Nation at a Glance — (01/11/18)
News stories from across the nation. Visit www.bworldonline.com (section: The Nation) to read more national and regional news from the Philippines.
ECB hawks take lead on QE debate as doves stay quiet
AS THE European Central Bank (ECB) enters 2018, the debate over its stimulus plans is being dominated by policy makers warning against keeping policy ultra-loose for too long.
With the euro-area economy expanding solidly after three years of negative interest rates and quantitative easing (QE), hawks such as Bundesbank President Jens Weidmann have stepped up calls for a definite end-date to bond purchases. Even Executive Board member Benoit Coeure, a leading proponent of QE when the region faced deflation, now sees a “reasonable chance” the latest extension of the program to September will be the last.
The key though is whether President Mario Draghi and doves such as chief economist Peter Praet also adjust their positions. They’ve stayed quiet this year, letting the latest slowdown in inflation do the talking. Investors should gain an insight into the discussion on Thursday, when the account of the Dec. 14 Governing Council meeting is published.
“If we continue to hear only from the hawks there may be a perception that the mood has shifted in their direction more than it actually has,” said Oliver Rakau, an economist at Oxford Economics in Frankfurt. “The numbers clearly show the recovery is more sustained now, but I wouldn’t expect any sudden shift in ECB policy.”
The euro has climbed more than 1% since the ECB’s December policy meeting, though it has weakened slightly in recent days.
Bond holdings under QE will reach €2.55 trillion ($3 trillion) by September — equivalent to a quarter of gross domestic product, similar to the Federal Reserve’s program at its peak — and officials have pledged to do more if needed. Their own projections don’t see inflation back in line with the goal of just under 2% until at least late 2020.
HALF AND HALF
Yet economic growth is the fastest in a decade, and the broadest in the single currency’s history. That’s giving credence to the arguments of minority, if vocal, dissenters such as Weidmann and Dutch central-bank governor Klaas Knot who say price pressures are mounting and the ECB must stop before risks such as elevated asset valuations undermine financial stability.
Half of the six-member Executive Board, which proposes and implements policy, appears to be reluctant to extend QE again. In addition to Coeure, Yves Mersch has warned his colleagues that the ECB shouldn’t “fall behind the curve” by acting too timidly. Sabine Lautenschlaeger has long been on the record as saying she’s skeptical of the need for QE.
STATUS QUO
“Hawks such as Weidmann and Knot are still the outliers, but where they lead, the rest of the council is likely to soon follow,” Marchel Alexandrovich, an economist at Jefferies International Ltd. in London, wrote in a client note. Even so, “with core inflation once again disappointing expectations, makes it easy for Draghi to maintain the status quo for another few months.”
Euro-area inflation slowed to 1.4% in December and the underlying rate, excluding volatile components such as food and energy, held at a meagre 0.9%.
One development policy makers will be keenly watching is wage negotiations in Germany, where the IG Metall union is negotiating on behalf of 3.9 million metalworkers and engineers for a 6% pay hike and more flexible hours. It’ll hold talks with employers such as automakers on Thursday.
Without a significant pick-up in salaries in Europe’s strongest economy, where unemployment is at a record low, the ECB has little reason to believe it’s on track to hit its goal.
“Core inflation is still subdued and the German pay negotiations are key,” said Piet PH Christiansen, an economist at Danske Bank A/S in Copenhagen. “But in any case, with the strong economy emboldening the hawks, we are in for a more split Governing Council.” — Bloomberg
Manila to host Blockchain & Bitcoin Conference Philippines
On January 25, Manila for the first time will host Blockchain & Bitcoin Conference Philippines, an event dedicated to cryptocurrency, blockchain and ICO.
Philippines is a pioneer in the digital assets regulation
At the end of November 2017, the Philippines` Securities and Exchange Commission announced its intention to introduce cryptocurrencies in the legal field. This means that soon the state can become one of the pioneers in the field of regulating digital assets. Legislative security will positively affect the popularity of the Philippines in the crypto community.
Participants are crypto industry professionals
Crypto experts from all over the world will take part in the event: representatives of financial institutions, bankers, entrepreneurs, investors, lawyers, developers of blockchain solutions, startups and professional traders.
