China would rather have weak and compliant neighbors:
As China’s economy has grown so has Chinese skill at using its economic power to pressure nations to cooperate. All the nations opposing China in the South China Sea have significant economic ties with China. China is always offering to invest more or allow trade concessions (let the country export to China) in return for “cooperation”. At the very least this gives “pro-China” forces in the target country some clout. ...
Now China is turning this pressure against the impudent neighbors who rashly oppose Chinese domination of the South China Sea. A recent example of this is China suggesting that South Korea not sell its new T-50 armed jet trainers to the Philippines. This effort may fail, but it might succeed and even if it does not the threats leave an impression, one that makes it very clear that China must not be defied.
Yeah, everyone said that Taiwan was a special case. China considered Taiwan part of China. So that isn't a pattern to worry about, right?
Unless you want to argue that China considers the Philippines part of China (and think that is a comforting explanation) so this is still not unsettling.
It would be better for countries to resist China early. If everyone just sold what they produced to whoever could buy it--including to Taiwan--China would find no weaknesses to exploit.
Or do nations that wish to export arms think that Europe can absorb their productive capacity?