China takes reclamation skills to Duterte town

AMONG THE FIRST to gain from Philippine President Rodrigo R. Duterte’s China pivot could be the people who live on rickety wooden stilt-houses in a waterlogged area of his hometown of Davao City.

Chinese investors are set to spend $200 million to raise three islands from the sea to create a new port. Residents in the area known as Isla Verde aren’t worried that one of the companies is CCCC Dredging Group Co. Ltd., which helped turn a handful of rocks and reefs in the South China Sea into a chain of Chinese maritime outposts that threaten Philippine territorial claims.

“I don’t care who builds the islands on the sea,” said Eddie Piling, 43, whose makeshift house with no plumbing may have to be demolished to make way for the development. “I heard about CCCC Dredging in one of the village meetings but we don’t mind as long as we benefit.”

China’s involvement in developing the Davao coastline is a direct result of Mr. Duterte’s October visit to Beijing, when he secured investment and credit pledges worth $24 billion. It’s also a prime example of the economic pragmatism that he says justifies striking a balance between the US, the Philippines’s top military ally, and China, its top trading partner.

Optimism is growing in the Philippine business community over closer economic ties with China, in part because few countries have similar amounts of capital to spend, according to Eufracia Taylor, Asia analyst at risk advisory company Verisk Maplecroft. Still, she said, cooperation “can go only so far before the issue of sovereignty rears its head.”

“The relationship between the Philippines and China is at best a marriage of convenience, based on a shaky truce on the South China Sea,” Ms. Taylor said.

Malcolm Cook, a senior fellow at the ISEAS-Yusof Ishak Institute in Singapore, points out that the actualization rate for Chinese foreign direct investment pledges in the region is lower compared with Japan and the US.

“Chinese investment and financing are likely to grow and give (Mr.) Duterte the opportunity to praise Chinese commitments as benefits of his changed foreign policy,” Mr. Cook said. “But I doubt that there will be $24 billion as promised.”

Mr. Duterte is planning to implement an 8 trillion- peso ($ 161 billion) infrastructure program over the next six years. The project in Davao, initially conceived while he was mayor, is a $ 780- million joint venture with local businessman Reghis M. Romero, chairman of Mega Harbour Port and Development, Inc., which will build infrastructure for the three new islands including roads, bridges, and power and telecommunication lines.