May 11 (Bloomberg) -- Filipinos demonstrated in front of a Chinese consular office in Manila and China told tourists to avoid unnecessary travel to the Philippines in signs of an escalating dispute over territory in the South China Sea.
Shares of Philippine tourism-related stocks slid for a second day after China’s Xinhua News Agency reported that travel agencies in Shanghai and Guangzhou suspended tours. On May 9, Chinese travel agencies Ctrip.com and Beijing Caissa International Travel Service Co. also suspended trips.
Tensions have risen since a standoff began last month between ships from both countries over an island called Scarborough Shoal by the Philippines and Huangyan by China. China has become more assertive over its claims to the oil and gas rich waters of the South China Sea, while the U.S., which has a mutual defense treaty with the Philippines, has shifted its military posture toward the Asia-Pacific region.
“ All we ask is for the Chinese government to respect the rights of its neighbors, even while it needs to assert its national interest,” said Bituin Bautista, one of the protest organizers. “If it continues in this path of obstinate bullying, it will only have itself to blame for the consequences of its folly.”
Kung Fu Fighting
About 500 people gathered for the protest, demanding that China pull out of the disputed area. Demonstrators sang and danced to the 1974 disco hit “Kung Fu Fighting.” Police stopped a man from trying to burn three Chinese flags.
Chinese Foreign Ministry spokesman Hong Lei told a daily briefing in Beijing that the Philippines should take measures to keep the dispute from getting any worse.
“The government has incited the Philippine people to protest,” Hong said. “We again demand the Philippines to take effective actions, respect China’s territory and sovereignty and avoid escalating the situation.”
China’s National Tourism Administration warned Chinese tourists who are already in the Philippines to abide by the local laws and mind their security, according to a statement posted late on its website last night. The Philippines should ensure the safety of Chinese people and companies in the country, the Foreign Ministry said yesterday.
Alliance Global Group Inc., which owns the operator of the Philippines’ biggest casino, fell 0.3 percent to 12.90 pesos at the close of trading in Manila, after posting its biggest loss in more than seven months yesterday. Cebu Air Inc., the nation’s largest budget carrier, fell 2.3 percent to 67.25 pesos, its lowest close in more than a month.
Hotel operator Waterfront Philippines Inc. declined 5.8 percent to 40.5 centavos, while Acesite Hotel Corp. decreased 2.7 percent to 7.59 pesos. The Philippine Stock Exchange Index fell 0.7 percent to 5,158.14.
The standoff with China may force Philippine travel agencies to look to other markets for tourists, according to Aileen Clemente, president of the 364-member Philippine Travel Agencies Association.
China is the fourth-largest market for tourists to the Philippines, behind South Korea, the U.S. and Japan. Tourist arrivals from China rose 78 percent in the first quarter, more than from anywhere else among the top 12 markets, to 96,455, or 8.4 percent of the total, according to government data.
“Since there have been cancellations from China already, we have to move strategies elsewhere,” Clemente said. “We will have to mount new markets and increase marketing efforts in countries such as Russia, India, Europe and the Middle East. The effect of the cancellations is immediate.”
The latest dispute began on April 10, when Chinese ships blocked the Philippines from inspecting Chinese fishing boats in the area. China’s Foreign Ministry has summoned a Beijing-based Philippine diplomat at least three times since the standoff began.
China has become more assertive in the South China Sea and Cnooc Ltd. began its first deep-water drilling rig in the area on May 9. Cnooc Chairman Wang Yilin said the rigs are a “strategic weapon for promoting the development of the country’s offshore oil industry.”
China has also clamped down on the Philippines beyond the tourism sector. China will increase quarantine and inspection of fruits shipped from the Philippines including pineapples and bananas, the General Administration of Quality Supervision, Inspection and Quarantine said in a release dated May 2.
The Philippines sought to play down the latest dispute. In an interview with Bloomberg Television, Finance Secretary Cesar Purisima said every bilateral relationship has its issues and that the media was blowing the latest dispute out of proportion.
“Filipinos are peace-loving and most welcoming of foreigners and I think our track record bears that out,” Purisima said in the interview. “It is important that we continue to work on this on a reasonable basis.”
The Philippines has a mutual defense treaty with the U.S., which announced last year that it would carry out a “pivot” to focus its military in the Asia-Pacific region. At a meeting with Philippine leaders on April 30, Secretary of State Hillary Clinton reaffirmed the U.S. commitment under its mutual defense treaty, which obligates the two sides to support the other if attacked.
At a regular briefing yesterday, U.S. State Department spokeswoman Victoria Nuland urged restraint and said the U.S. supports “any kind of collaborative, diplomatic process by the claimants to resolve the disputes without any kind of coercion.”
To contact Bloomberg News staff for this story: Norman P. Aquino in Manila at firstname.lastname@example.org
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