China seeks investment for disputed islands, to launch flights

[January 15, 2016]  BEIJING (Reuters) - China will invite private investment to build infrastructure on islands it controls in the disputed South China Sea and will this year start regular flights to one of them, state media said on Friday, moves likely to anger other claimants.

China claims almost all of the energy-rich waters of the South China Sea, through which more than $5 trillion of maritime trade passes each year. The Philippines, Brunei, Vietnam, Malaysia and Taiwan have overlapping claims.

In 2012 China set up what it calls Sansha city, based on Woody Island in the Paracels, to administer its islands there.

Though China calls it a city, its permanent population is no more than a few thousand, and many of the disputed islets and reefs in the sea are uninhabited.

Sansha's deputy mayor, Feng Wenhai, said they will welcome private investment and "will initiate public-private-partnership program", state news agency Xinhua said.

"The city will also push forward the planning and construction of a maritime medical rescue center. Submarine optical cables will be laid and put into use this year, and WiFi will cover all inhabited islands and reefs," Feng said.

The airport on Woody Island will also this year launch regular flights, Feng added, without elaborating.

China took full control of the Paracels in 1974 after a naval showdown with Vietnam.

Hundreds of Vietnamese demonstrated in Hanoi when China established Sansha city and invited oil firms to bid for blocks in offshore areas that Vietnam claims as its territory.

Tensions between China and Vietnam have flared in recent weeks, after Chinese civilian aircraft conducted several test landings on the disputed Fiery Cross Reef, one of three runways China has been building for more than a year by dredging sand up onto reefs and atolls in the Spratly Islands.

Vietnam says China's landings were on an "illegally" built reef, and has vowed to defend its sovereignty through peaceful measures.

Chinese state media on Friday showed pictures of what it said was the first batch of civilian passengers to arrive by plane on Firey Cross Reef, family members of troops based there, though it only appeared to be two women and two young children.

"Everyone rapturously looked around at the island's beautiful scenery," read a caption underneath one of the pictures carried on the website of Chinese news portal Sina, showing the four of them standing on the tarmac in front of two civilian aircraft.

The United States has criticized Beijing's building of artificial islands in the disputed Spratly archipelago, south of the Paracels, and has conducted sea and air patrols near them.

The Philippines has challenged Beijing at the arbitration court in The Hague, a case Beijing has not recognized.

(Reporting by Michael Martina; Editing by Ben Blanchard and Nick Macfie)

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