By Kyle Aristophere T. Atienza, Reporter

CHINA’S growing aggression in the South China Sea threatens Philippine economic growth and could affect other countries in the region by disrupting supply chains, analysts said.

“The bilateral dispute between the Philippines and China involves our limited access to our own territory and all the resources there,” Diwa C. Guinigundo, a former Philippine central bank deputy governor, said in a Viber message at the weekend.

An energy crisis looms as China continues to prevent the Philippines from exploring and exploiting Reed Bank, a large tablemount within Manila’s exclusive economic zone (EEZ) that according to the United States Energy Information Administration may hold as many as 5.4 billion barrels of oil and 55.1 trillion cubic feet of natural gas.

“If we are not able to access the Recto Bank (Reed Bank) for its estimated rich reserves of oil and natural gas, we might be facing a possible energy crisis,” Mr. Guinigundo said.

The Malampaya gas field, the country’s sole indigenous source of natural gas that accounts for 30% of energy requirements of the main island of Luzon, is expected to be depleted by 2027. Energy experts have said this could lead to brownouts.

“Unless we find alternative sources of renewable energy and rationalize power generation, transmission and distribution, it would be difficult to achieve our target growth rates,” Mr. Guinigundo said.

The Philippines, a net importer of food and gas, targets 6-7% economic growth this year, but that is threatened by inflation, which quickened to 3.8% in April from 3.7% in March amid spiraling food prices. 

“Threatening our fishermen with detention will limit our ability to fish in our own territory,” Mr. Guinigundo said. “This could also pose a serious problem to the supply of marine products like fish and shellfish. It is likely we would experience another bout of inflationary pressures.”

George T. Barcelon, president of the Philippine Chamber of Commerce and Industry, said the Philippines and its neighbors should worry about possible supply chain disruptions if sea tensions lead to “any untoward incident.”

The Philippines and many of its Southeast Asian neighbors rely on Chinese imports, he said by telephone, citing the need for the Association of Southeast Asian Nations (ASEAN) to make a stand.

The government of President Ferdinand R. Marcos, Jr. has filed more than 50 diplomatic protests against China, 25 of which were lodged this year.

More than $3 trillion worth of trade passes annually through the South China Sea, which China claims almost in its entirety. A United Nations-backed tribunal in 2016 voided its claim for being illegal.

China has announced a four-month fishing ban in the entire waterway, weeks after it adopted a policy authorizing its coast guard to detain foreigners it suspects of violating its exit-entry rules “in the waters under the jurisdiction of China” for up to 30 days — and in some cases for as long as 60 days — without a trial.

“What happens in the South China Sea will affect us directly, not only in terms of access to a vital waterway but also our trade with China and with other countries too,” Raul F. Montemayor, national director of the Federation of Free Farmers, said in a Viber message.

TESTBED
In February, Philippine Coast Guard spokesman Jay Tristan Tarriela said about 275,520 metric tons of fish come from areas of the South China Sea within the Philippines’ economic zone, accounting for 6-7% of the national fishery output.

About 20-30% of the total were from Scarborough Shoal, a traditional fishing ground within the Philippine EEZ that China seized in 2012.

“The tensions will have a direct impact on our domestic economy and commodity prices in particular,” Mr. Montemayor said. “But China could be heavily affected too both commercially and geopolitically, so they have to seriously consider any aggressive action that they will take.”

China is the Philippines’ largest source of imports and second-largest export market. The United States, a major Philippine defense ally, is the largest destination of Philippine exports and its fifth-largest source of imports.

Mr. Marcos at a security dialogue in Singapore on May 31 said the South China Sea is no longer a regional issue. He was responding to Xu Hui, commandant of the Chinese military’s International College of Defense Studies who asked whether Manila was raising the tension in the waterway by allowing other parties to be involved in the dispute.

Mr. Marcos said the Philippines “remains true to the principles” of the ASEAN, which he said was built on common interests.

“I could even go as far as to say there is no such thing as a regional issue any longer, and when we talk about the South China Sea, we have to also remember that the South China Sea is the passageway for half of world trade,” he said. “Peace and stability in the South China Sea and freedom of navigation in the South China Sea is a world issue.”

“The South China Sea has become a world issue not just because of maritime trade but also because it’s a testbed for the rules-based world order,” said Hansley A. Juliano, a political science lecturer at Ateneo de Manila University.

“It’s a testbed of whether countries all over the world are adhering to the same standards or they’re motivated to interpret them based on their geopolitical alliances,” he said in a Facebook Messenger chat.

Policy expert Michael Henry Ll. Yusingco noted as the Marcos government “internationalizes” the issue of Chinese aggression in the waterway, the Philippines should never lose sight of boosting its maritime defense.

“Our primordial concern now should be to become a maritime powerhouse in our region especially given the avowed policy of the President regarding the West Philippine Sea,” he said via Messenger chat.

Mr. Yusingco does not see China changing its course in the near term but noted that it might rethink its approach “if they see our navy and coast guard organically grow in strength.”

“There’s no reason to think that they’ll cease their aggression and other dirty tactics,” he said. “We should not lose sight of the main goal which is to steadily improve our defense force.”

THE PHILIPPINE Defense department at the weekend said it wants to work with like-minded nations to boost defense supply chains across the region.

The Department of National Defense (DND) issued the statement in support of a new Indo-Pacific cooperation seeking the integration of defense industries in the region. 

The Indo-Pacific Defense Industrial Base Collaboration, endorsed by the United States at the 2024 Shangri-la Dialogue in Singapore, will “ensure a shared defense resilience that is vital to regional security, economic security and prosperity across the Indo-Pacific,” the agency said.

It said there should be a continuous dialogue with its partner countries to boost exchanges of expertise and best practices, and enhance upskilling and reskilling efforts “to meet the continuing demands of sustaining and upgrading our defense weapon systems.”

The Philippines seeks to confront “multiple security challenges” including from “unconventional actors who employ a full spectrum of tactics” by acquiring and sustaining defense assets, it said.

The Philippines seeks to develop its defense capability through the Self-Reliant Defense Posture Program “wherein co-production, co-development and licensed production opportunities will be possible for components in larger systems that will involve local industries in defense infrastructure and production and manufacturing of advanced weapon systems.” 

“Likewise, co-sustainment shall be pursued through regional maintenance, repair and overhaul and upgrade activities,” it added.

It said it’s also banking on research and development to develop critical technologies such as artificial intelligence, quantum biotechnology and semiconductors, which are critical in producing defense assets. — Kyle Aristophere T. Atienza