The folly of the Duterte Administration’s appeasement policy on China and the Belt and Road Initiatives

The Belt and Road Initiative (BRI) origin could be traced back to October 2014 when President Xi Jinping, speaking before the Indonesian Parliament, proposed the formation of a China-ASEAN community with a common destiny to provide a new blueprint for a new Maritime Silk Road. He also suggested the creation of an Asian Infrastructure Investment Bank (AIIB) to finance China-ASEAN infrastructure connectivity especially the ports facilities along the route. By launching these new initiatives, the Chinese leader put forth a new agenda for China-ASEAN relations involving the familiar themes of closer economic, social, diplomatic, and security ties without compromising the South China Sea issue. As a tool of economic statecraft, the BRI enables China to use its massive financial resources, networks, and human interchanges to establish more comprehensive trade and diplomatic relations with countries in Europe and Asia. It also facilitates China’s utilization of existing regional organizations to the greatest extent possible for negotiations, coordination, and enhanced connectivity.

China clarified its goal to promote economic development via the Maritime Silk Road, which begins from its coastal provinces through the South China Sea to the South Pacific. Relevant to the South China Sea dispute, the BRI has greatly stabilized China’s bilateral relations with Southeast Asian countries. Many of these countries lack technological expertise and stable financial institutions to raise the capital needed to fund their long-term development projects. Through the BRI, China is poised to make huge investments in Southeast Asian infrastructure, including railways, highways, seaports, power plants, and digital communication network facilities.

LURED BY THE BRIS
At the onset of his term in June 2016, President Rodrigo Duterte and his economic advisers were aware that the Philippines had not fared well in competing with its more prosperous Southeast Asian neighbors for foreign investments primarily because of the country’s lack of infrastructure. Potentially, Chinese public investments for infrastructure development projects would be forthcoming if Philippine-China relations — severely strained during the previous administration — were improved considerably. Then ad interim Foreign Affairs Secretary Perfecto Yasay echoed the administration’s position on the South China Sea dispute as he declared, “that the relationship between the two countries (China and the Philippines) was not limited to the maritime dispute. There were other areas of concern in such fields as investment, trade, and tourism and discussing them could open the doors for talks on the maritime issues.”

With the benefit of hindsight, the historical first meeting between President Xi Jinping and President Duterte could have offered expansive opportunities to enhance bilateral operations. While coordination and cooperation to build infrastructure were the manifest motives, the two leaders have two different, but intersecting intentions hinged on their individual agendas. For President Xi Jinping, the Philippines’ inclusion within the BRI framework places the whole archipelago in the clutches of China’s grandiose expansionist agenda. For President Duterte, the BRI projects would bolster his infrastructure agenda alongside the consolidation of his power in government. Either way, the interests of the Philippine people and the importance of railways, urban rail transit, highways, ports, and other facilities are leveraged.

THE FOLLY OF APPEASING CHINA
So far, no substantial results have come out of the administration’s appeasement policy as it is not clear how the BRI fund can be tapped. The Philippines was not a party when China unveiled the initiative in 2015 because of the tension over the South China Sea dispute. China excluded the Philippines from the web of six economic corridors linking China with neighboring sub-regions. By the time the Philippines became a BRI participant in 2017, the initiative suffered major setbacks due to cancellations.

Former Philippine National Economic Development Authority Secretary-General Ernesto M. Pernia publicly admitted the slow inflow of Chinese ODA because of the two countries’ very strict screening process in scrutinizing loan agreements and implementation of contracts. In late 2019, he also argued that part of the issue is unfamiliarity. The Philippines is “not used to Chinese ODA as we are with other partner [countries] like Japan and South Korea.” The Nomura Research Institute observed delays in the implementation of the BRI-funded projects caused not only by technical issues but also because of domestic political struggles, developments related to the South China Sea dispute, and the forthcoming change in Philippine regime in 2022.

Associated with the BRI is China’s predatory financing. Philippine experience manifests the growing impact of corrosive capital as exemplified in the four case studies undertaken by the Stratbase ADR Institute in partnership with the Center for International Private Enterprise (CIPE). According to the study, “defective consultation process in both CRPIP and NCWS-KDP projects” were a concern, “where project construction started ahead of the completion of the consultation process in violation of the Indigenous People’s Rights Act of 1997.”

Further, in the case of DITO Telecommunity, “it is not an ODA, but Duterte offered China to become the third telecom player.” The study also found that “For the Safe Philippines Project, bidding was open exclusively for Chinese contractors.” In its entirety, the study concluded that “transparency issues are recurring in all four case studies involving Chinese investments in the Philippines.”

As the country prepares to choose its new leaders in the 2022 national elections, the serious repercussions and accountability for these follies must be exposed to the people.

Dr. Renato De Castro is a Trustee and Convenor of the National Security and East Asian Affairs Program, Stratbase ADR Institute.