Guests will enjoy not only the conference, but also an exhibition
The event takes place in the format of a conference + exhibition, which simplifies the search for potential business partners. Within the conference, speakers will discuss legislative changes in the field of cryptocurrencies and tokens in the Philippines, share the experience of preparing a startup for the ICO, advise which digital assets should be invested in the new year and tell about the benefits of blockchain for business.
Representatives of the international crypto community will gather in the exhibition area: suppliers of mining equipment and farms, crypto exchanged, blockchain projects and investment funds.
The event is held by the international company Smile-Expo
The organizer of the event is Smile-Expo, the company that conducts events of the Blockchain & Bitcoin Conference network in 15 countries of Europe and Asia.
Venue: Edsa Shangri-La Hotel, Manila.
Follow the news on the official website of Blockchain & Bitcoin Conference Philippines.
Trade deficit widens in November as imports outpaced exports
THE Philippines registered a November trade deficit of $3.78 billion in its balance of trade in goods, wider than the $2.49 billion shortfall in the same month last year, the Philippine Statistics Authority reported earlier.
Merchandise exports grew 1.6% to $4.96 billion in November according to the government’s latest trade data that was released earlier this morning. This was slower compared to the 7.1% posted in October, but was a reversal from the 4.5% decline during the same month last year. By major commodities, exports of mineral products grew 128.5% to $364.28 million, offsetting the declines seen in exports of manufactured goods (-1.5% to $4.13 billion) and agro-based products (-28.5% to $288.48 million). Electronic products, which accounts 58.1% of the total outbound shipments, expanded by 12.7% to $2.88 billion in November.
Meanwhile, imports grew 18.5% to $8.74 billion in the same month, higher than October’s 13.1% growth albeit lower than the 21% seen in November 2016. Imports of raw materials and intermediate goods increased by 18.9% to $3.31 billion while that of capital goods ($2.88 billion) and consumer goods ($1.62 billion) went up by 16.1% and 14.4%, respectively. — Lourdes O. Pilar
Factory output contracts in November
FACTORY output declined for the third straight month in November, the Philippine Statistics Authority (PSA) reported earlier this morning.
Preliminary results from the PSA’s Monthly Integrated Survey of Selected Industries (MISSI) showed that the November factory output – as measured by the Volume of Production Index (VoPI) – contracted by 8.1%. The recent figure was lower than the 5.8% contraction recorded in October and a reversal of the 15.1% growth registered in November 2016.
Sectors that posted double-digit declines were: chemical products (-62.7%), tobacco products (-48.3%), textiles (-33.8%), and footwear and wearing apparel (-23.9%).
Average capacity utilization, which is the extent by which industry resources are being used in the production of goods, was estimated at 83.9% with eleven of the 20 sectors registered capacity utilization rates of 80% and above. — Camille A. Aguinaldo
Meralco bares rate hike from tax reform
THE Manila Electric Co. (Meralco) expects an 8-centavo increase in electricity cost per kilowatt-hour (/kWh) as early as next month with the application of new taxes on coal, oil and power transmission, a company official said yesterday, adding that part of the increment will be implemented in phases.
“Total is 8 centavos,” Lawrence S. Fernandez, Meralco vice-president and head of utility economics, told reporters when asked to quantify how much more consumers will pay with the enforcement of new taxes under Republic Act No. 10963 or Tax Reform for Acceleration and Inclusion (TRAIN) Act.
“[That’s the] full impact… for Meralco customers this year.”
Mr. Fernandez said Meralco derived its computation using power dispatch levels in November 2017, which saw a third of Meralco’s requirements come from coal-fired power plants and a smaller portion from an oil-fired facility.
He said that the excise taxes on coal and oil would translate to an additional 1 centavo/kWh which will be implemented on a staggered basis since it would depend on power generators’ existing stock of fuel.
RA 10963 provides for a P50 per metric ton (/MT) excise tax on coal that will rise to P100/MT next year and further to P150/MT starting 2020, besides subjecting imported coal to the value added tax.
The law also provides a P2.50 per liter excise tax on oil that rises to P4.50 per liter next year and further to P6 per liter starting 2020.
The bigger impact would come from a 7 centavos/kWh increase in transmission charge, Mr. Fernandez added.
The staggered one-centavo increase could start in February, but if grid operator National Grid Corporation of the Philippines (NGCP) were to include in its January billing the tax on power transmission, next month’s rate increase would even be bigger, he said.
