MIS/UNDERSTANDING CHINA
In the tough world of diplomacy
ISSUE ANALYSIS No: 18 Bobby M. Tuazon Director for Political Studies Center for People Empowerment in Governance (CenPEG) 06 October 2026
The meeting between Foreign Affairs Secretary Thereza Lazaro and China’s Foreign Minister Wang Yi on July 22 as well as Defense Secretary Gilberto Teodoro’s spat with the Chinese envoy are what sparked the publication of this paper.
The diplomatic engagement reflects both countries' recognition that prolonged and acrimonious confrontation carries economic, security and regional costs.
Dialogue does not mean Manila is abandoning its sovereignty claims or Beijing is changing its position. But both sides agreed to maintain bilateral dialogue, establishing a mechanism to resolve the maritime dispute and related major confrontations.
Why it matters
The South China Sea is critical to Philippine national security, fishing communities, energy exploration and international trade.
Reduced tensions could lower confrontation risks, protect livelihoods and create opportunities for economic cooperation.
Reset and Dialogue: This is the principle that both the Philippines and China iterated at the opening of the Asean post-ministerial conference on July 22, 2026, in Pasay, Metro Manila. In a Nov. 3 phone conversation, Lazaro and Wang agreed to manage maritime tensions through diplomatic dialogue and peaceful dispute resolution.
Fundamental differences over the South China Sea, however, far outweigh both nations’ desire to reduce the risks of prolonged confrontation.
This above principle was agreed upon earlier in a 2017 meeting between former President Rodrigo R. Duterte and President Xi Jinping in Beijing. In 1988, then President Corazon A. Aquino and China’s core leader Deng Xiaoping agreed on a joint exploration and development of marine, fishing, and gas resources in South China Sea.
Former President Benigno S. Aquino III also agreed that maritime differences are not the sum total of the two countries’ diplomatic relations.
Lazaro described the Nov. 3 exchange as "frank, pragmatic and constructive", saying both sides recognized the importance of continued diplomatic engagement and managing disagreements based on mutual respect.
The two ministers’ discussions potentially include the revival of stalled oil and gas exploration talks over Reed Bank or Recto Bank (Lǐyuè Tān). A contested territory, Reed Bank is found west of the Philippines, off the coast of Palawan in the West Philippine Sea.
Both foreign officials also agreed that relations should be guided by three principles: maintaining diplomatic dialogue, avoiding actions and rhetoric that would unnecessarily undermine bilateral relations, and resolving disputes peacefully.
Without compromising Philippine sovereignty and national interests, the DFA said the two countries remain committed to a stable, predictable and mutually respectful relationship.
On the other hand, China's account of the ministerial-level meeting cites Wang's warning that Manila should exercise caution in its words and actions on maritime issues. The Chinese foreign minister also accused certain Philippine politicians of interfering in bilateral relations and urged Manila to maintain what Beijing described as a "rational and unified China policy".
Wang is viewed in the diplomatic community as an unusually centralized and authoritative figure who combines strategic direction with direct operational messaging.
Apparently, while the foreign affairs department cut a conciliatory tone, Defense Secretary Gilbert Teodoro’s diatribe publicly denouncing China’s maritime right claims in the South China, led Chinese diplomats to declare him “persona non grata”.
The diplomatic exchange followed weeks of increasingly sharp rhetoric, including controversial remarks by Chinese Ambassador Jing Quan hinting that China could "easily win" a conflict with the Philippines. He quickly added that China prefers resolving conflicts peacefully. The foreign affairs department summoned the ambassador in October after the remarks triggered strong protests from Philippine officials.
President Ferdinand Marcos Jr. called the ambassador’s statement as “sounding like a threat”. The government also rejected China's objections to the Philippines’ maritime domain claim.
The 2016 international arbitral ruling invalidated the legal basis of Beijing's expansive maritime claims. China, however, did not participate in the hearing. The South China Sea arbitration between the Philippines and China was held at the Permanent Court of Arbitration (PCA) in Den Haag, Netherlands. Beijing maintains historical, sovereign and territorial claims to the South China Sea.
The latest engagement also comes ahead of the 49th Asean Summit in Manila and the 33rd APEC Economic Leaders' Meeting in Shenzhen, China where both governments are seeking constructive high-level exchanges.
“Century of Humiliation”
On a related thought: China has emerged from its Century of Humiliation (1839-1949) to become today’s leading economy guided by the theory of socialism.
However, a stark split has emerged between those who understand the nuances of China's trajectory and those who systematically misread it, based on the assessments of international and economic events.
To Western policymakers, a major blind spot is their assessments of current international and economic events. Bureaucracies have been criticized for heavily relying on translation tools and basic data feeds while lacking deep historical, cultural, and political context. This frequently leads to groupthink and missed political signals.
For instance, foreign lawmakers routinely craft policy regarding China despite lacking firsthand exposure or a fundamental grasp of its internal dynamics.
Particulars: International markets misjudge corporate governance and transparency in China. A prominent study highlights that Western investors view cozy ties with the Communist Party of China (CPC) as a "governance red flag". Local Chinese investors, in contrast, view government alignment as a distinct competitive advantage. (Samantha Stice-Lawrence, "China Stock Market's Hidden Problem: Foreign Investors Get a Different Truth". (Wall Street Journal, November 2026)
Furthermore, foreign investors frequently miss details regarding party connections because Chinese companies downplay or omit these local political links in their English-language disclosures.
