Renewed Philippine-US relations at the expense of China? Not really.
After Rodrigo Duterte’s 6-year presidency of the Philippines, Ferdinand Marcos Junior got elected as the country’s new President in May 2022, which impacts the Philippines relationship with China and the US.
Marcos’ predecessor, Duterte, repeatedly threatened to sever the Philippines’ alliance with America in favor of China. He maintained warm relations with Beijing. Shortly after his inauguration as President, in 2016, he visited Beijing. The two countries agreed that China would provide the Philippines with up to US$24 billion in investments, based on official development assistance (ODA) loans. It would provide $9 billion in soft loans, and a further $15 billion worth of direct investments from Chinese firms in railway, port, energy and mining projects was foreseen.
Duterte needed all that money because he focused strongly on infrastructural projects, under the motto ‘Build, Build, Build’. Yet, the Duterte administration largely failed to attract any significant Chinese investments at all. Philippine officials state that “there were a lot of promises [from China], but not much was delivered.” The Philippine Department of Transportation canceled three major railway projects with Chinese counterparts, because China abandoned its involvement in these projects.
The new Marcos administration is aiming to maintain infrastructure spending as a share of GDP between 5-6%, yet it revaluates the financing of the infrastructural projects. There are concerns over China’s high-interest rates of up to 3%, which are way higher than Japan’s 0.01% for ODA-based infrastructure projects. Therefore, the Marcos administration is exploring new finance partners.
Marcos also suspended negotiations with China over disputed energy resources in the South China Sea. A sensitive topic, both to China and the Philippines.
Marcos Junior recently decided to participate in US President Biden’s new trade coalition in the Indo-Pacific, the Indo-Pacific Economic Framework (IPEF).
This may look as if President Marcos Junior turns back to the Philippines’ former ally, the US, with which it signed a Defense Treaty in 1951. He aims for something else: he wants good and strategic relations with both major powers. He actually follows a foreign policy which aims at getting maximum benefits from both the US and China whilst ensuring minimum dependence on either one of the two major powers.
