Locsin to recommend ending contracts with Chinese firms involved in South China Sea militarization after US move

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Metro Manila (CNN Philippines, August 28) — Foreign Affairs Secretary Teodoro "Teddy Boy" Locsin, Jr. said he will recommend ending local contracts with Chinese firms found to be behind incursions in the South China Sea, similar to sanctions imposed by the United States.

"Yes, if I find any of those companies are doing business with us, then I would strongly recommend we terminate that relationship with them. If they were in any way involved in the reclamation, then it becomes consistent on our part to terminate any contract with them," Locsin told CNN Philippines' The Source on Friday.

"Of course, since the contract was already entered into, they could sue us back... I'm very careful about validating anything China does by inaction," he added, saying he still needs to coordinate with the Department of Transportation and the National Economic and Development Authority if any approved or ongoing projects are being carried out with Chinese partners covered by US sanctions.

Washington has taken an aggressive stance against China's incursion in the South China Sea. Just this week, the US government imposed sanctions on Beijing's state-run firms as well as visa restrictions on Chinese nationals involved in reclamation and militarization activities in disputed waters.

RELATED: The US and China say they're making progress on trade, even as other tensions worsen

​China's Foreign Ministry spokesman Zhao Lijian told state media Xinhua that its construction activities "are entirely within its sovereignty," adding that the activities of state firms are legitimate and lawful. He went on to call the US sanctions as "unjustified," telling Washington to stop meddling in Beijing's affairs.

Also covered by the blacklist are workers of China-owned enterprises including subsidiaries of China Communications Construction Company

The same company is tapped as partner of Lucio Tan's MacroAsia Corporation in upgrading the Sangley Airport in Cavite. CNN Philippines is striving to get comments from the project proponents.

​For his part, Cavite Governor Jonvic Remulla said he will wait for the national government's official decision. "We will wait for the President's directive. This is a very complex issue with geopolitical implications. I cannot weigh on this alone," he said via text message.

Malacañang said President Rodrigo Duterte's "main consideration is what is best for the country’s Build, Build, Build program." It also appealed to the US and China for calm, without commenting on Locsin's proposed sanctions.

"The Philippines considers the United States and China as special friends and trading partners. We hope that both partners of the Philippines will be able to draw an understanding and resolve any and all issues between them amicably and peacefully," Presidential Spokesperson Harry Roque said in a statement.

The Cavite provincial government awarded the contract to the joint venture of MacroAsia and CCCC in February. The state-owned construction firm in China was blacklisted by the World Bank from 2011 to 2017 for engaging in "fraudulent practices" in building the Philippines' National Roads Improvement and Management Project.

The US said China has been using its state-owned corporations to dredge and reclaim more than 3,000 acres of disputed features in the South China Sea, destabilize the region, trample on the sovereign rights of its neighbors, and cause untold environmental devastation. 

Earlier this month, Chinese Ambassador to the Philippines Huang Xilian flagged American presence in the South China Sea, saying they should stop “trying to make trouble” in the region.

In 2016, a Hague-based international tribunal ruled as invalid Beijing's sweeping territorial stakes in the South China Sea and recognized Manila’s sovereign rights within areas of its exclusive economic zone which China claims. Vietnam, Malaysia, Indonesia, Brunei and self-governing Taiwan also have their own territorial claims in the South China Sea. Despite the ruling, China has continued with its island-building activities in features covered by the Philippines' exclusive economic zone.