China professes to the system, “Socialism with Chinese characteristics”, in its current development stage – a strategic policy that most global policymakers fail to understand. Coined in 1982 by core leader Deng Xiaoping, socialism with Chinese characteristics is the official political and economic ideology of the Communist Party of China (CPC). The matrix adapts Marxist-Leninist principles to fit China's unique history of civilization, as well as cultural and economic conditions.
Western economists apply standard, knee-jerk free-market logic. For what? To predict an imminent "China collapse" which is repeated a hundred times, due to perceived “real estate crises, high debt, and low consumption”. They misread the state’s intervention strategy, missing how Beijing prioritizes production capacity and geopolitical leverage over short-term profit, choosing to subsidize unprofitable manufacturing sectors rather than artificially propping up consumer spending.
Based on UNDP and US academics, today’s China is the world’s leading economy using Purchasing Power Parity (PPP) terms.
Who reads China
Analysts from the Harvard Business Review cite business leaders’ cognition that China’s manufacturing edge and pace of innovation have forged ahead, particularly in clean energy tech like solar, wind farms, batteries, and electric vehicles (EVs). While politicians debate tariffs, these sectors understand that China has fundamentally transitioned from a low-cost assembler to a hyper-efficient value-chain leader.
In Asia, analysts often possess a much more granular understanding of China's modern influence. They recognize that Beijing's soft power is no longer delivered just through state media, but through "everyday China" - consumer goods, tech apps, tourism, and digital lifestyle content that shape public perception far more effectively than traditional propaganda.
As Jeffrey Sachs famously asserted, "China is not an enemy. China is just a success story. That's why it is viewed by the United States as an enemy," adding that "China's success isn't a threat — it's basic arithmetic" given its population of 1.4 billion. He also dismissed U.S. claims of Chinese industrial overcapacity as "absolutely wrong".
Independent academics like Sachs who combine linguistic proficiency with deep historical memory are increasingly cited as the only group providing accurate assessments. They look past raw official data - which economists note can be subject to data blackouts and censorship - to read the subtle internal policy shifts that dictate where the country is going. They’re often in disbelief after finding that China is the only country where leaders in all levels practice “criticism and self-criticism” – accepting and correcting errors to make people’s whole-democracy move ahead.
As emphasized by Xi Jinping, China's "whole-process people's democracy" is a political concept introduced by the CPC describing how public participation is integrated into the country's governance mode.
Understanding China especially its core interests are vital amid the tensions between Manila and Beijing: It helps prevent accidental military conflict, protects national sovereignty while sustaining economic ties, and navigates complex regional power dynamics.
Core Issues
Understanding China means understanding its core issues are: 1) Taiwan: "The core of the core interests" and the ultimate red line in foreign relations; Beijing views reunification as non-negotiable; 2) Hong Kong and Macao: Preserving complete sovereign and administrative control under the "One Country, Two Systems" framework; 3) Xinjiang and Tibet: Maintaining absolute central control and suppressing independence or separatist movements; and, 4) South China Sea and East China Sea: Treating maritime sovereignty claims, island groupings (such as the Spratly and Paracel chains), and disputed areas like the Senkaku/Diaoyu Islands.
Balancing Sovereignty and Economic Realities
While President Ferdinand Marcos Jr. actively defends Philippine sovereign rights and the 2016 arbitral ruling that invalidated China's expansive claims, China remains a major economic and trading partner.
Sinologists note that the relationship cannot be viewed only through the lens of maritime conflict; it also involves deep economic, cultural, and people-to-people ties ("everyday China"). Understanding China helps the Philippines protect its exclusive economic zone while pragmatic trade and investment exchanges continue.
Dialogue, negotiation and non-interference: These are the key principles guiding Chinese diplomacy. Chinese leaders are firm in protecting the role of dialogue, negotiation, and non-interference by a third country (US, in particular).
China has formally resolved land and border territorial disputes with 12 neighboring countries through diplomatic negotiations and treaties: Kazakhstan: Border treaty signed in 1994; Kyrgyzstan: Final border agreement, 2009; Laos: Border demarcation 1992; Mongolia: Border treaty,1962, followed by demarcation in 1984; Myanmar: Border treaty, 1960; North Korea: Boundary treaty, 1962; Pakistan: Boundary agreement, 1963; Russia: Supplemental agreement signed in 2004 that finalized the remaining eastern sector of the border; Tajikistan: Border agreement, 2011; Vietnam: Land boundary treaty signed in 1999 (though maritime disputes in the Gulf of Tonkin were also addressed, broader South China Sea maritime claims remain unresolved); Hong Kong & Macau (Sovereignty Transfers): Resolved via joint declarations and the resumption of sovereignty with the United Kingdom (1997) and Portugal (1999) rather than traditional cross-border treaties.
Finally, the Philippines’ foreign relations department should set the tone in resolving policy conflicts disallowing the defense department from shooting from the hips that will jeopardize ongoing diplomatic talks. Talk and settle – firing should not be a course of action. #
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