China looks to maintain Philippines supply chain gains as Marcos Jnr pivots back to US

Beijing wants to build ‘demonstration parks’ in China and the Philippines that would offer tax breaks and other incentives, while further integrating supply chains

Amid US threats of decoupling, China is looking to shore up supply chains and maintain gains made under former president Rodrigo Duterte, experts say

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President Ferdinand Marcos Jnr (left) is restoring ties with Washington, effectively walking back his predecessor Rodrigo Duterte’s more pro-China orientation. Photo: AP

Published: 8:00pm, 13 Oct 2022

China’s move to establish “demonstration parks” for trade and innovation in the Philippines is part of an effort to shore up supply chains amid US decoupling threats and moves by President Ferdinand Marcos Jnr to restore ties with Washington, analysts say.

Beijing wants to jointly build the parks in both countries, Huang Xilian, the Chinese ambassador to Manila, told Communist Party tabloid Global Times last month. Analysts say parks like these typically offer tax breaks and other incentives to stimulate business.

The parks will also further integrate the supply chains of the two countries, he said.

His comments were published not long after Marcos Jnr said the future of the Philippines was tied up with the US as a “partner”, effectively walking back his predecessor Rodrigo Duterte’s more pro-China orientation.

Amid US threats of decoupling, China is likely looking to maintain gains made under Duterte with its new proposal, experts said.

[China] wants to make sure that what was gained from the Duterte administration can be sustained

Herman Kraft

“[China] wants to make sure that what was gained from the Duterte administration can be sustained,” said Herman Kraft, a political-science professor at University of the Philippines Diliman.

In light of decoupling, he said, “my suspicion is that they want to have bases covered”.

The US has slapped tariffs on hundreds of billions of dollars worth of Chinese goods and banned the export of American technology, which has driven many Chinese firms to establish alternative production bases in Southeast Asia.