The Balancing Act of Philippines-China Relations
COME TO OUR
BY HERMAN JOSEPH S. KRAFT
President Duterte campaigned with the slogan of “Change is Coming!” and a key area where this has been prominently noticeable is in foreign policy. The “pivot to China” has been seen as a sea-change in
how the Philippines approaches its foreign relationships. From a focus on being a key non-NATO ally of the United States to the new country coordinator for ASEAN-China bilateral relations seems to be a complete
turn-around. In reality, Philippine relations with the US remain fundamentally the same. For all the criticism (to say the least) that President Duterte has heaped on the US, the institutionalized linkages that have made it the key strategic partner of the Philippines in its international relations remain unchanged.
There is more than something, however, to the idea of change in Philippine-China relations with the turn-around happening in such a short time. Seen from a historical perspective, the relationship between the two countries has HAS CHANGE COME TO OUR FOREIGN POLICY?What can the Philippines expect in its relationship with China beyond the Duterte administration?PHILIPPINE-CHINA RELATIONS: been steadily improving since the establishment of diplomatic ties between the Republic of the Philippines and the People’s Republic of China in 1975. The tendency to see the Duterte Administration’s “pivot to China” as a major shift in Philippine foreign policy is only in the context of conditions, albeit important and intense conditions, in the last 10 years regarding the West Philippine Sea. To be sure, developments regarding the disputing claims to land features (and even the waters themselves on the part of China) located there had spilled over into different aspects of the bilateral relationship between the two countries. And there were even concerns over how this might blow into a conflict involving the two great powers in the region—the US and China. Given historic trends, however, it is probably more accurate to characterize the Duterte
administration’s approach as a normalization of the bilateral relations rather than a “shift.” The most noticeable foreign policy priority of President Duterte upon his accession to power was the restoration of Philippine-China relations. The difficulty lay in the fact that this had significantly deteriorated during the
Aquino administration. The confrontation over Scarborough Shoal in 2012, the challenge posed to China at the 2012 ASEAN Summit, and eventually the initiation of an arbitration case against China by issuing a Notification and Statement of Claim in accordance with the dispute settlement provisions of UNCLOS,
particularly under Art. 287 and Annex VII have all contributed to a situation where almost all lines for dialogue had been cut off. China had indicated, as the case prospered, that any discussion to restore Philippine-China relations would have to await the emergence of a new presidential administration. This pretty much signaled that relations with the Philippines were dead in the water as long as Aquino was at the helm of the government. At the start of his presidency, Duterte worked hard to assure China of his good intentions. Buttressed by three visits to China within the first year of his administration, he was able to turn relations with China around. A major part of this turn-around was when the decision of the arbitration court came out within a month after the accession of Duterte to the presidency. The fundamental ruling went completely against China. Despite the “win,” President Duterte decided not to bring up the Arbitral Award in its pursuit of improving relations with China. This was the key ingredient of observations of a “shift” in Philippine foreign policy towards China. President Duterte claimed that
this did not mean that the Philippines was giving up on its claim but that this will be raised before his administration ends at “an appropriate time.” He explained this position by claiming that he did not want to go to war with China – an event that could only be disastrous for the Philippines. In the meantime,
the Philippines would instead seek to harvest economic benefits from an improvement in relations with China.In a number of visits to Beijing and meetings with Xi Jinping between 2016 and 2018, Duterte was able to secure Chinese goodwill and promises of investments and loans of up to US$24 billion. In late February 2018, President Duterte was quoted as explaining cooperation between the Philippines and China on jointly sharing in the resources of waters surrounding the disputed features in the South China Sea as similar to “co-ownership.” While his spokesperson explained this away as a simplification of a more complex notion of joint development, it raised the hackles of critics of the President’s policies regarding the South China Sea. The statement, however, illustrates the attitude of President Duterte and the policies that guided his approach to the issue. At the same time, China’s own policies moved towards favoring the Philippines. In February 2018, the two leaders agreed to set up a joint panel to draft a framework agreement on exploring oil and gas in the South China Sea. At the turn-over ceremonies of ASEAN in
Singapore last November 2018, the Philippines was given the mantle of being the country coordinator for ASEAN-China bilateral relations. This is not a role that is driven by a rotational assignment, and would not have happened without the explicit agreement of the Chinese government. This shows how far China
was willing to demonstrate its acceptance of the new relationship with the Philippines. It is, however, in the economic side that the Duterte administration has bet more fully on Philippine-China relations. The promise of the pledges of huge amounts of Chinese capital that would be invested in the Philippines is the key driver of the Duterte foreign policy of pivoting to China. With the “Build, Build, Build” economic thrust, capital is something that the Duterte administration will be needing a lot of. An initial estimate of US$180 billion is going to be needed for the highly ambitious infrastructure-driven economic strategy. Granted
that this is something that needs to be done (in fact should have been done a long time ago), it is a huge
undertaking, one that is certainly not going to be completed in the course of one presidential term. But it
must be done, and has to be started. If it is correct to assume that the pivot to China is largely economically-driven, what has this led to? A number of changes facilitated by improvements in the Philippines’ relations with China has become evident in the last few years. Overall the trend has been modest, but steadily rising across most indicators. According to information provided by the Bangko Sentral ng Pilipinas, there has already been an uptick in foreign direct investments from China to the Philippines. The increase seems to be cautiously restrained but the rate has been steadily going upwards. It reached nearly US $30 million at the end of 2017 from just above US $10 million in the beginning of 2016. Tourist arrivals have also been going up since 2016. The Department of Tourism has reported that the volume of tourist arrivals from China in 2018 increased by 42%. In fact, the number of Chinese tourists to the Philippines had passed tourist arrivals from the US. This leap in numbers is attributed to the improved ties between the Philippines and China, the addition of air routes, and the Visa Upon Arrival (VUA) option for Chinese nationals. Others, however, point to the increase in the number of Chinese nationals that have been given permission to work in the Philippines – an issue raised by Senator Franklin Drilon, among others.Likewise, there has been a mild increase in trade relations between the two countries. Between April 2017 and April 2018, there was a 34% increase in the volume of trade between China and the Philippines. A significant part of this, however, was accounted for by a huge surge in imports to the Philippines from China. Over the same period of time, the trade imbalance between the two countries has been growing significantly in China’s favor. Overall, the fulfillment of the expectations of China’s involvement in the economic programs of the Philippines has been less than impressive. Japan and Korea retain a much larger share of investments to the Philippines compared to China. China has surged in ranking as a trade partner of the Philippines, but this overwhelmingly favors China. There is something to be said about Duterte’s pursuit of better relations with China as the crowning consideration of his foreign policy. For all the fawning that has been done, however, the numbers are quite underwhelming.
In the case of trade, it would even seem that the Philippines is becoming a dumping ground for surplus Chinese products. Perhaps it is too much to expect dramatic changes given that it has only been less than three years since President Duterte came to power, and the turn-around in relations with China. Beyond
questions of numbers, we still have the unresolved issue of the Arbitral Decision and other issues related to the South China Sea. With the current good relations so connected to the personality and preferences of President Duterte, what can the Philippines expect in its relationship with China beyond the Duterte administration?