A Chinese state-owned firm that helped build man-made islands in a disputed area of the South China Sea has clinched a big-ticket infrastructure deal with the Philippines, a rival claimant to the strategic waters, amid Manila’s newfound detente with Beijing, a report has said.

The China Communications Construction Co. (CCCC), a state-owned infrastructure group, signed a contract with the Philippines’ Mega Harbor Port and Development Inc. to conduct a 208-hectare land-reclamation project in the harbor of Davao city, where Philippine President Rodrigo Duterte formerly served as mayor, the Beijing Youth Daily reported Monday.

The reclamation is expected to finished by the end of 2019, it said. CCCC Dredging is the largest dredging company in China in terms of capacity and installed power, the report said.

Beijing has built seven artificial islands on rocks and reefs it controls in the Spratly chain of the South China Sea, with a dredging ship owned by CCCC seen in surveillance photos at one of the islets there in early 2015, the Wall Street Journal reported in November.

Analysts say the agreement is part of moves by Duterte to repair ties with Beijing amid the row over the South China Sea.

In July, a ruling by an international arbitration court invalidated China’s claims to much of the strategic waterway, through which about $5 trillion worth of trade passes every year. Brunei, Malaysia, the Philippines, Taiwan and Vietnam all have rival claims in the waters.

The U.S. Defense Department’s annual report on China’s military said in May that while Beijing had paused its land-reclamation work in the disputed Spratlys late last year after adding more than 3,200 acres (1,280 hectares) of land to seven features it occupies there, the man-made islets give it long-term “civil-military” outposts from where it can project power.

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