Since he assumed office more than three years ago, President Duterte has been all praises for China as an economic ally. He has described the world’s second biggest economy as a better partner than the country’s long-time friend, the United States.
He sold his administration’s foreign-policy pivot to China as good for the country economically — that the giant neighbor eager to be on good terms with a more friendly administration in Malacañang could help provide the funds needed to fuel the Philippines’ economic growth, especially for vital infrastructure projects.
The timing was fortuitous, as China had just launched in 2013 its ambitious Belt and Road Initiative (BRI), a campaign designed to improve trade and travel links, and also boost its influence, not only in the Asia-Pacific region but also in Africa, the Middle East and Europe by spearheading infrastructure financing through its Asian Infrastructure Investment Bank (AIIB), which was launched in Beijing in October 2014.
Twenty-one countries, including the Philippines, were founding members of the AIIB, whose main objective is to finance infrastructure projects needed to prop up economic growth in the Asia-Pacific region. The AIIB is seen to help fund projects in the region and complement traditional funding from established multilateral lenders such as the World Bank and the Asian Development Bank.
Fast-forward three years later, and the country’s chief economist is now expressing disappointment in China for the lackluster flow of financial support for the Philippine infrastructure program dubbed “Build, build, build,” which seeks to complete or start a hundred flagships projects—roads, airports, bridges and seaports — until the end of the Duterte administration in 2022.
Asked last Friday why the much-ballyhooed China funding for big-ticket infrastructure projects has been slow in coming, Socioeconomic Planning Secretary Ernesto M. Pernia placed the blame squarely on China’s lap: “They [the Chinese government] are the ones slow, the processes from their part,” he said. In fact, Pernia noted that Japan was beating China in providing financial assistance to the Duterte administration’s infrastructure program; Tokyo’s aid arm, the Japan International Cooperation Agency, has been disbursing official development assistance loans much faster than Beijing is doing, such that many infrastructure projects funded by Japan are ongoing.
The only ongoing China-funded project, on the other hand, is the Chico River irrigation project in Cagayan. Another project, the Kaliwa Dam, which is projected to supply Metro Manila with an additional 600 million liters of water a day, has just barely started.
A reason given for the slow pace of funding approval is the lack of a mechanism that would allow officials from the two countries to meet regularly. It was only last December that China proposed to institutionalize meetings between the two countries to resolve issues related to projects proposed by the Duterte administration for Chinese funding.
In contrast, there already exists the Philippines-Japan Joint Committee on Infrastructure Development and Economic Cooperation, which has held nine meetings since 2017, with another one scheduled in Bohol in the first half of 2020.
China’s BRI has two major components: the Silk Road Economic Belt, with six overland corridors mainly in central and north Asia and Europe, and the 21st Century Maritime Silk Road, where the Philippines is linked as part of the Association of Southeast Asian Nations. However, the Philippines may not play that significant a role in this component, as China views the maritime trade route as a relatively small economic market.
This could explain in part the lack of enthusiasm on the part of the Chinese government to prioritize Philippine projects submitted to it for funding support — despite the Duterte administration having bent over backwards these last three years to appease China on many issues, especially those related to the Philippines’ territorial sovereignty over the West Philippine Sea which China has repeatedly violated.
Pernia’s admission that Beijing is not living up to its part of the bargain should make the Duterte administration sit up and rethink its course.
It has only less than three years left, and with Beijing’s attention and resources focused in the near-term on containing the spread of the novel coronavirus outbreak and its impact on China’s economy and society, it is unlikely that China’s dismal record in official financing flows to the Philippines will turn for the better anytime soon.