Chinese island-building firm wins contract with South China Sea rival claimant, the Philippines

A Chinese state-owned infrastructure company that has helped build artificial islands in a disputed area of the South China Sea has signed a land reclamation contract in the Philippines, a rival claimant in the sovereignty dispute, according to a newspaper report.

CCCC Dredging Co, a subsidiary of China Communications Construction Company, will carry out a 208-hectare land reclamation project in the harbour at Davao where Philippines President Rodrigo Duterte once served as a city major before assuming office in June, the Beijing Youth Daily reported.

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The Chinese company will create land along an 8km stretch of coastline in Davao Bay. The artificial land will be used for government offices, businesses, housing, port terminals and industry, the report said.

The deal was signed on Thursday during a China-Philippines business dinner that Duterte attended, the dredging firm said on its website. The project is expected to be completed by the end of 2019, it said.

The project between the Chinese firm and Mega Harbour Port and Development in the Philippines was one of the trade and business deals finalised during Duterte’s visit to Beijing last week when he declared a “separation” from long-standing ally the United States.

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Analysts say the move is part of Duterte’s attempt to mend ties with Beijing amid the sovereignty row in the South China Sea and it deals a blow to US’ “pivot to Asia” strategy.

About US$13.5 billion in deals were signed between China and the Philippines during Duterte’s visit to Beijing, according to the Philippines trade minister.

CCCC Dredging is the world’s largest firm in its sector in terms of dredging capacity.

The firm delayed plans to list on the Hong Kong stock exchange last year after questions were raised about its alleged involvement in China’s land reclamation in the disputed Spratly Islands, the Wall Stree Journal reported last November.

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China stepped up its creation of artificial islands in the region in 2015, alarming several countries in the region, including the Philippines and Vietnam. The work has also drawn criticism from Washington.

Satellite images analysed by IHS Jane’s, the defence consultancy, showed that Tianjin Dredging Company, one of CCCC Dredging’s three subsidiaries, operated most of the giant barges that have been digging sand from the seabed and piling it on remote coral atolls such as Mischief Reef, Subi Reef and Fiery Cross Reef, which are also claimed by the Philippines and Vietnam.

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Relations between China and the Philippines have been strained since an international tribunal in The Hague ruled in July there was no legal basis for China’s claims to much of the waters. The case was bought by rival claimant the Philippines after China seized a reef over which both countries claim sovereignty.

The ruling said that the artificial islands China has built, including at Mischief Reef, violated the Philippines’ sovereignty rights. China has rejected the rulings and refused to take part in the proceedings in The Hague.

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