Philippine Realities in Duterte’s China Policy
Protestors rally against China's activities in the South China Sea. (Photo: Reuters)
By Andrea Chloe Wong

Philippine Realities in Duterte’s China Policy

Feb. 14, 2019  |     |  0 comments

Since President Rodrigo Duterte assumed office, Philippine relations with China have experienced a remarkable renaissance. When the results of the arbitration ruling favored the Philippines’ case and invalidated China’s “nine-dash line”, Duterte chose to downplay the country’s legal victory. Since then, the Duterte administration received massive loans and investments from the Chinese government that resulted in more positive engagement. Proof of these recent revitalized relations have been the state visit of Duterte to China early into his presidency in October 2016, and the state visit of President Xi Jinping to the Philippines in November 2018. Xi’s latest trip was the first state visit by a Chinese president to the country in 13 years, solidifying both countries’ renewed trust and confidence in each other.

Though Philippines-China relations are making positive headlines at the political level, they are consequently raising eyebrows at the domestic level. While Duterte’s accommodating policy may have gained goodwill from the Chinese government, it has however caused increasing anxiety among the Filipino public. Such alarm in public opinion reflects the resulting realities of Duterte’s close engagement with China that point to the following:

Weak Pursuit of the Philippines’ Maritime Territorial Sovereignty

Critics against the Duterte administration widely regard the revitalized relations and the upsurge of economic investments from China as a quid pro quo or compensation for the Philippines’ more lenient stance on maritime issues. They have raised concerns over the Duterte administration’s geopolitical and maritime concessions towards China when it granted a permit in January 2018 allowing a Chinese vessel to conduct maritime research in the eastern seaboard of the Philippines, including Benham Rise, which the country has sovereign rights. The Duterte administration also failed to forcefully respond to the landing of Chinese bomber planes in the disputed Paracel islands in May 2018; and the ongoing reclamation activities of China in the contested Spratly islands.

Since becoming president, Duterte has repeatedly stressed that antagonizing China would not do the Philippines any good as it cannot match Chinese military power. He avoided public diplomatic protests and opted for bilateral talks, undermining ASEAN’s multilateral efforts to neutralize China’s maritime aggressions in the South China Sea. For instance, the Philippines could have taken advantage of its ASEAN chairmanship in 2017 and led the organization in addressing China’s increasing militarization in the South China Sea. The exclusion of such crucial maritime issue in the Chairman’s statement, which has persistently caused anxiety among fellow claimant states, was considered a “missed opportunity” for the Philippines.

Duterte’s shrewd yet logical approach to China bears suspicion that his administration is “giving up” the country’s maritime claims in exchange for Chinese aid and investment. However, Duterte declares otherwise: “We never surrendered anything. Just saying that I do not want to talk about this at the moment … The South China Sea is better left untouched. Nobody can afford to go to war.” His statement suggests that he will be “strategically silent” or tolerant of China for an indefinite time, which apparently comes with a price tag. However, such strategy continues to be a cause for concern in the Philippines as China’s provocative actions in the contentious South China Sea (missile installations, presence of military planes, artificial island building, among others) may gradually turn into “normalized” operations for the Chinese government.

Slow Implementation of China-Funded Projects in the Philippines

Because of popular perception that Duterte has prioritized economic agenda over maritime interests, Chinese investments in the Philippines gained public scrutiny. During Duterte’s state visit to Beijing in October 2016, both countries signed 27 deals worth USD 24 billion in Chinese investments. Two years after, barely any projects have materialized, prompting deepening concerns that Duterte “has undermined the country’s sovereignty with little to show in return.” Moreover, Chinese loans that fund these projects may cause the Philippine government to be vulnerable to increasing interests and high debt payments. For some analysts, these can be used as China’s leverage to gain political and security concessions from the Philippines, as in the case of other countries that defaulted on their loans. However, the country under Duterte administration can be considered an interesting case because “it is already giving territorial and other concessions to China even without debt-related pressure being exerted.”

