China has pledged to help fund a $169 billion infrastructure renewal drive in the Philippines, an apparent bid for friendship as Filipinos question whether officials in Beijing are trying to squelch their maritime sovereignty claims.
Over the past year, Chinese boats have surrounded a Philippine-held islet in a disputed tract of the South China Sea. A collision between vessels from the two countries sank a Philippine boat in June. Filipinos want China to honor a 2016 ruling by the Permanent Court of Arbitration in the Hague against the legal basis for its sovereignty claims to the sea, but Chinese officials reject the verdict.
Too much distaste for China could pivot the Philippines closer to the United States, a staunch military supporter, and to Japan, a steady development aid donor. China is at odds with both Tokyo and Washington politically.
Philippine President Rodrigo Duterte, who made peace with China in 2016 by setting aside the maritime dispute, met last week with Chinese President Xi Jinping and Chinese Premier Li Keqiang. Li vowed to “step up cooperation” on the five-year Philippine infrastructure drive, Duterte’s website said.
“Perhaps it’s a way to reassure the government and at the same time also the public that it remains committed to the support in terms of the infrastructure projects in the Philippines,” said Maria Ela Atienza, a political science professor at the University of the Philippines Diliman.
“At the same time, maybe they thought it’s a way to placate the rising dissatisfaction of the public and even some sectors in government about the Chinese movements in the EEZ [maritime exclusive economic zone] of the Philippines,” she said.
Funding targets
During his meeting in Beijing with Duterte, Xi said it was “necessary” to pair the Philippine infrastructure drive with China’s own Belt and Road initiative, the Chinese official Xinhua News Agency reported.
The Belt and Road initiative is a 6-year-old, $1 trillion campaign by Beijing to open trade routes around Eurasia by helping other countries build ports, roads and other infrastructure.
Xi called at the meeting for “major” cooperative projects in infrastructure construction, industrial parks, energy and telecommunications, Xinhua said.
“First and foremost, the Chinese are trying to send a message that it’s not just words, but actually we’re going to step up to the plate and pledge some money,” said Stephen Nagy, senior associate politics and international studies professor at International Christian University in Tokyo.
China stepped up trade and development support for much of Southeast Asia after losing in the International Court of Arbitration. In 2016 Xi pledged $24 billion in aid and loans for the Philippines.
About $4.7 billion of that pledge had reached the Philippines as of February, according to domestic media reports. Ordinary Filipinos have complained that China is giving too little so far.
Duterte kicked off his infrastructure renewal, a program called "Build, Build, Build," to help prepare the country for more industry. About one-in-five Filipinos live in poverty today, due largely to lack of jobs.
South China Sea
China and the Philippines dispute sovereignty over parts of the 3.5 million-square-kilometer body, valued for fisheries and fossil fuel reserves. Three other Southeast Asian countries and Taiwan claim all or parts of the same sea, but China calls about 90% of the waterway its own.
About a decade ago, China began taking a military and technological lead by reclaiming land to expand small islets and place military equipment on some of them.
Duterte’s predecessor filed a lawsuit in the International Court of Arbitration in 2013.
Xi said last week that China and the Philippines should set aside disputes, according to the Xinhua report.
Poor Sino-Philippine relations would raise the prominence of U.S. and Japanese help for the Southeast Asian country, analysts believe.
Duterte initially shunned the United States to build ties with China, but a survey by the Manila-based research organization Social Weather Stations released in July found that 51% of Filipinos feel “little trust” in China while 81% had “much trust” in the United States.
Washington irks China by passing Navy ships into the disputed sea as a statement it’s open for international use. Xi told Duterte China would “continue to firmly support the Philippines' efforts to safeguard national sovereignty and resist external interference,” Xinhua said.
China must boost aid to “change the security equation,” Nagy said.
Japan, which had given the Philippines a cumulative $24.4 billion in development support through 2017, also enjoys a favorable image among Filipinos. Japan is courting much of Southeast Asia through development aid to shore up its own influence in the region as China grows economically.
“Any funder who would like to help the Philippines is always welcome, however at the moment, just to give you an update, the biggest share of our ‘Build, Build, Build’ remains with Japan,” said Jonathan Ravelas, chief market strategist with BDO Unibank.