Mr. Fernandez said that since TRAIN took effect on Jan. 1, Meralco expects its January bill from NGCP to reflect the 12% value-added tax (VAT). He said TRAIN had repealed the VAT exemption granted to NGCP by RA 9511, which gave it the franchise to engage in the business of transmitting electricity through a high-voltage network of interconnected transmission lines, substations and related facilities.
Meralco’s controlling stakeholder, Beacon Electric Asset Holdings, Inc., is partly owned by PLDT, Inc. Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has interest in BusinessWorld through the Philippine Star Group, which it controls.
Electricity contributes 4.51% to the theoretical basket of basic goods and services used by a typical Filipino household on which annual inflation is computed.
ESTIMATED INFLATION IMPACT
ING Bank N.V. Manila expects inflation to pick up by 3.7% this year on the back of rising crude prices, coupled with the impact of TRAIN.
The forecast is higher than the 3.4% given by the Bangko Sentral ng Pilipinas (BSP), coming from a 3.2% reading in 2017. This, however, will still fall within BSP’s 2-4% target band for 2018.
“We believe that inflation pressures in 2018 would be more intense,” ING economist Jose Mario I. Cuyegkeng said in a market report yesterday.
“We estimate that the direct impact of the tax reform-related excise taxes would result to a 0.8-1 percentage point (ppt) increase.”
RA 10963 reduces personal income taxes for those earning below P2 million, alongside a simpler system for computing donor and estate taxes.
Foregone revenues will be offset by the removal of some VAT exemptions; increased tax rates for fuel, automobiles, tobacco, coal, minerals, documentary stamps, foreign currency deposit units, capital gains for stocks not in the stock exchange, and stock transactions; as well as new taxes for sugar-sweetened drinks and cosmetic surgery.
Second-round effects that will be felt through rising transport fares as well as higher wages and production costs would also drive prices up by another percentage point, Mr. Cuyegkeng added.
The inflation uptrend is expected to prod the BSP to raise rates twice this year, even as these will lag behind the United States where three tightening moves are expected from the Federal Reserve.
Central bank officials said they expect new taxes to add less than 1 ppt to inflation this year, even as they said the BSP is ready to adjust policy tools should the pace pick up beyond expectation.
BOND YIELDS RISING
Faster inflation is also expected to exert upward pressure on interest rates, with yields at the secondary market already trading higher in 2018’s first trading week.
Higher rates fetched for US Treasuries and higher funding requirements from domestic capital markets are also spurring a pickup in rates.
“Market had become more wary of inflation expectations and had priced this in with spreads to inflation rising by 20bps (basis points) in 2H 2017 from 1H 2017… [W]ith inflation rising in 2017 to 3.2% from 1.8% in 2016, market had shaken off some complacency and started to exact a higher inflation premium,” ING Bank said in the report.
Previously, players had asked for “modest” yields as inflation stood favorable, even settling below the target range at 1.8% in 2016. However, the pickup in prices last year and future prospects made them change tack.
Expectations of additional rate hikes by the Fed are also triggering higher rates sought by market players.
Still, this is seen countered by ample funding held by the Bureau of the Treasury, giving the government space to be more discerning of bond bids.
Mr. Cuyegkeng said two retail Treasury bond offers last year generated “substantial cash” for the government worth P430 billion. A $1-billion global note offer expected this month would also boost public coffers.
“Government cash position is healthy for most of 1H 2018. This would allow government to manage bond yields at auctions,” the bank analyst said.
“We expect this cash position to have a positive effect on local bond market.”
The Treasury rejected all bids at yesterday’s offer of 10-year bonds as yields sought by market players were higher than expected. — Victor V. Saulon and Melissa Luz T. Lopez
Stock mart resumes climb to new record high
By Arra B. Francia
Reporter
THE PHILIPPINE STOCK EXCHANGE INDEX (PSEi) broke through the 8,900 line on Tuesday, resuming its ascent to a fresh peak on the back of expectations that the next tax reform package will cut corporate income tax rates.
The fifth trading day of 2018 saw PSEi log its fourth record high, gaining 2.04% or 178.60 points to finish 8,923.72 on Tuesday. It was now up 4.27% from its record-high 8,558.42 finish in 2017.
