Pentagon To China: Stop Building Islands And Talk To Us More

Reuters reported on Friday that U.S. Defense Secretary Ash Carter met with China’s General Fan Changlong this week to discuss South China Sea land reclamation, U.S.-China military cooperation and a potential U.S. visit by Chinese President Xi Jinping later this year.

Military presence and artificial island construction in the South China Sea have been a source of tension between the U.S. and Chinese military in recent months.

Spirit Of Cooperation

Carter reportedly urged cooperation between the two countries in the South China Sea, expressing the U.S.’s commitment to “a sustained and substantive U.S.-China military-to-military relationship.” Carter and Fan discussed the benefits of potential cooperation on humanitarian assistance, disaster response, peacekeeping and counter-piracy.

In addition, the two military leaders discussed ways to constructively manage differences of opinion.

Related Link: What's Happening Between The U.S., China, Taiwan And Japan In The West Pacific?

Calling For A Stop To Land Reclamation

Carter reiterated the U.S.’s position that China should stop all land reclamation and militarization of disputed territory in the South China Sea.

Fan explained that China’s construction work in the South China Sea is intended only to improve living conditions in China by providing better protection of its citizens. Fan also expressed China’s belief that it has every right to construction in its own territory.

Rising Tensions

Fan also urged the U.S. military to stop its activities in the South China Sea. Tensions between the two countries recently escalated when a U.S. spy plane with a TV crew aboard flew close to artificial islands that China is currently building.

Last year, the Pentagon accused a Chinese fighter jet of conducting a “dangerous intercept” of a U.S. Navy patrol plane by flying within yards of the American jet and performing aerial maneuvers around it.

Stock Plays

Investors that believe that issues in the South China Sea could continue to escalate might consider defense ETFs such as iShares Dow Jones US Aerospace & Defense ETF (NYSE: ITA) or SPDR S&P Aerospace & Defense ETF (NYSE: XAR).

Both ETFs are up more than 6.0 percent in 2015.