China’s promised infrastructure billions yet to arrive in the Philippines, five years on
- Only a fraction of the US$9 billion in soft loans and US$15 billion worth of direct investments Beijing promised Manila in 2016 has been paid out
- Japan’s official development assistance dwarfs China’s aid to the Philippines, with US$8.5 billion in 2019. Beijing also charges higher interest rates on loans
Still, not everyone was convinced the US$24 billion in Chinese investments would come without strings attached.
The pledges caused some “reservations” from the start, said former Philippine Economic Planning Secretary Ernesto Pernia, who was among the top officials who signed deals with Beijing. “The quid pro quo seemed logically slanted in China’s favour, the super-powerful one.”
China originally agreed to provide US$9 billion in soft loans, yet Beijing’s loans and grants to the Philippines were at US$590 million in 2019, up from US$1.6 million in 2016, according to data from the National Economic and Development Authority. It also pledged US$15 billion worth of direct investments, yet approved investments totalled $3.2 billion from 2016 to 2020, according to data from the Philippine Statistics Authority.
“Our traditional allies Japan and the United States continue to be our best funders for official development assistance,” said Torio, who has researched infrastructure funding.
Duterte’s government has defended the country’s China policy, with Trade Secretary Ramon Lopez saying last month it has reaped economic benefits.
Philippine coastguard sends strong warning to Chinese vessels during South China Sea patrol
China-funded projects “were negotiated to promote the national interest,” Finance Secretary Carlos Dominguez said in April in response to a newspaper report about these deals. Contracts have been disclosed and can be scrutinised by the public, he added.
Duterte’s administration has also said its policies have helped in the South China Sea, even as their coastguards had several “dangerous” encounters and officials have recently protested against the presence of Beijing’s “maritime militia.” The US has backed the Philippines and expressed concerns over China’s recent actions, which Beijing has said were normal and legitimate.
Presidential spokesman Harry Roque said the Philippine leader succeeded in preventing China from occupying more areas claimed by Manila.
“No new occupation, no new reclamation, we’re at status quo,” Roque said in May. “That’s the legacy of the Duterte administration.”
A Social Weather Stations poll in July last year found trust in China fell from poor to bad, hitting a new low under Duterte.
Chinese Foreign Ministry spokesman Wang Wenbin on Friday defended the value of the projects. “China and the Philippines always work together to promote cooperation on the basis of mutual respect and mutual benefit,” Wang said. “Relevant projects have also made positive contributions to the Philippines’ economic and social development.”
One big problem the projects face is the Philippines’ lengthy approval process, according to Tina Clemente, a professor at the University of the Philippines’ Asian Centre.
Chinese investors are also staying away from the country and investing more elsewhere in the region because of structural problems in the business environment such as foreign ownership restrictions, high power costs and poor infrastructure, she said.
“Economic engagement with China is inevitable, but expectations could have been managed better,” said Clemente, who has researched China’s economic diplomacy. “The hype that was supposed to sell the idea that engaging with China is for our benefit is now backfiring.”