MANILA - More than 7,500 Philippine and US troops on Monday (April 1) began their largest annual military exercise, amid reports of Chinese encroachments into waters surrounding the largest Philippine-held territory in the disputed South China Sea.

This year's "Balikatan", or shoulder-to-shoulder, exercise involved 4,000 Filipino and 3,500 American soldiers. A contingent of about 50 Australians is also participating.

Among the American warships deployed is the USS Wasp, an amphibious assault ship, and its squadron of F-35B stealth fighters, which are being deployed for the first time in the exercise.

Balikatan, which will last till April 12, is being held as the Philippines files a diplomatic protest over reports that China's "maritime militia" are swarming around Thitu island, 480km west of the Philippines' main coastline.

Philippine forces have occupied Thitu since 1970. At 37ha, it is the Philippines' largest outpost in the South China Sea. About a hundred civilians and a small contingent of Marines currently live there, in what the Philippines considers as its most remote village.

The military reported this weekend that at least 200 Chinese fishing boats and coast guard ships have been sighted around Thitu, blocking access by Filipino fishermen to sand bars and fishing grounds there.

President Rodrigo Duterte's spokesman Salvador Panelo told reporters on Monday the foreign ministry has already lodged a protest, acting on the military's recommendation.

He said he would also discuss the matter with China's ambassador, Zhao Jianhua.

"We will ask them first, 'Why?' If they acknowledge such fact as determined by us, (we will) ask them why they are doing it. We will politely ask them not to…do what they're doing," he said.

There have also been accounts of Filipino fishermen being harassed in waters around Scarborough Shoal, another disputed rock in the South China Sea.

Mr Panelo and security officials have dismissed these as "unsubstantiated". But the head of the local fishing agency urged fishermen to avoid going to Scarborough for now.

Mr Zhao on Monday told reporters there were "limits" to where both Filipino and Chinese fishermen could go around Scarborough.

He said the Philippines and China, for instance, had agreed to keep fishermen from both sides off the shoal itself, or anywhere near it.

China seized control of Scarborough in 2012, after a Philippine Navy frigate intercepted eight Chinese fishing boats suspected of poaching coral and giant clams.

A two-month standoff between the Philippines and China later ensued. The US eventually mediated a deal. Both sides were told to withdraw from Scarborough.

The Philippines pulled out its ships. But China stayed, and later sealed off the entire atoll and chased away Filipino fishermen attempting to get near.

China loosened its hold, as Mr Duterte pursued warmer ties Beijing. Philippine fishing boats were again allowed to fish unmolested around Scarborough.

But a documentary released last week by an opposition politician claimed China's coast guard continued to routinely chase away Filipino fishermen, or filch from their haul.

Philippine and US officials said on Monday that this year's Balikatan, as in previous iterations, is focusing on enhancing interoperability of the two sides' militaries, testing response time to disasters and external threats, and dealing with terrorists.

"Balikatan is not aimed at any other nation in the region," said Brigadier-General Chris McPhillips, exercise director for the US side.

His Philippine counterpart, Lieutenant-General Gilbert Gapay said wargames set for the coming days, including live-fire drills and amphibious landing exercises, would be "generic in nature".

"It's not directed to any threat or existing security concern," he said.

Last month, while on a brief stop in Manila, US Secretary of State Mike Pompeo said China's island-building in the South China Sea "threatens (the Philippines') sovereignty, security and therefore economic livelihood, as well as that of the US".

He also assured Manila that any attack on Philippine security forces in the South China Sea would trigger a treaty requiring American troops to intervene.