Political scientists widely believe the tough-talking Duterte will make a compromise on territorial claims.
"Duterte risks playing directly in to Beijing's hands. At best, he will be able to strike a deal for some kind of joint development of Scarborough and other disputed territories, but under Chinese sovereignty. This would be in return for various forms of economic assistance," Bates Gill, professor of Asia-Pacific Strategic Studies at Australian National University, told CNBC.
Chinese state-run newspaper The Global Times echoed that view in an editorial on Tuesday, stating that China can adopt a flexible policy on the Philippines' fishing rights by enabling the return of Filipino fishermen.
"In exchange, Beijing would no doubt like to see Manila continue to distance itself from Washington," Gill added.
Duterte, who said he wants to adopt an independent foreign policy, has already vowed to "break up with America," threatening to end a key U.S.-Philippine military pact.
The move away from the U.S. is aimed at quashing the Philippines' "self-perceived identity as the little brown brother of the United States," CSIS said. That's a sharp turnaround from his predecessors, including Benigno Aquino III, who traditionally viewed Washington as their closest ally.
However, if Duterte panders too heavily to Beijing, it could drastically transform regional geopolitics by allowing China to deepen its grip on Southeast Asia.
"The reconfiguration of the archipelagic nation's foreign policy will certainly alter the balance of power in the South China Sea," the Council of Foreign Relations said in a note on Friday.
A soft Philippine stance on the Scarborough Shoal could also impact Duterte's alpha-male reputation at home, where he rode to power on a populist campaign that catered to nationalist sentiment.
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