianqi in Beijing

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