China-backed pipeline stalls as PH asserts sea rights

MANILA, Philippines — No Chinese financing commitments reached the completion stage from 2022 to 2023 as the administration of President Ferdinand Marcos Jr. moved away from the previous government’s policy of engagement with China.

Dr. Alicor Panao, Inquirer data scientist and University of the Philippines associate professor, said Chinese financing is often measured in terms of billions of pesos pledged, but “the amount committed tells only part of the story.”

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Based on AidData’s verified records, the pattern of whether projects advance from commitment to implementation and completion “suggests that changes in project delivery closely mirror shifts in Philippines-China relations.”

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From 2001 to 2010, during the administration of President Gloria Macapagal-Arroyo, 31.4 percent of Chinese-backed projects reached completion, although 42.9 percent remained at the commitment stage.

As tensions in the West Philippine Sea escalated, the administration of President Benigno Aquino III from 2010 to 2016 saw the pipeline “narrow considerably,” with only 14.3 percent of projects completed and 71.4 percent remaining at the commitment stage.

In 2012, the Philippines and China figured in a standoff at Panatag (Scarborough) Shoal. A year later, the Philippines initiated arbitral proceedings against China before the Permanent Court of Arbitration.

READ: PH wins arbitration case over South China Sea

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The arbitral tribunal issued its ruling on July 12, 2016, declaring China’s nine-dash line, now the 10-dash line, in the South China Sea to have no basis in international law.

It also found that China violated the Philippines’ sovereign rights in its exclusive economic zone (EEZ) by interfering with fishing and oil exploration, constructing artificial islands, and failing to prevent Chinese fishermen from fishing within the Philippines’ EEZ.

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When Rodrigo Duterte became president in 2016, Chinese infrastructure engagement expanded considerably, with 38.5 percent of projects reaching completion — the highest among the administrations covered — and 17.3 percent advancing to implementation.

Panao said this reflected “a period of closer engagement with Beijing.”

READ: Junked rail loans show China is unfit as partner – analysts

The sharpest reversal occurred between 2022 and 2023, when 95.2 percent of Chinese-backed projects remained at the commitment stage, while only 4.8 percent advanced to implementation and none reached completion.

According to the report, this coincided with Manila’s more assertive response to Chinese activities in the West Philippine Sea, expanded security cooperation with the United States, and the withdrawal of several major Chinese loan proposals.

For Panao, “the shape of the financing pipeline suggests that during periods of closer engagement with Beijing, a larger share of projects advance toward implementation and completion.”

“As maritime tensions intensify, by contrast, Chinese-backed commitments increasingly get stalled at the commitment stage,” he said.

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Panao said the decline in Chinese financing limited the Philippines’ access to infrastructure investments but also reduced the country’s reliance on China as a development partner.

“This provided Manila with greater policy space to pursue a more assertive maritime strategy and greater flexibility in advancing its national security interests,” he said. /dm

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