Timson Securities, Inc. Equities trader Jervin S. de Celis attributed the main index’ jump yesterday to news on the Department of Finance (DoF) plan to submit three more tax reform packages to Congress within the year, including the second one that will slash corporate income taxes to 25% from 30% currently.
“That’s what’s keeping the PSEi going up since our corporate income tax is the highest among Southeast Asian nations. Most of our neighboring countries implement corporate tax rates between 12.5% and 25%,” Mr. De Celis said in a mobile phone message.
Foreign investors continued to bet on the strength of the Philippine economy, with net foreign inflows ballooning to P1.42 billion from P1.202 billion on Monday.
All six sectoral indices moved into positive territory, with the property sector lodging the biggest increase at 2.4%, followed by financials at 2.24%.
Summit Securities, Inc. President Harry G. Liu said that apart from the tax reform program, investors are banking on companies’ year-end financial reports.
“Of course there’s the tax reform program, the infrastructure program. And then you have the yearend reports, these are the ones that are causing the market to get more positive,” Mr. Liu said in a telephone interview.
He added that such developments pointing to further boost to the macroeconomy down the road will continue to fuel investor optimism.
“So looking at it, I think in the long term this trend would be very much upward-looking,” Mr. Liu said.
“In the short term, maybe we can meet a bit of resistance for profit-taking. But nevertheless, my long term picture should be about 10,000 for the year.”
Timson Securities’ Mr. De Celis said the PSEi could breach the 9,000 mark as early as this week. Some analysts had earlier projected the market reach this level later into the year. “This week, the PSEi breaching the 9,000 is highly like since we are just a few points away from it and this is due to optimism on economic reforms of the current administration as well as the expected higher government spending on infrastructure projects,” he said. “While the ascent of the PSEi is too fast and steep, it may consolidate probably above 8,800-9,000 level once the market has already factored in these news.”
Gov’t sets preliminary tax collection goals until 2022
THE GOVERNMENT has set preliminary annual collection targets until 2022 for its two main revenue bureaus as it keeps its eye on an P8.44-trillion plan to build infrastructure until then.
The Bureau of Customs (BoC) has been entrusted with a P581.3-billion collection program for this year, Department of Finance (DoF) documents show. The preliminary target is 26.48% more than the P459.6 billion set for 2017, as stated in the latest Budget of Expenditures and Sources of Financing.
For the Bureau of Internal Revenue (BIR), the government is looking at a P2.039-trillion target this year. BIR Commissioner Caesar R. Dulay has said that medium-term targets are still up for discussion with the economic managers of the Development Budget Coordination Committee.
For 2019, the government is looking at a P2.309-trillion target for the BIR, 13.24% more than this year, and P662.2 billion for the BoC, which is 13.19% higher than in 2018.
In 2020, the BIR is tasked to rake in 13.34% more at P2.617 trillion, while BoC has a 12.99% bigger target at P748.2 billion.
The BIR in 2021 is expected collect P2.942 trillion, 12.42% more than the preceding year, while the BoC should rake in P826.2 billion, up 10.43%.
At the end of the administration’s six-year term in 2022, BIR collections should reach P3.312 trillion, 12.58% more than in 2021, and the BoC take should hit P914.8 billion, or 10.72% more.
Latest available government data show that the BIR collected P1.621 trillion as of November last year, 12% more than the P1.45 trillion it got in 2016’s corresponding 11 months.
The same comparative 11 months saw the BoC collecting 14% more at P413.1 billion from P361.5 billion. — Elijah Joseph C. Tubayan
BSP cites drivers of stronger FDI inflows
By Melissa Luz T. Lopez
Senior Reporter
THE PHILIPPINES’ infrastructure spending program and warmer ties with China and Russia will support stronger foreign investment inflows this year, the country’s central bank chief said, alongside robust expansion of local industries.
Bangko Sentral ng Pilipinas (BSP) Governor Nestor A. Espenilla, Jr. said foreign direct investments (FDI) are on track to keep growing this year to reach a new record high.
As of its December review, the central bank saw FDI net inflows hitting a fresh high of $8.2 billion this year, up from an expected $8-billion stash in 2017 on the back of “sustained positive developments.” Improving global economic conditions are shaping up to be favorable for more businesses to place their bets here.
