The National Interest
Date: December 30, 2018
By: Stephen R. Nagy
President Xi’s state visit to the Philippines was the first in thirteen years. It marks a high point in Sino-Philippine relations with economic pledges from Beijing and an agreement to engage in joint exploration in the Scarborough Shoals, maritime features that are claimed as sovereign territories by both Beijing and Manila.
The significance of the bonhomie between Presidents Xi and Duterte should not be downplayed. Prior to the decision of the Permanent Court of Arbitration’s decision to reject all of China’s claims in the South China Sea (SCS) in July 2016, bilateral relations were arguably at an all-time low. With the election of President Duterte and his declaration that the “U.S. has lost” in the SCS in Beijing during a state visit to China in July 2016, Duterte secured $24 billion in Chinese economic pledges to help the Philippines develop infrastructure and its economy. They also mutually agreed to put aside the territorial disputes between them to focus on cooperation and stabilizing their relationship.
By most accounts, the relationship has moved in a positive trajectory as some of the economic pledges made to Manila have begun to trickle in. To date, an estimated $800 million out of the $24 billion has been accounted for. As with most large-scale economic pledges related to infrastructure and development, it takes years for the economic assistance to take root and to be able to assess its effectiveness. Still, there are questions concerning Chinese commitment to fully delivering promised funds, especially if Manila strengthens its relationship with America and or Japan, or if Manila returns to a more contested approach to its territorial claims.
Notwithstanding the positive assessment of the detente between Manila and Beijing, there are consternations over infrastructure development and the reality that all projects are being conducted by Chinese companies. For many, this does not benefit the average Filipino because Chinese businesses are building Chinese roads (in the Philippines) with Chinese money.
Recalibrating this imbalance may ameliorate the reputation of Chinese “assistance.” If not, pledges may gravitate towards some of the criticisms being directed at Beijing’s Belt and Road Initiative (BRI) projects, with a growing chorus of participating states rethinking BRI participation. This uproar is over Chinese businesses, instead of local businesses and communities, being seen as the overwhelming benefactor of BRI projects and economic pledges. The withdrawal of Malaysia by Prime Minister Mohammed Mahathir from BRI projects is an illustrative example of what could become the trend if pledges do not manifest and if local stakeholders are not seen to be directly benefiting from projects and pledges. The Philippines will be no exception to this trend. [FULL STORY]