Analysis: Duterte’s Pivot Mainly Benefits China
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Philippine President Rodrigo Duterte and Chinese President Xi Jinping (Source: Wikipedia)
In the first half of his six-year term, Duterte has visited China five times and met with Xi eight times, more often than most of his predecessors.
What merited another trip this time?
The Office of the President announced that Duterte was going to raise the arbitral ruling with Xi—the legal victory of the Philippines that invalidated China’s nine-dash line claim over most of the South China Sea—and take up economic and business deals. China has repeatedly refused to recognize the international tribunal’s decision handed down in 2016.
Facing public pressure in the Philippines, where popular sentiment is against China, the President, who has decided to set the ruling aside to appease China, was forced to include it in his agenda. A June 2019 survey by the Social Weather Stations (SWS) showed that most Filipinos do not trust China, which scored a -24 rating, considered poor. Negative trust ratings for China have been consistent through the years.
Moreover, the SWS poll found that nearly nine out of ten Filipinos want Duterte to assert the country’s sovereign rights over the West Philippine Sea.
It turned out that Duterte’s talk with Xi about the tribunal’s decision was a public relations spectacle to please the domestic audience in the Philippines. As expected, Xi rejected the ruling. "He (President Duterte) said that the arbitral award is final, binding and not subject to appeal. In response, President Xi reiterated his government’s position of not recognizing the arbitral ruling as well as not budging from its position," Presidential Spokesman Salvador Panelo said in a statement.
The President used the arbitral ruling as a magic wand. By raising it, he hoped to erase negative perceptions that he is subservient to China. Beyond that, though, he has closed the door to other diplomatic options to partly enforce the ruling. These range from entering into sea boundary agreements with claimant countries like Vietnam and Malaysia to sending Philippine Coast Guard patrols in the area as a means to assert sovereign rights, as proposed by Supreme Court Justice Antonio Carpio, a leading expert on the West Philippine Sea.
The Philippine Coast Guard vessel EDSA (left) and Philippine Navy frigate Del Pilar patrolling the West Philippine Sea (Source: CARAT Philippines)
In the light of this status quo, it is timely to review the economic balance sheet from Duterte’s three-year embrace of China. In the beginning of his term, seeking economic deliverance from China was the reason the President said he was “separating” from the United States and “depending” on Beijing.
One major indicator is the amount of foreign direct investments (FDI) China has poured into the Philippines. While this has risen dramatically from US$28.79 million in 2017 to $198.68 million in 2018, China has still not outpaced our traditional sources of FDI like the U.S., Singapore, and Japan. In the first quarter of 2019, China ranked second in terms of FDI next to Japan.
Giving a big picture of FDIs in the country, Bangko Sentral Governor Benjamin Diokno said in a speech in June that the top five investors over the past decade have been Japan, the United States, Hong Kong, ASEAN and the European Union. He did not cite China as a new entrant with its growing investments.
In terms of top sources of Official Development Assistance (ODA), China was a poor performer, not even part of the top 10, in 2017. Japan has been the consistent leader here, followed by the World Bank, the Asian Development Bank, the U.S., South Korea, Australia, the United Nations, the Asian Infrastructure and Investment Bank, France, EU, and China.
As of March 19, 2019, the National Economic Development Authority reported the top ODA sources, which basically remained the same for the top 5. China climbed to the 8th place. This, despite the much-touted Build Build Build infrastructure program of the government where China has pledged loans for roads, bridges, and dams.
In trade, China became our biggest source of imports in June 2019, making it our top trading partner. But imports from China overtook Philippine exports, resulting in a wide trade gap.
Pag-Asa Island (Source: Satellite Image from CSIS/AMTI)
As for tourist arrivals, China overtook Korea in April 2019.
In sum:
· China has not surpassed our country’s traditional sources of investments and ODA, both major economic indicators.
· The trade picture is uneven in favor of China.
· It is in tourism where China has started to lead.
These economic measures show that the friendship between Xi and Duterte is one sided. Xi gets to enjoy continued domination in the West Philippine Sea and escalates the presence of warships, Coast Guard and maritime militia vessels in our waters.
So far, in 2019, at least 12 sightings of a varying number of vessels have been reported. The most occurred from January to March when more than 600 Chinese maritime militia ships swarmed Pag-asa (Thitu).
What had the most impact, though, was the ramming in June of a Philippine fishing boat—anchored in waters within the country’s EEZ—by a Chinese trawler which abandoned 22 fishermen to the elements. Heartbreaking stories of fishermen swimming in the inky waters searching for help as their boat started to sink filled Philippine media. But Duterte dismissed this as a “maritime incident,” sparing China of blame.
While China has free rein in the West Philippine Sea, the Philippines has yet to see the pledges of FDI and ODA which have been slow in coming. Xi and Duterte have become friends with benefits—but it is clear that the giant neighbor gets most of it.
Marites Danguilan-Vitug
Marites Dañguilan Vitug is editor at large of Rappler. Her latest book is “Rock Solid: How the Philippines won its maritime case against China.”
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