“FDI inflows uptick is further seen in 2018 in line with the continued fast tracking and modernization of the country’s infrastructure as well as growing interests from non-traditional investment sources such as China and Russia,” BSP Governor Nestor A. Espenilla said in an e-mail interview with BusinessWorld.
FDIs are a key source of capital for the local economy, which create more jobs for Filipinos as these fuel business expansions.
Some $5.839 billion in new investments entered the country as of September last year, close to matching the $5.85 billion in FDIs tallied in 2016’s comparable nine months.
The central bank is scheduled to release October FDI data today.
The United States, Singapore and the Netherlands were the biggest sources of foreign capital as of end-September, according to BSP data.
Cozier ties between Manila and Beijing amid President Rodrigo R. Duterte’s “pivot” to China are expected to unlock additional trade and investments between the two nations.
China has already pledged around $7.34 billion in soft loans and grants for the Philippines over the past two years, according to the Department of Finance.
The recovery of the manufacturing sector and the steady growth of services supported the influx of foreign capital last year, alongside the rollout of previously approved big-ticket infrastructure projects under the public-private partnership scheme, the BSP chief said.
This year, he again sees manufacturing — particularly of electronics and motor parts — as the biggest beneficiary of new investments. Other attractive industries include renewable energy and waterworks; real estate; entertainment financial and insurance activities; and wholesale and retail trade.
The Duterte administration’s “Build, Build, Build” mantra on infrastructure development would also entice more foreign businesses to place their bets here, Mr. Espenilla said.
On the central bank’s part, regulatory reforms to improve ease of doing business and deepen the local debt market are also expected to unlock more opportunities for FDIs.
“Strong economic fundamentals; young, reliable and educated workforce; as well as the government’s commitment to carry out reforms toward structural transformation and infrastructure development, should attract more investments into the country,” Mr. Espenilla said in his e-mail.
Philippines, Japan on track for new MRT deal
By Patrizia Paola C. Marcelo
Reporter
THE PHILIPPINE and Japanese governments are on track to ink a deal for a new maintenance contract for the Metro Rail Transit-3 (MRT-3).
In a statement, the Department of Transportation (DoTr) said the Philippine and Japanese governments have exchanged notes verbales regarding official development assistance (ODA). The arrangement with Japan involves obtaining ODA financing under the Japan International Cooperation Agency’s (JICA) Special Terms for Economic Partnership (STEP).
The DoTr said that with projects under Japanese ODA, terms include 0.10% interest per year, with a 40-year payment period, and 12 years grace period for the principal.
JICA will then conduct from this month until next month a feasibility study, which will refine the project’s scope of works, followed by relevant government approval. Signing of the loan agreement and procurement of the rehabilitation and maintenance provider will follow in March to April, and by the second quarter, the Japanese provider will start its mobilization.
The Japanese government will nominate a rehabilitation provider. The DoTr said that Japan “has given assurances that it will nominate a provider that is highly qualified, and has a robust and reliable track record.”
The DoTr said in November that it was in high-level discussions with the Japanese government “to pave the way for DoTr’s direct engagement” of previous MRT maintenance provider Sumitomo Corp. and its technical partner Mitsubishi Heavy Industries, under a Government to Government (G2G) Official Development Assistance (ODA) platform.
The agency said that the joint venture of Sumitomo and Mitsubishi Heavy is being considered due to their previous experience of designing and maintaining the MRT.
DoTr in November terminated its contract with Busan Universal Rail, Inc. (BURI), citing BURI’s alleged failure to ensure efficient and available trains and failure to procure the proper spare parts.
The government is also currently evaluating the unsolicited proposal of Metro Pacific Investments Corp. (MPIC) for the rehabilitation and takeover of the MRT system. MPIC is one of three key Philippine units of Hong Kong-based First Pacific Co. Ltd., the investment management and holding company of Indonesia’s Salim family.
MPIC’s other units are Philex Mining Corp. and PLDT, Inc. Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a majority stake in BusinessWorld through the Philippine Star Group, which it controls.
Palace says corruption purge now directed to the local governments
By Arjay L. Balinbin
PRESIDENT Rodrigo R. Duterte’s corruption drive, which was started by the dismissal of his own appointees in the Executive department, will now be directed to local government officials, according to Presidential Spokesperson Herminio Harry L. Roque, Jr.
