Chinese vice-premier heads to Philippines, with US$6b gift basket

Wang Yang’s visit comes amid warming ties between the two South China Sea claimants

PUBLISHED : Friday, 17 March, 2017, 9:03am
UPDATED : Friday, 17 March, 2017, 9:03am

Chinese Vice-Premier Wang Yang kicked off a visit to the Philippines on Thursday, with a package of deals and loans worth more than US$6 billion in tow.

Wang is expected to oversee the signing of multiple agreements during his four-day visit, including a US$1 billion deal for agriculture exports, and financing for 15 infrastructure projects including two railways, a hydroelectric dam and an irrigation system.

China will also establish a six-year programme to develop economic ties, and make a US$1 million donation to quake-hit Southern Mindanao.

Relations between Beijing and Manila have improved in recent months after years of decline over the two nation’s competing claims in the South China Sea. Manila took the issue to an international arbitration panel in The Hague, which handed down a ruling last July that sided with the Philippines.

China, Philippines to set up negotiation mechanism to resolve South China Sea disputes

But Philippine President Rodrigo Duterte has tried to develop a better working relationship with Beijing and made a state visit to China in October. Official exchanges from the two nations have since stepped up, with Chinese Commerce Minister Zhong Shan visiting the Philippines for three days from March 6 to resume the suspended Philippines-China Joint Commission on Economic and Trade Cooperation.

Zhong made his trip even though the National People’s Congress was being held in Beijing, suggesting China attached great importance to ties with Manila. The Commerce Ministry also organised a delegation consisting of more than 20 Chinese companies that signed more than US$1.7 billion in deals with Philippine enterprises, ranging from minerals, raw materials to agriculture products.

To help bolster tourism, Hainan Island, in southern China, is planning to open direct flights to Manila and Cebu this year.

China and Philippines agree to cooperate on 30 projects worth US$3.7b

China often hands out economic sweeteners to countries that maintain good ties, creating an economic relationship that can also be used as a weapon if tensions escalate. While the tactic is common in foreign policy, it should be used sparingly, experts cautioned.

Wu Shicun, head of the government-affiliated National Institute for South China Sea, said: “It’s very normal that economic cooperation serves a country’s national interests”.

But Dai Fan, a Southeast Asia expert at Jinan University in Guangzhou, said China should not rely too much on “economic weapons”.

“It would force other countries to diversify economic partnerships worldwide and remain wary when cooperating with China, all of which are harmful for Beijing in developing a genuine economic relationship,” Dai said.

George Siy, chairman emeritus of the Association of Young Filipino-Chinese Entrepreneurs, said not all setbacks in economic relationships between countries should be viewed as “economic retaliation”. In some situations, it was simply unfavourable to do business when diplomatic ties were cool, Siy said.