Between Talks and Tensions: Why the South China Sea Won’t Stabilise in 2026

As the Strait of Hormuz closure pushed the Philippines into a national energy emergency in late March 2026, President Ferdinand Marcos Jr. signalled openness to restarting joint oil and gas talks with China at Reed Bank. Meanwhile, Foreign Affairs Secretary Maria Theresa Lazaro called for weekly Code of Conduct (CoC) negotiation meetings to deliver a text by July 2026, when the Philippines chairs the ASEAN Summit. Within the same period, China Coast Guard (CCG) vessels turned away Filipino fishing boats near Scarborough Shoal, the People’s Liberation Army Navy (PLAN) ran live-fire drills east of Luzon, Japan deployed combat troops to Balikatan 2026 for the first time since 1945 and Manila and Beijing traded fresh accusations over Sandy Cay.

The above two patterns of events are not as contradictory as they seem. The Philippines does not speak with a single voice on China: it lives with daily friction at sea as an archipelago even while pursuing accommodation through diplomatic and economic channels, and it is simultaneously deepening security ties with the United States, Japan and Australia that Beijing reads as being directed against it.

The signals of accommodation are real. After almost a year of frozen dialogue, China and the Philippines met in Cebu on 29 January 2026. Both sides reported progress on updating their coast guard memorandum of understanding (MoU), with three rounds of talks since. Chinese Ambassador Jing Quan recently reiterated Beijing’s openness to dialogue, the status quo, and joint development, and noted that fishing-zone discussions had also resumed. After the Strait of Hormuz closure, Marcos Jr. told Bloomberg that the oil shock could provide “impetus for both sides to come to an agreement” on Reed Bank’s joint development.

Each signal, however, is partial or contested. Senator Erwin Tulfo, after meeting Ambassador Jing Quan, said the MoU would enable joint patrols. The Philippine Coast Guard (PCG) and Department of Foreign Affairs (DFA) pushed back; on 12 April, the DFA stated the MoU “does not contemplate cooperation in sensitive operational areas, joint patrols in particular”. This episode is familiar: senators, the coast guard, the foreign ministry and the presidential palace each speak in their own register.

This is not a temporary feature. Manila’s internal divisions complicate any unified diplomatic position. On 11 May, the House voted 257 to impeach Vice President Sara Duterte; her Senate trial is set for July, the same month as the ASEAN summit and when the Philippines, as chair, is supposed to deliver the CoC text. President Marcos’ own complaint was dropped at the committee level. The Marcos–Duterte fallout has eroded the executive coordination that kept Philippine foreign policy unified.

The CoC has its difficulties; the July deadline is more rhetorical than substantive. Disputes remain within ASEAN over its scope, its legally binding character and how to address the military activities of extra-regional powers – chiefly the US, Japan and Australia. The ASEAN chairmanship gives Manila the platform to push for expedited CoC negotiations but not to determine the outcome.

The absence of mutual accommodation reflects deep structural features which are institutional, geographical and strategic.

The energy opening is similarly fragile. Reed Bank lies within what Manila claims as its exclusive economic zone (EEZ) under the 2016 arbitral award and the 2024 Maritime Zones Act, legal instruments that Beijing does not recognise. Any joint development must also satisfy the 1987 Constitution’s requirement of “full control and supervision” over natural resources, the same provisions that earlier voided the Philippines-China-Vietnam Joint Marine Seismic Undertaking (JMSU) and stalled the 2018 Philippines-China MoU.

As an archipelago, the Philippines’ sovereignty is exercised daily on the water — by its fishermen, coast guard cutters and the BRP Sierra Madre at Second Thomas Shoal. On 27 April, Chinese state media reported that the CCG had raised its flag on Sandy Cay; days later, Philippine coast guard personnel were dispatched in response. On 3 May, Beijing said five Philippine personnel had landed “illegally”; Manila said it would deploy ships against four Chinese research vessels. The same morning, the Atin Ito civilian coalition planted yet another Philippine flag on the sandbar, slipping past two CCG vessels and a PLAN frigate. Every resupply run, flag-raising and research vessel asserts presence.

The strategic environment is moving in the opposite direction from these diplomatic openings. Manila and Washington have conducted joint maritime activities in the South China Sea (SCS) over a dozen times since November 2023, as part of more than 500 bilateral military engagements planned for 2026 across all domains. Exercise Balikatan 2026 held its largest edition to date: 17,000 troops from seven nations, with Japan deploying combat troops for the first time and conducting a Type 88 missile live-fire on Philippine soil. The Japan–Philippines Reciprocal Access Agreement came into force in September 2025, followed by their Acquisition and Cross-Servicing Agreement in January 2026.

For Beijing, piecemeal confidence-building carries little reassurance when Manila is seeking to update its coast guard MOU with China while hosting 1,400 Japanese troops along the First Island Chain. China has tracked these developments: PLAN’s Task Force 107 ran drills east of Luzon under the Type 055 destroyer Zunyi while the Liaoning carrier group operated nearby. Around Scarborough, the Philippines claimed that China has tightened its presence with a 352-metre barrier and continued operations at Sabina and the Second Thomas Shoal.

The impasse is unlikely to be resolved this year: the CoC will not be meaningfully signed, the updated coast guard MOU will be modest at best and joint development will not pass the Philippines’ constitutional review. For Beijing, the picture is uncomfortable too: Ambassador Jing’s lament that “reducing the relationship to a single issue limits what both sides can gain” is genuine, but neither side will set aside the SCS issue. The absence of mutual accommodation reflects deep structural features which are institutional, geographical and strategic. Until Manila negotiates as one and both sides align their diplomatic statements and maritime actions, the SCS remains at a stalemate, with higher day-to-day risks at sea.

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