“The President stated (in the Cabinet meeting last Monday, Jan. 8) that he will continue with the process of cleansing the bureaucracy and that he will now turn more of his attention to local government units (LGUs) including the Autonomous Region in Muslim Mindanao (ARMM),” Mr. Roque told reporters in a press briefing on Tuesday, Jan. 9.
The President, who has vowed to make good on his campaign promise to stop corruption in government including in the awarding of contracts and the use of taxpayers’ money in overseas trips, had recently fired Maritime Industry Authority (MARINA) administrator Marcial Quirico C. Amaro III and Presidential Commission for the Urban Poor (PCUP) Chair Terry Ridon for their foreign travels.
In October last year, Mr. Duterte signed Executive Order No. 43, creating the Presidential Anti-Corruption Commission (PACC), which will have the authority to investigate administrative cases, including graft and corruption, of presidential appointees. But observers also regarded the said order as being in response to the Ombudsman’s intent to investigate the Duterte administration.
Mr. Roque said the commission “has been established but it hasn’t been constituted” yet, adding, “But the President has not waited for its constitution before he has started actually the purging of corrupt officials in government.”
“As you know, even without the commission, he has gone ahead and fired many of his presidential appointees….He has shown that with or without it, he has a firm resolve against corruption and he will implement it,” Mr. Roque also explained.
Section 12 of the said Executive Order transfers to the PACC the “investigatory, recommendatory and other incidental functions of the Presidential Anti-graft Commission,” which were earlier transferred to the Office of the Deputy Executive Secretary for Legal Affairs (ODESLA).
Asked whether the “cleansing” of the LGUs is connected also to President Duterte’s campaign against narco-politicians, Mr. Roque said, “I’m sure it’s all connected. But I guess the President mentioned in the Cabinet meeting his resolve also to clean up the ranks of the local government executives to highlight that it’s not just presidential appointees that would be subject to this campaign to promote public accountability but includes everyone in government.”
It will be recalled as well that in his first six months as President, Mr. Duterte had issued a command for law enforcers to shoot on sight the narcotics-linked politicians, saying the damage they have done to the country is unforgivable.
PHL to protest apparent Chinese airbase
THE PHILIPPINES will make a diplomatic protest to China, which it described as reneging on a promise not to militarize artificial islands in the busy South China Sea waterway, the Southeast Asian nation’s defense minister said on Monday.
The United States has criticized China’s buildup of military facilities on the artificial islands and is concerned they could be used to restrict free movement through the key trade route.
Philippine Defense Secretary Delfin N. Lorenzana’s comment followed a Dec. 30 broadcast of aerial footage by the official China Central Television (CCTV) showing Fiery Cross Reef, which appeared to have been transformed into an airbase.
“The Chinese government said some time ago that they were not going to militarize those reclaimed islands,” Mr. Lorenzana told reporters, adding that the protest would be made through the foreign ministry.
“If it is true and we can prove that they have been putting soldiers and even weapons systems, that will be a violation of what they said.”
There was no immediate comment from Chinese officials.
China and the Philippines have long sparred over the South China Sea, but relations have improved considerably under President Rodrigo R. Duterte, who has been courting Beijing in hopes of winning business and investment.
China has assured the Philippines it will not occupy new features or territory in the South China Sea, under a new “status quo” brokered by Manila as both sides try to strengthen their relations.
Reports about China militarizing reclaimed islands were not new, presidential spokesman Harry L. Roque, Jr. told a regular news briefing.
“We have always been against the militarization of the area,” he added. “It is certainly not OK, because it constitutes a further threat to peace and security in area.”
China is holding to a commitment not to reclaim more islands, Mr. Roque added, however.
“There is still no breach of the good faith obligation for as long as China has not embarked on new reclamation,” he said, when asked about the situation on the reef.
China has denied US charges that it is militarizing the South China Sea, which is also claimed by Brunei, Malaysia, the Philippines, Taiwan and Vietnam.
The reef has a hospital with more than 50 doctors, high-speed mobile connections and an airport with a runway of 3,160 meters (3,456 yards) to serve what Beijing calls a “weather station” equipped with radar, Chinese state media say.
In the last 27 years, China’s navy has sent more than 1,000 soldiers to guard the reef, state media have said. — Reuters