The question is if the economic issues from lack of growth opportunities will bend the Philippines back to more normal relations. Particularly if they don't gain anything by these actions, maybe even lose sovereignty over since if their chained territories.
Admittedly the damage to the general public had already been done and this will last a long time.
You got it the other way around. The watercannon is China calibrating its response to a base enough level that even the smooth brains running the Philippines can now understand the message China is sending them. The Philippines has already done the damage to bilateral relations and has just been too stupid to understand the more subtle messages China has been sending them previously.
The level of hysterical crying by the Philippines in the media is a reflection of the level of panic and helplessness that is now settling in as realisation finally dawns that they have badly misjudged the situation and pushed China too far, and it is not aimed primarily domestically or at China, but at the US. And is almost certainly a desperate gambit to try to force America’s hand in lending them support and cover by making a public spectacle after the Americans private told them where to shove their demands for America support to directly intervene as China pushes back in the grey zone.
All China has to do is keep watercannoning the supply ships (which it has previously allowed to pass for humanitarian reasons as well as for the big picture benefits while Duterte was in power) for a few weeks or months at most, and the few poor sods tasked with manning the Sierra Madre would be forced to leave to avoid literally dying. The Philippines knows full well that ones it’s troops leave the Sierra Madre, they will never be able to go back, and they will have effectively lost that claim forever.
Their claim that using water cannons is a declaration of war is a transparent attempt to drag America into the frame to escort their supply ships. Which America is not going to do as they will have to be stupid to start up an escalation ladder that China dominates at every level.
Whether China steps back after having gotten Manila’s attention or if it will press home the lesson by forcing the Philippines to abandon the Sierra Madre is a decision for Beijing and Beijing alone to make. But the problem is that with its silly rhetoric, Manila might be forcing China’s hand to just stave them off the Sierra Madre, since China cannot be seen to be cowed by such baseless one-sided hysterical claims. Because if it back off now, its inevitable that Manila will learn entirely the wrong lesson from this and come back with even more provocative antics in the future.