Chinese belt and road run aground in the Philippines – analysis – eurasia review

By Michael Hart

In late July, the Estrella-Pantaleon four-lane bridge was opened to traffic over the Pasig River in Manila, providing a new route between the urban centers of Makati and Mandaluyong in the congested capital of the Philippines. Approximately 50,000 vehicles will pass each day on the bridge, which was built by the China Road and Bridge Corporation under the aegis of Beijing’s Belt and Road Initiative and Philippine President Rodrigo Duterte’s national infrastructure program “Build, Build, Build ”.

Duterte, who attended a groundbreaking ceremony with the Chinese ambassador, welcomed the opening of the bridge and, after a virtual meeting with Xi Jinping on August 27, said he was considering the completion of other key infrastructure projects funded by China, ranging from flood control to railways. Yet many of the projects envisioned at the start of Duterte’s six-year presidency – when he left a state visit to Beijing with $ 24 billion in investments and loans – go unrealized as his tenure touches down. at its end.

“Belt and Road” and “Build, Build, Build”

Of the loans and investment pledges guaranteed during the 2016 visit, $ 15 billion reflected business-to-business agreements, while $ 9 billion was in the form of loans expected by Chinese banks for projects. specific or to Philippine companies. At least 17 memoranda of understanding or other agreements have been signed, covering a wide range of projects in sectors ranging from transport and manufacturing to renewable energy. The proposed Chinese projects covered the entire 1,850 km length of the Philippine archipelago.

In Beijing, Duterte hailed a new start for economic relations between the Philippines and China, after announcing his “separation” from a close traditional ally of the United States in front of the Chinese leaders. Xi Jinping responded to Duterte’s openness by lifting restrictions on Philippine banana and pineapple exports, which had been imposed years earlier amid rising tensions in the South China Sea. The Philippine president, seeking Xi’s support, was largely content to put these differences aside.

It appeared that the path was set for an economic boom in tune with the two leaders ‘grand plans: Duterte’s “Build, Build, Build” program, which upgraded the Philippines’ overloaded national infrastructure near the top. of its administration priorities – was to receive a boost in the form of long-term Chinese funding under the Belt and Road Initiative. At the western end of the Pacific, the Philippines marked a lucrative stopover along the envisaged Maritime Silk Route.

The various fortunes of Chinese projects

Over the next five years, however, projects took a long time to get started. In 2020, $ 620 million in official development assistance from China was disbursed to the Philippines, out of $ 4.6 billion earmarked for ongoing projects, most of which remained at the procurement stage. The Philippines hopes to add $ 1.9 billion to that total soon, with Under Secretary of Finance Mark Dennis Joven pointing out last month that the Export and Import Bank of China is evaluating loans for three more projects. major.

Finance Secretary Carlos Dominguez recently expressed his approval in the Filipino Daily Investigator of China’s implementation of projects already underway, but acknowledged that the “massive” deals were accompanied by red tape, citing in particular “difficulties in obtaining approvals”, and the fact that construction companies of the two countries involved in the joint ventures “get along. “

The fortunes of three Chinese-backed infrastructure projects in 2021 demonstrate these disparities:

In January, a deal was approved for a US $ 940 million freight railroad connecting two former US military bases to Luzon, the wealthy northern Philippine island. Construction of the 71 km single-track line will take approximately four years and, when completed, will connect the commercial areas of Subic Bay and Clark Air Force Base to ports and airports, facilitating the flow of goods and stimulating growth. of an existing economic center.

A few days later, the China Road and Bridge Corporation announced a US $ 400 million contract across the country for the construction of a 4 km overseas bridge connecting the city of Davao to Mindanao in Samal Island. The four-lane structure will allow automobile traffic to pass through the narrow Pakiputan Strait, thereby boosting trade and tourism in the region. Both projects look set to make a big difference in their communities.

However, not all projects got the green light. In Cavite, the provincial government earlier this year overturned a decision to award multibillion-dollar airport modernization work to a consortium led by the China Communications Construction Company, derailing one of the world’s largest projects. costly supported by China in the Philippines. Local governor Juanito Victor Remulla told Reuters the companies in the consortium were “deficient in three or four elements” and “not fully committed” to the project.

Remulla insisted the decision to cancel the contract was unrelated to the blacklisting of Chinese companies involved in the Sangley airport project by the United States, over their alleged role. in building military installations on disputed reefs in the South China Sea. Duterte rejected demolition deals with these companies, vowing that the infrastructure projects are in the national interest and must continue.

Belt and Road limited to the Philippines

Overall, Belt and Road presents a mixed picture in the Philippines. Only three major infrastructure projects backed by China are expected to be completed by the end of Duterte’s tenure in mid-2022. More are in the works, but much will depend on who wins next year’s election. Duterte is expected to run for the vice-presidency of the ruling PDP-Laban, alongside Bong Go or his daughter, Sara Duterte-Carpio, the current mayor of Davao. A victory for Camp Duterte would give the delayed projects a chance to move forward, while a victory for the opposition would leave the status of the projects unclear.

Whatever the outcome, Chinese-funded projects in the Philippines will be more dispersed and on a smaller scale than elsewhere in Southeast Asia, where massive Chinese investments in places like Laos have raised fears of a ” the debt ”. An expansive megaproject like the Pan-Asian Railway, which Beijing plans to take through Laos, Thailand and Malaysia on its way to Singapore is not a prospect in the Philippines, due to its island geography and proximity to China. . In the Philippines, Beijing also has less urgency because it has less to gain strategically than its closest neighbors in Southeast Asia.

As a result, Duterte’s move to China has been accompanied by an increase in Belt and Road investment, but not on the massive scale seen elsewhere in the region.

This article was published by Geophysical Monitor.com

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