"China believes that over the long run it's inevitably going to win this South China Sea contest (because) the U.S. will be distracted, the Philippines will cut a deal, so it doesn't need to pick a fight. It doesn't need to use force at any given moment; it can always back off and try again."
The stance of new Filipino president Rodrigo Duterte, who took office Thursday, is unclear. During his presidential campaign, he said he would ride a jet ski and plant a Philippine flag on one of the seven man-made islands China had built in the Spratly to dramatise Manila's claim, Reuters reported.
However, he has also called for dialogue, saying in May that he would settle rows over the territory with multilateral talks.
On Monday, Duterte said he won't comment about the dispute until the arbitration court has made its ruling, according to a Reuters report.
On its part, the U.S. regularly exercises its right to "freedom of navigation" by sending naval vessels through the South China Sea, including within 12 nautical miles of islands claimed by China. Beijing has responded by calling these actions "provocations" that risked a military response.
Geopolitical research firm Stratfor's Asia Pacific analyst Rodger Baker told CNBC earlier this month that the Chinese "are very serious about turning the South into their territory" and see their actions as being similar to what the U.S. was doing in the Caribbean over a century ago.
"The Caribbean is the pathway into the Mississippi which is the backbone of the U.S. For China, the South China Sea is the passageway to all of their ports so that is a very critical place. They are playing an 18th, 19th century game in the 21st century, but for them they see this as a matter of security and a necessity, and they now have the capability to push and to enforce this while in the past they didn't," said Baker.
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