BEIJING: Philippine President Rodrigo Duterte announced his "separation" from the United States on Thursday, declaring that it had "lost" and he had realigned with China as the two agreed to resolve their South China Sea dispute through talks.

Duterte made his comments in China, where he is visiting with at least 200 business people to pave the way for what he calls a new commercial alliance as relations with longtime ally the United States deteriorate.

His trade secretary, Ramon Lopez, said $13.5 billion in deals would be signed

Duterte's efforts to engage China, months after a tribunal ruling in the Hague over South China Sea disputes in favour of the Philippines, marks a reversal in foreign policy since the 71-year-old former mayor took office on June 30.

"America has lost now," Duterte told Chinese and Philippine business people at a forum in the Great Hall of the People, attended by Chinese Vice Premier Zhang Gaoli.

"I've realigned myself in your ideological flow and maybe I will also go to Russia to talk to (President Vladimir) Putin and tell him that there are three of us against the world - China, Philippines and Russia. It's the only way," he added.

"With that, in this venue, your honours, in this venue, I announce my separation from the United States," Duterte said to applause. "I have separated from them. So I will be dependent on you for all time. But do not worry. We will also help as you help us."

China has pulled out all the stops to welcome Duterte, including a marching band complete with batton-twirling band master at his official welcoming ceremony outside the Great Hall of the People, which most leaders do not get.

RED CARPET WELCOME

President Xi Jinping, meeting Duterte earlier in the day, called the visit a "milestone" in ties.

Xi told Duterte that China and the Philippines were brothers and they could "appropriately handle disputes", though he did not mention the South China Sea in remarks made in front of reporters.

"I hope we can follow the wishes of the people and use this visit as an opportunity to push China-Philippines relations back on a friendly footing and fully improve things," Xi said.

Following their meeting, during which Duterte said relations with China had entered a new "springtime", Chinese vice foreign minister Liu Zhenmin said the South China Sea issue was not the sum total of relations.

"The two sides agreed that they will do what they agreed five years ago, that is to pursue bilateral dialogue and consultation in seeking a proper settlement of the South China Sea issue," Liu said.

China claims most of the energy-rich South China Sea through which about $5 trillion in ship-borne trade passes every year. Neighbours Brunei, Malaysia, the Philippines, Taiwan and Vietnam also have claims.

In 2012, China seized the disputed Scarborough Shoal and denied Philippine fishermen access to its fishing grounds.

Liu said the shoal was not mentioned and he did not answer a question about whether Philippine fishermen would be allowed there. He said both countries had agreed on coastguard and fisheries cooperation, but did not give details.

SEA ROW TAKES "BACK SEAT"

Duterte's tone toward Beijing is in contrast to the language he has used against the United States, after being infuriated by US criticism of his bloody war on drugs.

He has called US President Barack Obama a "son of a bitch" and told his to "go to hell" while alluding to severing ties with the old colonial power.

On Wednesday, to the cheers of hundreds of Filipinos in Beijing, Duterte said Philippine foreign policy was veering toward China.

"I will not go to America anymore. We will just be insulted there," Duterte said. "So time to say goodbye my friend."

The same day, about 1,000 anti-US protesters gathered outside the US embassy in Manila calling for the removal of US troops from the southern island of Mindanao.

Duterte on Wednesday said the South China Sea arbitration case would "take the back seat" during talks, and that he would wait for the Chinese to bring up the issue rather than doing so himself.

Xi said issues that could not be immediately be resolved should be set aside, according to the Chinese foreign ministry.

China has welcomed the Philippines approaches, even as Duterte has vowed not to surrender any sovereignty to Beijing, which views the South China Sea Hague ruling as null and void.

China has also expressed support for his drug war, which has raised concern in Western capitals about extrajudicial killing.

Duterte's overtures to China have been accompanied by signs of improving business ties with the world's second largest economy.

China's Liu said Beijing will restore Philippine agricultural exports to China and provide financing for Philippine infrastructure.