Trade tops Aquino's agenda in first China trip

BEIJING/MANILA (Reuters) - Philippine President Benigno Aquino will try to smooth tensions over territorial disputes in the South China Sea this week on his first state visit to China, where he will seek $7 billion (4.3 billion pounds) worth of deals with the world's second-biggest economy.

Philippine officials said Aquino's four-day visit included meetings with President Hu Jintao and Premier Wen Jiabao, during which they were likely to touch on other sensitive issues, such as his concerns about Filipinos jailed in China.

But with the need to get Chinese support for big-ticket infrastructure projects, Aquino's main focus will be on economic cooperation, analysts and officials said.

Philippine officials with knowledge of Aquino's agenda told reporters that his key objectives were to "heal wounds in bilateral relations" and "promote mutual confidence to ensure an environment of peace and stability in the South China Sea."

In the first few months of his administration, Aquino made an effort to avoid antagonising China by declining an invitation to attend last December's Nobel Peace Prize ceremony in Norway honouring jailed Chinese dissident Liu Xiaobo.

But relations have soured since then following a series of disputes on issues including the execution of three Filipinos convicted of drug smuggling in China in March and tensions over rival claims in the oil-rich South China Sea, or the West Philippine Sea as it is known by the Filipinos.

DISPUTED WATERS

China, the Philippines, Malaysia, Brunei, Vietnam and Taiwan all claim territory in the South China Sea. China's claim is the largest, forming a vast U-shape over most of the sea's 648,000 square miles (1.7 million square km), including the Spratly and Paracel islands.

The Philippines has been one of the loudest critics of China's stance on the disputed territory. Manila has warned that it was taking steps to modernise its armed forces and that it could take the dispute to the United Nations.

Aquino is expected to discuss the South China Sea dispute when he meets senior Chinese officials, but no breakthrough is in the offing.

"Summit diplomacies are more symbolic, the purpose is just to create a positive atmosphere for risk management," said Renato Cruz de Castro, professor and policy analyst at the De La Salle University in Manila. "The best that the two countries can do at this point in time is just to manage the tension."

The dispute has not prevented China becoming the third-biggest trade partner to the Philippines, with two-way trade of $27.7 billion in 2010, an increase of 35.1 percent from 2009.

"There is the consensus between China and the Philippines that the South China Sea issue is but only a small component of the bilateral relations and should not dominate or abduct the agenda," said Zhang Xuegang, a Southeast Asia expert at the China Institutes of Contemporary International Relations.

During his trip, Aquino is expected to sign commitments that the Philippines and China will reach $50 billion in bilateral trade by 2016, officials said.

Chinese companies in the rail, shipbuilding, mining, energy and airline sectors are expected to sign agreements with Manila during Aquino's trip from Tuesday to Friday.

The Philippines' oil and gas resources are attractive to resource-hungry China. Manila said in early August that Chinese firms, including China's top offshore oil producer CNOOC, were interested in investing in 15 oil and gas exploration contracts worth at least $7.5 billion.

(Additional reporting by Manny Mogato in Manila and Beijing Newsroom; Editing by Ken Wills and Alex Richardson)

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