Paying back Chinese loans not a problem for Philippines, says expert

MANILA, Philippines — Paying back its debts to China will not be a problem for the Philippine due to its "strong debt-paying ability," a Chinese expert said.

The Philippines had sought the support of China in its $168-billion (P8.4 trillion) infrastructure plan which includes roads, bridges, airports and ports.

Beijing has provided about $7.34 billion in loans and grants to Manila for 10 large-scale infrastructure projects, according to the China Council for the Promotion of International Trade.

Zhuang Guotu, director of the China Southeast Asian Research Association, told Chinese newspaper Global Times that the Philippines needs the infrastructure plan to boost its economy and support its fast-growing population.

Beijing has provided very low interest rates on loans that it has provided to its Southeast Asian neighbors, Zhuang said.

"And the Philippines has strong debt-paying ability. Besides, the loans are usually accompanied by repayment agreements, which use certain natural resources as collateral," Zhuang told Global Times.

He also noted that China is willing to provide loans, labo and expertise to help the Philippines.

"China's infrastructure capability leads the world and as a result many countries and regions are willing to cooperate with China," Zhuang said.

The Philippine government earlier announced that there are talks with the Chinese side for a possible joint exploration in the West Philippine Sea.

President Rodrigo Duterte even described this partnership as similar to "co-ownership" of the waters within the Philippines' exclusive economic zone.

Zhuang said that the two countries are probably already discussing first-phase preparations over joint oil and gas exploration in the West Philippine Sea or the South China Sea.

"In fact, discussions about joint exploration started in the 1970s, but it didn't come about for various reasons. This time, the negotiations came after the Philippines had long been troubled by energy shortages," the expert said.

The possible joint exploration would make a "new phase" in resolving the South China Sea dispute, he added.

In July 2016, a United Nations-backed tribunal issued a landmark ruling invalidating China's nine-dash line claim over the South China Sea. The arbitral tribunal also concluded that Beijing violated its commitment under the Convention on the Law of the Sea when it constructed artificial islands in the Philippines' exclusive economic zone.