Philippines-China relations is likely to maintain its rejuvenated state during the Duterte administration. It will be motivated by economic benefits on the part of the Philippines, and security interests on the part of China.

Arguably, there are reasonable explanations behind the slow progress of these Chinese-funded projects. Since China has invested largely on major infrastructure such as ports, railways, and transportation, it may be unreasonable to expect that these projects shall be finished soon or nearing completion. According to reports, the delays or cancellation of these projects are mostly due to several issues caused by the Philippine side. Some of these projects were cancelled due to questions concerning commercial viability, as in the case of raising islands in Davao City to create a new port. While some of them were put on hold, as in the case of mining projects between Chinese and Philippine mining companies due to a “moratorium on new mining operations that would make any extractive investment fruitless.”

With the expanding Chinese investments in the Philippines, these basic concerns should be initially addressed. Aside from questions of viability, there are also issues over the absence of specific timeline in project implementation, the dubious track record of partner Filipino companies, and the lower actualization rate of Chinese foreign direct investment pledges compared with Japan and the US. Ideally, these issues should be dealt with first before signing another set of bilateral agreements and investment deals, as both countries are expected to further deepen their economic engagement during Duterte’s presidency.

The latest state visit of Xi Jinping in Manila resulted in 29 signed bilateral agreements that prove the vitality of the two countries’ relations. As a result, these deals produce public clamor among Filipinos for accountability, efficiency, and transparency with each of these projects with China.

Large Number of Chinese Nationals in the Philippines

While the contentious maritime issues and development projects in China may already be causing anxiety, the rising number of Chinese living in the Philippines prove to be even more alarming among the Filipino public. According to the Bureau of Immigration, there were a total of 3.12 million Chinese citizens who arrived in the Philippines from January 2016 to May 2018, with 2.44 million of them coming from mainland China. In 2017, Chinese arrivals in the Philippines surged to 1.38 million from 1.02 million in 2016. Their growing presence is perceived as “intruding” into the daily lives and public spaces of ordinary Filipinos. This may soon prove to be more disturbing for the Filipino public than China’s encroachment in the Philippines’ maritime territories.

The Chinese immigration surge is primarily motivated by the booming offshore gaming industry in the Philippines. Since the Duterte administration began awarding licenses to Chinese gaming operators, there are more than 50 offshore gaming firms that established their offices. While gambling bets are placed remotely, companies employ Chinese workers to work in the Philippines (mostly in Manila) to handle marketing, customer service, and payment processing for overseas clients.

While their growing presence is only a fraction of Manila’s 12.9 million population, it results in economic and social issues that may cause public concern. For one, there is the rising number of undocumented Chinese who dominate the list of foreigners deported for illegally staying in the Philippines. In 2017, there were 1,248 Chinese out of the 1,508 foreigners who were deported by the Bureau of Immigration. Secondly, the mass arrivals of Chinese workers cause increasing domestic perception of stealing jobs away from ordinary Filipinos, who are already disgruntled with unemployment and underemployment in the country. Lastly, the influx of Chinese arrivals results in alarming property surge that is propelling the increase in home prices, especially in the Philippine capital. This puts local residents at a disadvantage with the soaring rental rates that they cannot eventually afford. Though the Chinese are boosting the Philippine economy, their presence leaves the property market vulnerable in the event of abrupt or untoward changes in the online gaming industry.

Though the positive bilateral relations under the Duterte administration is a welcome development for the Philippines, there are some adverse realities which may eventually prove unpopular from the Filipino public’s perspective. Bilateral issues concerning maritime claims, development projects, and Chinese immigration are causing increasing demand for a firmer and more principled Philippine stance towards China.

However, Philippines-China relations is likely to maintain its rejuvenated state during the Duterte administration. It will be motivated by economic benefits on the part of the Philippines, and security interests on the part of China. As an essential part of its political toolkit, the Chinese government has since been using its economic arsenal (albeit in varying degrees and intensity) to advance its security agenda. Thus, the mutual gains derived from the bilateral relations may in the long term benefit China more than the Philippines as it increasingly grapples with the domestic realities of Duterte’s policy.

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