CHINA'S willingness to discuss the Spratlys dispute within the framework of international laws is a significant development toward diffusing tension, Asia watchers say.
Although doubts persist in Manila about China's sincerity, last week's bilateral talks in the Philippine capital were a breakthrough.
China agreed for the first time to discuss the sovereignty issue and to a code of conduct with the Philippines in the Spratlys that would allow for freedom of navigation through the far-flung string of atolls in the South China Sea that straddle East Asia's most strategic sea lanes.
Suspicions that the area is rich in oil, gas, and marine resources have set off rival claims by China and five other countries - the Philippines, Vietnam, Taiwan, Malaysia, and Brunei.
After lectures by the United States and the Association of Southeast Asian Nations (ASEAN) asking China to behave, observers say Beijing is responding.
''China is trying to protect itself as a good neighbor because of the pressure from the US,'' says Julius Caesar Parrenas, an analyst with independent think tank the Institute for International and Strategic Studies here.
''China feels it is in danger of being isolated and wants to reassure ASEAN countries it will be a good neighbor,'' he adds.
The agreement commits Beijing and Manila ''to settle their bilateral disputes in accordance with the recognized principles of international law, including the United Nations Conventions on the Law of the Sea (UNCLOS).''
By using the UNCLOS as a possible framework, there would be a common basis later to determine the drawing of the baselines of each of the six claimants to the Spratlys.
''I don't think there will be an agreement soon,'' observes Mr. Parrenas. ''There will be a lot of talking to prepare their respective publics, especially the politicians, to accept an agreement.''
He pointed out that the Chinese Navy seems to be the one pushing China on to aggressive expansion into the South China Sea and will need to be brought around over time on any agreement China enters into.
But another observer, Noel Morado of the Institute for Strategic and Development Studies, says that China is talking out of both sides of its mouth - calming jittering neighbors and pacifying the assertive military at home.
''We're not quite certain as to what extent they are going to be flexible,'' he notes.
Tension in the region rose dramatically in February when China occupied Mischief Reef, 135 nautical miles from the Philippines shore, which Manila says is within its 200-mile economic zone.
Philippine and Chinese warships squared off near Mischief Reef in May when Manila flew international journalists over the Chinese-built steel structures.
Beijing angrily denounced the media tour as a provocation, but analysts credit the Philippines' attempts to raise world concern about China's ambitions in the region as having paid off.
Signs of Chinese flexibility came at the end of the three days of talks in Manila between Chinese Deputy Foreign Minister Wang Ying Fan and Philippine undersecretary Rodolfo Severino.
''I'm more encouraged today than two days ago,'' said Mr. Severino Aug. 11 after the talks, pointing out that Beijing seems amenable to multilateral talks with all the claimants. China previously insisted only on bilateral discussions.
China and the Philippines now agree on a set of principles for a code of conduct in the area to reduce the chances of a military clash, including one that called for the resolution of disputes ''without prejudice to the freedom of navigation into the South China Sea.''
Both sides have agreed to set up a panel of experts on other areas of cooperation in the Spratlys, such as fisheries, search and rescue, maritime safety, and pollution control.