SHANGHAI - China is ready to start negotiations with the Philippines on South China Sea-related issues if Manila ignores an arbitration ruling expected next week on their long-running territorial dispute, the official China Daily reported on Monday.

The Philippines brought the case to the Permanent Court of Arbitration in the Hague and a ruling is expected on July 12. The case contests China's claims to the bulk of the South China Sea, a body of water through which $5 trillion in ship-borne trade passes every year.

Hague court to issue PH-China ruling on July 12

China has said it plans to ignore the Court's ruling which would represent a snub of the international legal order.

Beijing to reject Hague ruling on South China Sea case

The Philippines, Vietnam, Malaysia, Taiwan and Brunei have overlapping claims with China in the area. Beijing has rejected the arbitration case, claiming the court has no jurisdiction and saying it wants to solve the issue bilaterally. In recent weeks it has ramped up its propaganda campaign downplaying the outcome of the case.

Negotiations between China and the Philippines could cover "issues such as joint development and cooperation in scientific research if the new government puts the tribunal's ruling aside before returning to the table for talks", the China Daily said.

China's main, government-run English newspaper did not name its sources but identified them as "close to the issues between the two countries."

"Manila must put aside the result of the arbitration in a substantive approach," it quoted one source as saying.

China's Foreign Ministry last month said the two countries had agreed in 1995 to settle disputes in the South China Sea "in a peaceful and friendly manner through consultations on the basis of equity and mutual respect".

China and the Philippines have held many rounds of talks on the proper management of maritime disputes, though have had no negotiations designed to settle the actual disputes in the South China Sea, it said.

In the arbitration case, the Philippines is contesting China's claim to an area shown on its maps as a nine-dash line stretching deep into the maritime heart of Southeast Asia, covering hundreds of disputed islands and reefs.

"Objectively the tribunal has no jurisdiction over the dispute," Sienho Yee, a law professor at the China Institute of Boundary and Ocean Studies at China's Wuhan University, told Reuters in a government-arranged interview on Friday.

"Negotiation has been agreed upon as the way to resolve the dispute," he said.