Second of 3 parts
RATHER than making the Philippines a “province of China” as the ignorant Yellows keep on ranting in their delirium, President Duterte’s rapprochement with the Asian superpower allowed the country to extract benefits from both the Chinese and the US. This is according to a study by entitled “An Analysis of the Philippines’ Policy Shift on the South China Sea Disputes.” Manantan is a research fellow at the Center for Southeast Asian Studies at the National Chengchi University in Taiwan.
Manantan summarized his study: “The Philippines under Duterte is using China as leverage in its alliance with the United States. By exploiting the ‘China card’ and downplaying the arbitration case, the Philippines has extracted concessions from Beijing and Washington. In capitalizing on the Sino-American rivalry, Manila has reaffirmed its strategic value within the US-Philippines alliance while benefiting more visibly from Chinese foreign aid and investment pledges.”
He explained: “The looming competition between the United States and China in the region is a springboard for the Philippines to further push its burden-sharing approach. As the great powers compete for dominance in the region, the Philippines is exploiting the conducive geopolitical environment to pursue its inherent interests. Therefore, the Philippines, under the Duterte government, gained an upper advantage which led to extracting benefits from two competing powers.”
The study continued: “Recognizing that the institutional mechanisms that would otherwise enforce the arbitral ruling are lacking, and that the Philippines’ weak defense capabilities would do little to deter China from pressing its sovereign claims in the South China Sea, the Duterte government has instead resorted to embracing China’s preference for bilateral talks. This has afforded the Philippines the chance to diversify its policy options by normalizing relations with China, and consequently benefiting from bilateral economic cooperation between the two countries.”
Manantan noted that China had immediately and even massively responded positively to Duterte’s extension of the Philippines’ hand in friendship: “Setting aside the South China Sea issue, Duterte’s four-day visit to Beijing from Oct. 18 to 21, 2016, generated deeper economic and diplomatic engagement with China. Duterte attained $24 billion worth of funding and investment pledges, and Trade and Industry Secretary Ramon Lopez subsequently listed the funding deals: $9 billion for soft loans, including a $3 billion credit line with the Bank of China, and economic investments worth $15 billion. The $9 billion in soft loans were earmarked for development programs, and a $15 million package was designated for drug rehabilitation programs.”
“The bilateral dialogue in Beijing also resulted in the Philippines inclusion in China’s Belt and Road Initiative, the centerpiece of China’s foreign and economic policy, and involves establishing a trade and infrastructure network inspired by the ancient Silk Road trading route. It is projected to eventually link Asian markets with their European counterparts.
Duterte returned to Beijing on May 15, 2017 to attend the first BRI summit. In his speech at that forum, he confirmed that the BRI dovetails with the Philippines’ infrastructure plans under its ‘Build, Build, Build’ program, for which China has guaranteed its support through donating billions of dollars. During the summit, the Philippines received a $7 million grant from China for the construction of two bridges in Metro Manila. However, this amount pales in comparison with the $9 billion loan pledged by China during Duterte’s first state visit on Oct. 19, 2016.”
What is surprising in the Manantan study is his finding that Duterte’s getting close to China wasn’t achieved at the cost of US support, which in fact even increased. Manantan pointed out a little-known reason for the US’ strategic interest in the Philippines:
“As China continues to gain a foothold in the contested seas through its expansive reclamation efforts, the US has deemed it critical to prevent China from having further access through the Luzon Strait that lies between the Philippines and Taiwan. If Chinese nuclear submarines successfully transit in this path, their missiles can launch for a first or second strike on the continental US.
This critically highlights the Philippines’ indispensable geostrategic position in the first island chain that guarantees the preservation of America’s security interests and deterrence capabilities from any attack, both in the Pacific and within its territory.
Also, this strongly supports the contention that despite Duterte’s outbursts against key US officials and his pro-China leanings, Washington continues to value its alliance with Manila even if it comes with the hefty price of downplaying its critical tone regarding the alleged human rights violations of the Philippine government’s anti-narcotics policy. Thus, one may reasonably conclude that the Philippines has been successful in maximizing economic benefits from China, while reaping the rewards of increasing US engagement.”
The study narrated how the Marawi crisis in 2017 when Filipino jihadist militants took over a part of the Muslim-majority city, demonstrated how Duterte’s independent policy benefited his country. The US extended substantial support to the country by providing Cessna tracing aircraft and drones for the military’s intelligence needs, as well as $14 million in emergency relief and humanitarian aid to affected residents.
But China also helped, providing $7.4 million worth of sniper rifles and ammunition, which armed the military to undertake the sniper-warfare that mainly defeated the Islamic jihadists. Duterte himself had revealed that this was part of P600 million in military aid that China promised to extend as soon as the Marawi crisis erupted. China also donated P85 million to assist wounded army troops and for the rehabilitation of the severely damaged city.
The study concluded; “Therefore, the Marawi siege became a ‘showdown’ between the United States and China as their respective foreign aid apparatuses took center stage and the Philippines emerged at the most advantageous spot. Happily exploiting the ‘China card’ and pragmatically placing its territorial disputes with this country on the back burner, the Philippines has visibly demonstrated that under Duterte it is determined to reduce what it views as its traditional strategic subordination by the United States. The Philippines which, according to its current president, has always been portrayed as ‘the lapdog of Washington, has actually reaffirmed its strategic importance within the US-Philippines alliance framework by diversifying its security ties with a rival great power like China.
By leveraging on the ‘China card’ and by downplaying the Philippines’ landmark victory on its maritime claims against China, the Duterte government challenged the Philippines’ strategic reliance on the United States.”
Main source of FDI
To update Manantan’s information, the following is a Dec. 9, 2020 article entitled “China emerges as PH’s most important source of investments,” in the Philippine Daily Inquirer, probably the most anti-China broadsheet in the country:
“Amid closer ties between Manila and Beijing under President Duterte’s watch, the Philippines was among the Asean countries that benefited the most from new investments related to China’s Belt and Road Initiative in recent years, the United Overseas Bank (UOB) Ltd. said.
“Mainland Chinese foreign direct investment (FDI) and construction projects in countries in the Asean have increased by 85 percent and 33 percent, respectively, since the start of the Belt and Road Initiative, with growth concentrated in Indonesia, Malaysia, the Philippines and Vietnam,” UOB said in a joint report with the Hong Kong University of Science and Technology’s Institute for Emerging Market Studies.
In the case of the Philippines, “the political rapprochement between mainland China and the Philippines that is taking place during the Duterte administration is boosting trade and investment relations,” UOB said. “The market strives to attract Chinese investors through its visa-on-arrival policy and relaxation of visa policies for Chinese workers,” the bank noted.
UOB said that since 2017, or President Duterte’s first full year in office, China had become the Philippines’ most important source of FDI, while “investment from the US has diminished in recent years.”
Citing Philippine government data, UOB noted that investment pledges by Chinese firms reached $965.8 million worth in 2018, on top of another $33.9 million from investors based in Hong Kong, a special administrative region of China.
Data gathered from the Philippine Statistics Authority show the stark contrast in the level of Chinese investments under President Benigno Aquino 3rd and under Duterte.
From 2010 to 2015, according to statistics from the Philippine Bureau of Statistics, the total investment of Chinese enterprises in the Philippines was P42.5 billion. From 2016 to 2019, such Chinese investments grew three times, to P143.2 billion. That’s how the Philippines benefited from Duterte’s independent, non-hostile-to-any-nation foreign policy.
On Monday: Why China and the US should thank Carpio, del Rosario, and Aquino – profusely.