China's Xi says 'bigger step' possible in offshore oil, gas development with Philippines

SHANGHAI, Aug 30 (Reuters) - Chinese President Xi Jinping
said China and the Philippines could take a "bigger step" in the
joint development of oil and gas resources in the South China
Sea if they can "properly" handle their dispute over
sovereignty.
Xi made the remarks on Thursday in a meeting in Beijing with
Philippine President Rodrigo Duterte, who has positioned himself
as a friend of Beijing but has come under growing pressure at
home to push back against China's maritime assertiveness.
The visit comes amid a recent rise in tension on multiple
fronts, with Chinese vessels challenging energy assets and sea
boundaries of Malaysia, Vietnam and the Philippines, prompting
the United States to accuse China of "coercive interference" and
holding hostage $2.5 trillion of oil and gas in the region.
Duterte's spokesman said earlier this month that he would
meet Xi to discuss a 2016 arbitration ruling that invalidated
China's claim to sovereignty over most of the South China
Sea. A report on Thursday's meeting by China's state news agency
Xinhua made no mention of the ruling, which China has
vociferously disputed.
It said Xi urged the two sides to "set aside disputes,
eliminate external interference, and concentrate on conducting
cooperation, making pragmatic efforts and seeking development".
"As long as the two sides handle the South China Sea issue
properly, the atmosphere of bilateral ties will be sound, the
foundation of the relationship will be stable, and regional
peace and stability will have an important guarantee," it quoted
Xi as saying.
The two sides could take a "bigger step" in the joint
development of offshore oil and gas, it quoted Xi as saying.
Duterte "expressed his view that the path to peacefully
resolving the South China Sea disputes is through cooperation,
rather than confrontation", according to Xinhua.
He also pledged to speed up joint maritime oil and gas
exploration with China.
On Thursday, China and the Philippines announced the
establishment of an "intergovernmental joint steering committee
and a working group between relevant enterprises" on oil and gas
cooperation, Xinhua reported.
China's claims in the South China Sea, through which about
$5 trillion in ship-borne trade passes each year, are contested
by Brunei, Malaysia, the Philippines, Taiwan and Vietnam.