China and the Philippines have each unfurled their national flags on tiny sandbars in the South China Sea, staking competing sovereignty claims in strategic waters seen as a potential flashpoint for global conflict.

The standoff over Sandy Cay, which lies close to military outposts built by both Beijing and Manila, was the latest between the two nations.

China has advanced this year's stimulus plans but is holding off on fresh measures as it tries to maintain composure, betting on Washington blinking first in a protracted trade war.

China on Monday said it was on the right side of history in its gruelling trade war with the United States. Recall that the US President Donald Trump, since returning to the presidency in January, has imposed 10 per cent tariffs on most US trading partners and a separate 145 per cent levy on many products from China.