The arrest comes as maritime confrontations between the Philippines and China, over contested reefs and waters in the strategic South China Sea, have escalated in recent months.

China claims most of the strategic waterway despite an international ruling that its assertion has no legal basis.

The Chinese software engineer, identified as Deng Yuanqing, and his two Filipino drivers were arrested last week as part of counter-espionage operations that began last month, National Bureau of Investigation (NBI) chief Jaime Santiago told a news conference.

He alleged that Deng was affiliated with a Chinese university controlled by the People's Liberation Army and was part of a team sent to "conduct espionage in our territory".

The Chinese embassy in Manila did not respond immediately to requests for comment on the arrest and allegations.

The NBI's cybercrime chief Jeremy Lotoc said Deng had made frequent visits to "critical infrastructure, specifically military camps, local government offices, power plants, police camps, stations, even shopping malls".

"They were basically collecting data and they have this remote application which transmits outside the country in real time data that they collected in our country," Lotoc said.

Lotoc said it was "alarming" because the information being transmitted could include geographical coordinates and topography.

Philippine military chief General Romeo Brawner said it was possible the information "could be used for military targeting purposes".

Lotoc said Deng had been in the Philippines for five years and was part of a group that also included hardware engineers and a financier who were still "at large".

The group received funding of 1.5 million pesos (about $26,000) a week via "shell companies", he said.

Brawner said it was the second arrest of a suspected Chinese spy since last year and that forensic analysis of equipment seized in the earlier arrest also revealed images of military and police camps in Manila.

Philippine police also said this week they had recovered a suspected Chinese submarine drone in waters off the central Philippines.

Brawner said authorities were investigating whether all three cases were linked.