Philippine President Rodrigo Duterte on Monday said Beijing was already "in possession" of the disputed South China Sea and Washington's return to a former naval base in the Southeast Asian country could raise the spectre of war.

In his fifth state of the nation address, Duterte went off script and discussed at length the maritime dispute, which is increasingly becoming a focus of U.S.-China rivalry in the region.

Responding to criticisms that his government had not done enough to assert Philippines' South China Sea claims, Duterte admitted he was "inutile" in the territorial dispute.

"China is claiming it. We are claiming it. China has arms. We do not have it. So, it's as simple as that. They are in possession of the property... so what can we do?" Duterte said.

"I have to go to war, but I cannot afford it, maybe other presidents can but I cannot... I cannot do anything," he said.

This is the first time Duterte has spoken publicly about the dispute since tensions escalated early in July when Washington took a harder line toward China. U.S. Secretary of State Mike Pompeo has said "Beijing's claims to offshore resources across most of the South China Sea are completely unlawful."

"I read somewhere... that the Americans intend to go back to Subic [Bay]," Duterte said, referring to the former U.S. naval base off the South China Sea.

"I'll just put on record my thoughts: I have nothing against America. I have nothing against China. But if you put bases here, you double the [specter] of a most destructive thing," the president said. "[If] you put bases here, this will ensure if war breaks out... the extinction of the Filipino race."

In his nearly two-hour-long speech, Duterte also called on Congress to pass a law reducing corporate income tax to help post-pandemic economic recovery. The president also demanded that telecom companies improve their services by December as he continued to attack prominent Philippine families who control the industry.

Since becoming president in 2016, Duterte has moved closer to China and often played down the maritime dispute as he courted Beijing for investments.

As the Philippines faced surging coronavirus infections and the worst economic downturn in three decades, Duterte said he was turning to China for vaccines.

"I made a plea to President Xi Jinping that if they have the vaccine, can they allow us to be one of the first? Or if it's needed, if we have to buy, that we will be granted credit so that we can normalize as fast as possible," Duterte said.