PH-CN relations: Confrontation or cooperation? Gains or losses?

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MID the escalating discord and tension between the Philippines and China concerning issues related to the disputed South China Sea (SCS), a pivotal question emerges for the Filipino people: Does this ongoing struggle — a geopolitical “tug of war” — serve the country’s national interests or potentially endanger its future?

This dispute is not merely about immediate gains or losses but encapsulates broader implications for national security, national interest, economic prosperity and international relations. The long-term consequences of this conflict cannot be ignored and must be factored into any strategic decisions.

Hence, when examining the dynamics between the two countries’ state of affairs, it becomes crucial to analyze and determine which approach, confrontation or cooperation, is more advantageous for the Philippines.

Adverse consequences

It can’t be denied that the administration of President Ferdinand Marcos Jr. has adopted a more belligerent posture in the SCS dispute with China, a move that could have significant repercussions.

While reinforcing the Philippines’ claims in the SCS, such a stance could provoke adverse consequences such as economic countermeasures from China, including a decrease or obstacles placed on investment and trade, among others — factors vital to the Philippine economy and the potential of an increased risk of escalating military tensions, which could disrupt the delicate equilibrium in the SCS, potentially unsettling the region’s peace and stability status quo.

In light of this, it becomes essential to question whether it is wise, prudent and pragmatic for the Philippines to set aside the tangible benefits gained from economic and trade cooperation with China in response to the SCS dispute — a conflict in contested waters involving not only the Philippines and China but also other claimant states such as Vietnam, among others.

Thus, it is imperative to ask whether the potential costs/losses of the escalating conflict between the two countries over the SCS outweigh the benefits of continued economic engagement anchored on cordial, pragmatic and friendly Philippines-China relations.

Positive gains of relationship

In 2023, China and the Philippines realized a trade volume of $71.91 billion. China has been the Philippines’ largest trading partner for around eight consecutive years. China is also the Philippines’ largest source of imports and destination for exports.

Notably, 2023 witnessed a surge in Philippine exports to China, including 3,696 tons of fresh durian valued at $22 million. As China’s largest import source of bananas and pineapples, the Philippines has also seen other products like coconuts, avocados and frozen fruits gaining popularity among Chinese consumers.

At the 6th China International

Import Expo, the Philippines secured orders worth over $1.1 billion, achieving a historical high and underscoring growing demand. According to the Department of Agriculture, durian trade cooperation with China is expected to create 10,000 local job opportunities, directly and indirectly, bringing tangible benefits to Filipinos.

Moreover, from 2016 to 2023, China’s cumulative agreed investment in the Philippines, totaling P169.2 billion, ranked fifth among all Philippine partners, while the United States’ P115.9-billion investment ranked sixth. In 2023, China’s agreed investment in the Philippines was P6.78 billion, while the US investment in the Philippines was P5.13 billion. In terms of net inflow of direct investment, in 2023, the US investment in the Philippines was $110 million, with a year-on-year decrease as high as 53.9 percent.

Furthermore, China’s investment in the digital economy, steel and high-end manufacturing is underway. Several Chinese high-end manufacturers of home appliances and high-end bearings have invested in and established factories in the Philippines. Furthermore, Alibaba Cloud has already completed the construction of its data center in the Philippines.

Over the past decades, China and the Philippines have achieved fruitful results through practical cooperation in infrastructure construction, trade and investment, agriculture and people’s well-being, bringing tangible benefits to both countries and peoples.

For instance, the two have collaborated on the synergy between the “Build Better More” Program of the Marcos administration and China’s Belt and Road Initiative (BRI). Around 40 G2G (government-to-government) cooperation projects have been carried out, covering disaster relief, road and bridge construction, and agriculture.

Regarding infrastructure cooperation, the China-aided EstrellaPantaleon (E-P) Bridge and Binondo-Intramuros (B-I) Bridge were opened to the public in 2021 and 2022, effectively easing cross-river traffic and symbolizing the friendship between the Philippines and China. In October 2022, the groundbreaking ceremony of the Samal IslandDavao City Connector (SIDC), a flagship project, was held.

At present, a series of projects are progressing. They include the SIDC, the Three Bridges Crossing Pasig-Marikina River and Manggahan Floodway Bridges, the Mindanao flood control facility and the Davao River Bridge.

A series of large-scale projects have set new records in the Philippines, or even the whole Southeast Asia: the San Marcelino 283-megawatt photovoltaic power plant stands as the largest photovoltaic project in the Philippines; the Cesca Tunnel Water Plant Project is the largest water resources development and utilization project in the country; the Davao Modernized Public Transportation System Project has made a breakthrough in the large-scale urban public transportation complex in the Philippines; and the Pagbilao 500-kilovolt substation is the first of its kind in terms of scale in Southeast Asia.

In agricultural cooperation, China has provided the Philippines

with more know-how on agricultural modernization and tailored infrastructure solutions. The Chico River Pump Irrigation Project was completed in 2022, and the Kaliwa Dam project kicked off on June 29, 2021.

Hence, in contemplating the multifaceted nature of the SCS dispute and its impact on Philippine-China relations, it is crucial to deliberate on whether it is in the Philippines’ best interest to risk the solid progress and benefits of a friendly, pragmatic and mutually advantageous relationship with China.

The geopolitical struggle over territorial and maritime claims in the SCS presents a Gordian knot, unlikely to be untied in the near future due to its complexity and the requirement for sustained patience and peaceful negotiations.

Therefore, it is worth considering whether this geopolitical tug-of-war in the SCS and the pursuit of a belligerent stance and approach to the contentious SCS dispute by the Marcos administration, which has no immediate resolution, is justified to potentially jeopardize the cooperative relations with China that has, to date, yielded significant advantages for the Philippines.

Conclusion

Indeed, under the Marcos administration, the Philippines is at a crossroads. Its belligerent approach to the SCS dispute comes with the risk of economic and political isolation. This dilemma calls for a nuanced approach and a balancing act of pragmatic engagement in international diplomacy and a peaceful resolution through negotiations, ensuring that today’s actions do not compromise the country’s future.

A balanced approach might serve the Philippines best, one that maintains its claims in the SCS while engaging China in a friendly and mutually agreeable manner. This would involve continued engagement in diplomatic negotiations and dialogues both bilaterally and multilaterally through the Asean (Association of Southeast Asian Nations) mechanisms, asserting rights without resorting to provocative military actions and seeking common ground on issues like combating climate change, joint oil and gas exploration, joint fishery management, anti-piracy efforts, combating transnational crime and illegal fishing, and joint marine scientific research and development.

If the Philippines can navigate this delicate balance, it stands to gain on both fronts. However, this requires astute diplomacy, independent foreign policy, strong and wise leadership, and an unwavering commitment to the country’s national interests of peace and economic prosperity. The path forward for the Philippines is not confrontation with China but cooperation anchored on a cohesive and consistent independent foreign policy that puts the welfare and progress of the Philippines and its people at its heart. Anna Rosario Malindog-Uy is a PhD economics candidate at the Institute of South-South Cooperation and Development in China’s Peking University. She is analyst, director and vice president for external affairs of the Asian Century Philippines Strategic Studies Institute (ACPSSI), a Manila-based think tank.