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The new China policy

There have been many debates and interpretations of the so-called shift in Philippine foreign policy under the Duterte administration. Perhaps, the clearest explanation of this new foreign policy, in terms of the Philippine-China relationship, was presented by Ambassador-Designate Santiago “Chito” Sta. Romana during the general meeting of the Management Association of the Philippines last Tuesday. Here are his main talking points.

The basic change in the Philippine China relations is the policy shift from strained relations with China to friendlier ties with emphasis on the economic relationships. This means that there is now a strategic shift “...from siding with the United States against China to improving relations with China.

However, he was very emphatic in stating that the Philippines will “...maintain its alliance with the United States.” While the goal is to seek better ties with China, the Philippines has no intention of establishing a military alliance with China.

Duterte China policy

The basic direction of the Duterte China policy is to focus on economic cooperation. This essentially means increasing trade, investments and tourism. Another goal is to increase Official Development Assistance ( ODA) or foreign aid especially for infrastructure projects.

The new policy also calls for improving bilateral relations. The Aquino administration’s policy was to advocate for multilateral talks in settling disputes with China. The Duterte administration is now willing to engage in bilateral or direct talks with China in an attempt to seek peaceful means for resolving disputes. This has always been a contentious issue between the two countries. China has always stated that it would be willing to engage only in bilateral talks.

This change in approach towards the Philippine-China relations means that “...economic cooperation will be the key driver of Philippine-China relations.” It is expected that disputes between the two countries “...will not disappear overnight and will be subject to negotiations.” However, the new administration’s policy is that issues arising from disputes will not be an obstacle to the development of bilateral ties between the two countries.

One obvious result from this shift  is the dramatic change in perception. From the Philippine perspective, instead of viewing China as a “national security threat”, the new perspective is that China will now be an “economic partner” in the economic development of the country.

China has always viewed the Philippines as a “geopolitical pawn”, and has even accused the country has being the “ Trojan horse” of the “containment policy” of the United States. In effect, China has always considered the Philippines as a willing ally of the United States in trying to limit the international influence of China.  The new perspective is to change this image so that China will now view the Philippines as a “friendly neighbor” with an independent foreign policy.

The recent Duterte state visit to China resulted in increased economic cooperation between the two countries. Several memorandums of understanding (MOU) were signed amounting to $24 billion.  The first component was an MOU for $9 billion in loans with $6 billion in soft loans and $3 billion in credit facility. The second component included $15 billion in proposed investment projects including various infrastructure projects. There were 13 agreements signed by the Philippines and China. There were also three proposed projects included in the economic cooperation package:

• $2.5 billion railway projects in Luzon and Mindanao;

• $780 million coastline and port project in Davao City;

• $500 - $700 million stainless steel plant project with the capacity of producing an estimated one million tons of steel a year.

Ambassdor Sta. Romana was quick to point out, however, that these proposed projects would still have to go through the process of feasibility studies, due diligence and bidding. There is every intention to ensure that the previous scandals during the GMA administration regarding proposed China-funded projects should not be repeated.  It should be remembered that the Philippines had also negotiated two major railway projects – North Rail and South Rail – with China,. Both projects had to be scrapped when they became mired in allegations of massive bribery.

Approach towards Philippine China disputes

Ambassador Sta. Romana also presented the latest status of the territorial disputes between the two countries. According to him, there is now a stalemate on the arbitral decision of the Arbitration Tribunal in the Hague. The Philippines continues to uphold the tribunal decision while China insists on rejecting the decision.

The Philippines continue to view the Hague ruling as the baseline in talks with China regarding disputes on territorial sovereignty.  As far as the Philippines is concerned, the Hague Tribunal ruling clearly states that there is no legal basis for China to claim historic rights to resources within the so-called 9-dash line. This is the basis for China’s claim that it has sovereignty over practically the entire South China Sea due to so called historic rights.

The Hague ruling also upheld that none of the Spratly islands can generate an Exclusive Economic Zone (EEZ). Therefore, there is no overlapping EEZ between the Philippines and China. The Hague ruling also stated that the Mischief Reef, Second Thomas shoal and Reed Bank are part of the Philippine continental shelf and EEZ: and, the Philippines has traditional fishing rights in Scarborough Shoal.

The present Philippine policy is a two-track approach which attempts to separate contentious issues from non-contentious issues. This will allow the two countries to proceed with issues like economics, finance, culture education, tourism and discuss contentious issues separately on a bilateral approach.

Ambassador Designate Sta. Romana explains the new policy approach as a “hedging strategy” which means, in geopolictical terms, leaving enough room for strategic maneuvering.

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