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UPDATE 1-Top Philippine diplomat recommends scrapping deals with blacklisted China firms

* Blacklisted Chinese firm has projects in Philippines

* Chinese company is linked to Mischief Reef

* China, U.S. should resolve differences - Duterte spokesman (Adds presidential spokesman’s comments)

MANILA, Aug 28 (Reuters) - The Philippines’ foreign minister said on Friday he would recommend the government terminates deals with Chinese firms blacklisted by the United States for their roles in constructing and militarising artificial South China Sea islands.

The United States this week named 24 Chinese companies and targeted individuals it said were involved, in its first sanctions move against Beijing over the South China Sea. China called those unjust.

“If they were in any way involved in the reclamation, then it becomes consistent on our part to terminate any contract with them,” Foreign Secretary Teodoro Locsin told CNN Philippines, without identifying a company or project.

Among those blacklisted was China Communications Construction Co (CCCC), which is set to build a $10 billion airport project with a local partner in Cavite, near Manila.

CCCC’s subsidiary, China Harbour Engineering Company has teamed up with Udenna Corp, run by Dennis Uy, a fast rising tycoon with close ties to Philippine President Rodrigo Duterte, for a proposed $1.2 billion reclamation project in Manila Bay.

Cavite governor Juanito Victor Remulla told news channel ANC that if Duterte or the defence ministry saw the airport deal as a security risk “then we will terminate the agreement immediately”.

Presidential spokesman, Harry Roque, said Duterte’s main consideration was the government’s infrastructure programme, adding that the region would benefit if China and the United States “resolve any and all issues between them amicably and peacefully”.

Udenna Land, Chinese Harbour’s partner in the reclamation project, and Pasay City, which oversees the Manila Bay reclamation, did not respond to requests for comment.

However, when asked in December if Udenna was concerned about partnering with a company involved in Mischief Reef, a missile-equipped artificial island built by China inside the Philippines’ 200-mile exclusive economic zone - an Udenna official said Uy “is not concerned”.

In the December response to emailed questions from Reuters, Leo Venezuela, Udenna’s Investor Relations Head, added the company has “a very insignificant stake” in the project. (Reporting by Karen Lema and Neil Jerome Morales; Editing by Martin Petty)

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