Marcos Stressed Economics To Keep China Engaged In Philippines’ Development Agenda – Analysis

In his second State of the Nation Address (SONA) Philippine President Ferdinand Marcos Jr. charted a firm focus on economics and made subdued reference to disputes, hinting at his desire to keep China on board the nation’s development agenda. His speech also indicated an interest in working with the country’s largest trade partner despite persistent sea incidents. The opening will likely be welcomed by Beijing, which has grown wary of Manila’s revitalized alliance ties with Washington. 

Maritime spat does not define ties 

The territorial and maritime row in the West Philippine Sea is not the sum total of Manila’s ties with Beijing. This spirit was reflected in Marcos’ SONA. He made no explicit mention of the contested flashpoint or the landmark 2016 ruling on it. Instead, China was mentioned twice, both on a positive note – one in relation to its fertilizer donation and another on the entry into the RCEP, where it is the biggest member economy. Many sectors he cited in his remarks, from agriculture, water, power, infrastructure, and digital economy to tourism, stand to benefit from cooperation with China. 

When Marcos made a point about the long-running spat, he was quick to give premium to diplomacy. He pledged to protect his country’s sovereign rights and preserve its territorial integrity in defense of a rules-based international order. But he also said that “[w]ith our national interest paramount, we will always pursue constant dialogue and diplomatic approaches to the resolution of any issue that may arise.” The chief executive also reiterated his commitment to an independent foreign policy, a constitutional dictum and a mantra of the previous China-friendly Duterte administration. He pointed out that being “a friend to all and enemy of none – has proven effective,” saying, “[w]e have formed strategic alliances with our traditional and newfound partners in the international community.” 

Agriculture and infrastructure as productive areas for cooperation 

Marcos recognized the areas where pragmatic cooperation between the two neighbors would reap gains for his country. He acknowledged China’s fertilizer gift, saying they had already been distributed. Last June, Beijing gave the country 20,000 metric tons of urea fertilizers. The president, also the concurrent Agriculture Secretary, underscored the importance of modern farming, a field where Chinese assistance in the last two decades has been paying off. Through the Philippine-Sino Center for Agricultural Technology (PhilSCAT), based in the country’s rice granary in Central Luzon, China has been training Filipino farmers on hybrid rice production. Last year, three new laboratories and a cold water irrigation system for hybrid rice were turned over. Beijing also gave aquaculture training and donated100,000 leopard coral grouper (a high-value commercial species) fry to fish farmers in Palawan and Davao in 2017. 

China loomed large in several projects cited by Marcos in his address. This includes the Wawa Bulk Water Supply involving Chinese contractor PowerChina. The completion of the project’s first phase will increase the water supply of Metro Manila and neighboring Rizal province. Although not mentioned in his speech, China is also building the much larger Kaliwa Dam close by. The president also called on the National Grid Corporation of the Philippines (NGCP), wherein State Grid Corporation of China has a 40% stake, to finish its deliverables, beginning with the crucial Mindanao-Visayas and Cebu-Negros-Panay island grid interconnections. 

Marcos mentioned twelve proposed mega-bridges, two of which have China links. One is the Samal Island-Davao City Connector Bridge, funded by a Chinese loan and is slated for completion by 2027. The other is the Bataan-Cavite Interlink Bridge that would connect two progressive provinces close to Manila. The country is reportedly seeking funding from both the Beijing-based Asian Infrastructure Investment Bank (AIIB) and the Asian Development Bank (ADB) to finance the initial phase of the undertaking. In his state visit to China early this year, Marcos also secured loans to finance the construction of three more bridges in Metro Manila.  

By all indications, Marcos is sustaining his precursor’s building legacy. And like former leader Rodrigo Duterte, he may find China an indispensable partner. His “Build Better More” takes off from Duterte’s “Build, Build, Build,” and he likewise pledged to keep public works spending within five to six percent of the country’s GDP. He set out an ambitious P8.3 trillion program spread over 194 projects, 83 percent of which will be on physical connectivity like roads, bridges, mass transport, seaports, and airports. Under Duterte’s watch, China donated bridges and drug rehabilitation centers, delivered an irrigation project in northern Luzon, and began work on the Kaliwa Dam. However, Marcos was mum about the fate of three China-backed railway projects negotiated during the previous government. 

Not putting all eggs in one basket, no letdown on the maritime front 

But similar to Duterte, Marcos is not putting all his eggs in China’s basket. In his speech, he mentioned the North-South Commuter Railway bankrolled by Japan and ADB and the Panay-Guimaras-Negros Island bridges, which South Korea will underwrite. He also called out NGCP for delays in completing its projects, saying that a performance review will be conducted on the private grid concessionaire. To mitigate the risks of incurring much foreign debt, the newly minted Maharlika Investment Fund, which stirred controversy, is also poised to play a big role in funding high-priority projects. 

Restraint in the discussion of the maritime tiff in his address is also not indicative of his stance on the issue. Among the proposed priority legislations he hopes Congress can act on is the Blue Economy Law. The bill aims to provide an overarching framework to sustainably harness the country’s marine wealth and exercise rights and jurisdiction in its maritime zones, among others. He also remains committed to modernizing the country’s police and armed forces “to be more effective in maintaining peace and order and in defending our sovereignty.” Days before his speech, Marcos also created a new post – Presidential Adviseron the West Philippine Sea – and named former Armed Forces of the Philippines Chief of Staff Andres Centino to head it. A recent incident in Ayungin (Second Thomas) Shoal is testing both sides’ ability to handle the sea row. Manila was frustrated about Beijing not answering the call in a communication mechanism established beforehand, putting into question the hotline’s effectiveness. 

As elsewhere, China presents challenges and opportunities for the Philippines. This nuance is not lost on Marcos, and such an appreciation will continue to inform his evolving foreign policy. 

This article was also published at China-US Focus