MANILA, Philippines -- Malacañang is still optimistic about a peaceful resolution to the maritime conflict with China over the disputed Spratly islands but is prepared to invoke the Mutual Defense Treaty (MDT) with the United States in case of an armed attack on the Philippines.

Executive Secretary Paquito Ochoa Jr. said the Philippines expects the United States to be its ally in the event the territorial dispute escalates in the region.

 “We have a standing Mutual Defense Treaty with the United States so the main, the relevant portion of that treaty is that the United States has been our ally and they will come. We expect them to be our allies in any problem that will require them to help,” Ochoa said in a press conference after the Independence Day rites in Malacañang.

The mutual accord between Manila and Washington, signed in 1951, stated that both nations would support each of other if either one was attacked by an external party. An armed attack involves assaults on the main territory or island territory under jurisdiction of either of the parties, or security forces, public vessels or aircraft in the Pacific.

The Philippines recently protested the illegal incursions of Chinese military into its territorial waters in recent months. The incidents reportedly occurred in the Reed Basin, which not included in the disputed territory in the South China Sea.

China has denied the allegations of harassment towards Filipino vessels and even warned its Asian neighbors to refrain from issuing irresponsible remarks.

Ochoa meantime said the government would exhaust diplomacy to reach a settlement into the sea conflict with China. He also appealed to concerned parties to exercise restraint to calm the tension in the area.

“It’s a political and diplomatic issue so we will solve it along those lines also so we don’t want to encourage anything that will exacerbate the issues there,” he said.

“Everybody should be very, very careful in handling this issue with the Chinese,” he added.

At present, Ochoa said there are no plans yet to convene the National Security Council to find ways to resolve the conflict with China. But the conflict with China is being tackled by the cabinet security cluster.

“We have convened already and we are in constant communication on these matters,” he said.

Chinese Ambassador to the Philippines Liu Jianchao, who was present at the Vin d’Honneur hosted by President Aquino for the diplomatic community in the Palace, has declined to add more fuel to the raging dispute with the Philippines. “Maybe I’ve talked about it too much,” the envoy said.

Muntinlupa City Representative Ruffy Biazon believes the Philippines and other claimants to islands in the South China Sea should push for the joint exploration and development of the island group rather than argue and strain the relationship of the countries involved.

Speaking at the weekly Tinapayan Forum in Manila, Biazon said that the issue of the Spratlys can be resolved peacefully by embarking on a joint development project with other claimants instead of engaging in verbal tussles that tend to flare up the already intense situation.

Apart from the Philippines and China, other claimant countries to island groups in the South China Sea are Vietnam Malaysia, Brunei and Taiwan.

Meanwhile, work is underway to establish a “China Desk” manned at the Board of Investments (BoI) in the Philippines by a Chinese official so that inbound and outbound investors in the country can be serviced more efficiently.

The move was recently agreed upon by the Philippines and the People’s Republic of China during a meeting between Department of Trade and Industry (DTI) Undersecretary and BOI Managing Head Cristino Panlilio and Chinese Min-istry of Commerce (MOFCOM) Vice Minister Chen Jian in Beijing.

The two government officials extensively discussed bilateral economic ties in order to promote more Chinese investments and joint ventures in the Philippines or vice versa.

During their talks, both sides also agreed to deepen communications to ascertain the specific potential of the Philippine market for environmentally-friendly vehicle technologies.

Currently using gas powered buses in Beijing, Chongqing, and other major cities, China, shared its experience in developing both natural gas-fueled vehicles, including for public transport, and electronic vehicles (e-vehicles).

China urged the Philippines to organize a delegation of policy-makers and business entities to visit its cities to understand the new technologies and applications in this sector.

Vice Minister Chen pointed out that bilateral trade between the Philippines and China is growing well, as evidenced by the 35 percent growth in trade in 2010, and the 216 percent year-on-year growth in first quarter bilateral trade in 2011.

He expressed a high level of optimism that the ASEAN-China Free Trade Agreement will help this upward trend.

He said that, even with a trade deficit, China welcomes more Philippine imports into China. (With reports by Leonard D. Postrado and Roy C. Mabasa)