Expect big deals and some choppy waters to navigate when Xi Jinping goes to Manila

Ahead of Chinese President Xi Jinping’s visit to Manila next month, the Philippines is leaving nothing to chance to ensure a smooth and fruitful trip for one of the world’s most powerful leaders. For instance, Manila has gone the extra mile to please its new-found strategic partner by reassuring Beijing that it will not join Washington’s reported plans to conduct large-scale drills in the South China Sea and Taiwan Strait in November. The Rodrigo Duterte administration has also reassured China that there won’t be any joint Philippine-US military drills on its soil during his stay. And much to Beijing’s delight, the Philippines has decided to take part in the joint China-Asean naval exercises starting from Monday in the waters off Zhanjiang, in China’s Guangdong province. This marks the Philippines’ first military drill with China, after decades of mutual strategic alienation and, in previous years, all-out acrimony. During Xi’s visit, his first ever to the Philippines, the two sides are expected to sign major deals, including big-ticket infrastructure projects as well as a framework agreement for joint energy exploration in the South China Sea. Major hurdles – and rewards – as China and Philippines try to forge deal to share South China Sea resources On the surface, Xi’s visit marks a sharp shift in what used to be one of the most antagonistic bilateral relations in the region. Beyond the highly cordial diplomatic exchanges with Beijing, however, there is growing frustration in Manila over China’s continued reclamation, occupation and militarisation of Philippines-claimed land features in the South China Sea, and unfulfilled promises of substantial Chinese investments in the Southeast Asian country’s infrastructure. Throughout his first two years as president, Duterte made it a priority to normalise his nation’s historically tense relations with China due to maritime disputes in the South China Sea. For the Filipino leader, who has been keen on luring large-scale Chinese investments, the overall tenor of bilateral relations shouldn’t be defined by disagreements alone. Initially, Duterte explored major defence deals with Beijing, regularly welcomed Chinese warships and military aircraft and consciously played down maritime disputes, the better to facilitate a historic rapprochement. So far, Duterte has also made it clear he is not interested in pursuing the Philippines’ arbitration award, issued by a special tribunal at The Hague in 2016, which nullified, among other things, China’s nine-dash line behind its claim to about 90 per cent of the South China Sea and censured its massive reclamation activities in the area. For a tough-talking leader, Duterte has been unusually meek and friendly towards Beijing, a sea change from the anti-China rhetoric of many of his predecessors, particularly Benigno Aquino III, who portrayed China as the primary threat to regional security. Recent months, however, have also seen Duterte take an increasingly tough stance against China, while quietly welcoming fortified defence cooperation with traditional allies. Weary and wary, Philippine President Rodrigo Duterte takes China to task and a softer line on the United States In May, the Philippine government issued “three red lines” in the South China Sea, warning Beijing of a breakdown in relations if China were to: reclaim and militarise the Manila-claimed Scarborough Shoal; unilaterally drill for energy resources along the Philippine continental shelf; and/or coercively evict Philippine marine forces stationed in the Second Thomas Shoal and other South China Sea land features. The unusually sharp language came amid reports of accelerated Chinese reclamation activities and, crucially, deployment of advanced military assets to disputed islands in the area. In August, Duterte urged China to “temper” its behaviour after the Philippine military complained about harassment of its routine surveillance operations in the South China Sea. Days later, he threatened conflict if Beijing were to unilaterally conduct exploration activities in the Philippine exclusive economic zone, threatening to deploy military officers to bring “a machete there and cut down the Chinese”. Behind the scenes, Duterte has also taken a tough line during the negotiation of joint exploration activities in the South China Sea. In response, Beijing has reportedly suspended any big-ticket investments pending completion of a resource-sharing agreement in disputed waters. Meanwhile, the Philippine defence establishment has quietly restored frayed relations with the US and welcomed a greater American strategic footprint in the country. During a visit to the Philippines in late September by Admiral Philip Davidson, commander of the US Indo-Pacific Command, the two allies signed an agreement to expand the number of annual military exercises from 261 to 281. US and Philippines to step up joint military activities amid China concerns over American nuclear bombers This year has seen the return of war games – which had been cancelled in 2016 during Duterte’s first year in office, including amphibious drills in the South China Sea – as well as a 60 per cent expansion in the number of American and Filipino troops taking part in the annual Balikatan exercises. Days ahead of Davidson’s visit, Philippine Defence Secretary Delfin Lorenzana went to Washington, discussing shared security concerns, including the South China Sea, with US Defence Secretary James Mattis and Secretary of State Mike Pompeo, who pledged “strong support” for upgrading the Philippines’ defences. As a sign of robust bilateral relations, the Philippines has been the biggest recipient of America’s US$300 million Foreign Military Financing and defence aid initiatives for the Indo-Pacific region. The two allies are also discussing the possibility of granting American troops expanded access to strategic Philippine bases facing the South China Sea, including the Bautista and Basa airbases. With US President Donald Trump’s administration launching a trade war against China, the Philippines is hoping to benefit from greater American investment and market access by exploring a separate bilateral free-trade agreement with Washington. For the Philippines, caught between the US and China, trade war is an opportunity to move up the value chain Much will still depend on what Xi offers during his visit to Manila, whether in terms of large-scale infrastructure investments or concessions in the South China Sea. What’s clear is that, for now, the Philippines is hedging its bets by reviving security ties with traditional allies amid deepening doubt over the fruits of Duterte’s strategic opening towards China.