Phillipine President Duterte declares; "I need China"
Interesting update by Bloomberg on Chinese – Philippine relations, of which we were reminded as President Duterte spoke at the Boao Forum for Asia, Annual Conference.
Bloomberg notes that Duterte was full of praise for China, and even declared his love for President Xi, in what was the start of his third visit to China. The article quotes Duterte from a briefing in March of this year;
“More than anybody else at this time of our national life, I need China,” Duterte said, adding that China’s help is a “very important ingredient” in his $180-billion infrastructure push.
Nearly two years into his presidency, Duterte’s pivot to China shows some signs of economic payoff. However, the Philippines continues to rely heavily on its traditional trading partners
Firstly, Bloomberg shows that Chinese tourism has picked up significantly, surpassing the US, and slotting into second place behind the main source of tourism, South Korea.
Secondly, the article notes that Chinese investments are surging under Duterte's reign, increasing almost 20x. This is still fairly low compared to investments from other countries.
Bloomberg then pulls out a great chart, depicting how the amount of loans and grants severely diminished since the territorial disputes in the South China Sea first started, under the reign of Duterte's predecessor. Duterte had made amends, and Chinese support is coming back. According the Finance Department, China has pledged nearly $7.5bln in loans and grants for several infrastructure projects, including funding for two bridges that will be built in Manila.
Concern however rises when you examine the trade balance. China has been the Philippines' top trading partner for the last 2 years, but increasing imports outpace the exports significantly, causing the balance to balloon in China's favor. China is the 3rd biggest customer of the Philippines, behind the US and Japan, but China is the top source for imports. Officials from both countries have stated that the goal is to balance trade during Duterte's six-year term.
Bloomberg then asks Gregory Polling of the CSIS what he thinks of the warming ties;
The benefits from warming ties with China “are nowhere near as great” as the countries’ officials portray them to be. Polling noted that loans and grants pledged by China haven’t translated to projects, and said Beijing still trails far behind other trade and investment partners. Philippine Economic Secretary, Ernesto Pernia, said in February that loan terms from Japan are better than China.
Another factor that will play a big role in China - Philippine relations going forward is the estimated 4 trillion cubic feet of natural gas reserves worth billions of dollars that the U.S. Energy Information Administration says could be in South China Sea areas claimed by the Philippines.
“When it comes to the most obvious place where relations have shifted -- the West Philippine Sea -- the two sides are no closer to any long-term deals to manage the disputes than they were two years ago,” Poling said.