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Foreign Policy

Turnaround in Philippines-China Relations

May 08, 2019

The overlapping timing of the Boao Forum for Asia (BFA) regional conference in Manila (April 22-23) and the Philippines’ participation in the PLA Navy’s annual review off Qingdao (April 22-25) shows the extent to which relations with Beijing have improved. In both occasions, it was the Philippines’ first time. Enhancing mil-to-mil ties and confidence building measures alongside increased economic interaction both create more enduring foundations for better bilateral relations. Hence, while very much nascent, these developments may hold promise, although challenges persist.

Groundbreaking gains, more to come?

China has been the Philippines’ largest trade partner since 2016 and its biggest investor since last year. At 29.62 percent growth in arrivals in 2018, it may also become the country’s biggest inbound tourist market this year. Chinese investments in infrastructure, steel, power, logistics and manufacturing may also have a transformative impact on the Philippine economy. Last year, China surpassed Japan to become the largest importer of Philippine bananas, a position Japan held for 30 years. Improved top-level political relations is helping facilitate this expansion of economic deals. Combined with the country’s fast growth and bright prospects, the choice of Manila as host comes as no surprise.

The timing may not be coincidental. In fact, it presages greater importance attached by both sides to their burgeoning ties. Manila’s hosting immediately preceded the Second Belt and Road Forum in Beijing (April 25-27) where Philippine President Rodrigo Duterte was among the 37 world leaders who attended. Duterte also attended the inaugural Belt and Road Summit in 2017. The Philippines also serves as the current ASEAN-China country coordinator.

The BFA conference in Manila saw the government and business community coming together to foster greater regional economic cooperation. It was held upon the invitation of Former President and incumbent House Speaker Gloria Macapagal-Arroyo, who is also a BFA Board Member. The Federation of Filipino-Chinese Chambers of Commerce and Industry and Philippine Chamber of Commerce and Industry, two of the country’s largest business groupings, served as local organizers.

Strike while the iron is hot

The tremor that struck certain parts of Luzon, including Metro Manila, did not deter the gathering of 500 entrepreneurs from Philippines, China, Thailand and other ASEAN countries. The Manila debut marked the fifth time an ASEAN capital has hosted the regional conference. Since its founding in 2001, the Boao Forum has held conferences in Hanoi, Hong Kong, Vientiane, Phnom Penh, Bangkok, Seoul, Astana, Dubai, Rome, Paris, and London. The high-level platform for exchange, considered as Asia’s version of Davos’ World Economic Forum, had a deep Filipino imprint with former President Fidel Ramos being among its founding fathers.  

President Duterte was unable to attend, but his Executive Secretary, Salvador Medialdea, read his remarks. Other key speakers included House of Representatives Speaker Arroyo, BFA Secretary General Li Baodong, former People’s Bank of China Governor and BFA Vice Chair Zhou Xiaochuan, and Former Thai Deputy Prime Minister and BFA Board Member Dr. Surakiart Sathirathai. Other notable guests included Guo Ningning, Vice Governor of Fujian province, where most of the local ethnic Chinese trace their roots; and State-Owned Assets Supervision and Administration Commission Vice Chair Ren Hongbin. Ren’s presence was important, as many state-owned enterprises are increasingly investing and doing business abroad, including in the Philippines.

Business matching followed. Chinese investors in manufacturing, agriculture, high technology, and labor were among those who attended and were keen to strike deals with Filipino partners. Chinese tech giant Tencent, which is behind the popular instant messaging and mobile payment platform WeChat, for instance, was reportedly in talks with local conglomerate Ayala. House Speaker Arroyo said that Chinese tech investors were interested to know more about domestic regulation, notably foreign investment restrictions.

The BFA Manila conference stressed the importance of inclusive growth, multilateralism, globalization, and upholding the global trading system against threats of protectionism. Speakers also highlighted the role of infrastructure investment, connectivity, and the digital economy as a new growth engine. China’s huge e-commerce market and efficient logistics can open opportunities even for micro, small and medium enterprises in ASEAN. Calls to accelerate negotiations for the Regional Comprehensive Economic Cooperation, and support for the Belt and Road Initiative were also raised. Dr. Sathirathai noted Beijing’s investments in education and vocational training for the fourth industrial revolution. He said that this can be a valuable area for cooperation between China and other Asian countries.  

Going beyond economics

Meantime, on the security front, the Philippine Navy dispatched its biggest ship to join the People’s Liberation Army naval fleet review. A 400-man contingent aboard strategic sealift vessel BRP Tarlac went to Qingdao to join 60 other countries taking part in the 70th year anniversary of China’s navy. Thirteen countries sent ships, including countries with which Beijing has longstanding territorial and maritime disputes, notably Brunei, Japan, India, Malaysia, Philippines, and Vietnam. Australia, Bangladesh, Myanmar, Russia, Singapore and South Korea.

While world leaders gathered for the Second Belt and Road Forum in Beijng on April 25, world navies were wrapping up their four-day event in Qingdao. The fleet review allowed China to showcase its growing naval prowess, including Asia’s largest guided-missile destroyer (Type 055), nuclear powered ballistic missile submarine (Long March 10) and the country’s first aircraft carrier, the Liaoning. China and ASEAN navies also held joint exercises on anti-piracy and maritime emergency rescue (April 27). Beijing attempted to imbue transparency in its naval buildup and reassure neighbors about its peaceful intentions.

With its engagement with traditional allies like the United States and Australia, and cultivation of ties with emerging partners China and Russia, the Philippines’ naval diplomacy gives shape to the pursuit of an independent foreign policy.

Indeed, warming political ties over the past three years are beginning to produce economic and security dividends for both sides. Duterte seems to be taking a cue from his predecessors, former Presidents Ramos and Arroyo, in appreciating China beyond the South China Sea disputes.

However, reports of continued marine environment depredation and interference in Filipino fishing undermine efforts to nurture amity. Concerns over Chinese loans, worries about the influx of Chinese workers and potential adverse social ills brought by the surge in Chinese offshore gaming may not easily dissipate. Finally, less public trust in China also means that bustling bilateral interaction will not escape continued Filipino scrutiny. 

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