Name: Chrischian Irish Anthony L.

Santuyo

Course and Section: Political Science/ PSC31

Subject: Political Economy

Professor: Sir Jumel G. Estrañero

TAMING AN UNTAMABLE BEAST: Does befriending China good for our Economy?

INTRODUCTION

The relationship between the Philippines and China, which span for over centuries, have
been primarily warm and passive. But in recent years, both countries have experienced fiery issues,
hitting their lowest point since the establishment of their diplomatic relations in June 1975.

Philippines-China relations have lately been dominated by territorial disputes. Despite

being cool and friendly with each other for the past few years, both started to reach their limit
when the Scarborough shoal stand-off happened. Fortunately, it has been resolved as both
countries decided to remove their respective vessels in the area, reducing the tension between
Philippines and China. However, it did not take long as China betrayed the agreement and
repositioned their maritime militia vessels, blocking Philippine access to protect their fishing boats
within the Philippine Exclusive Economic Zone (EEZ). This sparked tension between the two
countries, leading Former President Benigno Aquino III to file a case in the Permanent Court of
Arbitration (PCA) in The Hague, Netherlands.

Ever since, both countries have never been the same. Interactions between China and the
Philippines deteriorated over territorial disputes. as former President Benigno Aquino III
prioritized the country’s long-standing relationship with the United States. Aquino took some
measures and built a strong connection between the U.S and the Philippines as he believed that the
United States of America will provide security and military power to fight China’s advances.
This study aims to understand the relationship between the Philippines and China and determine
if having a friendly relationship with China will be beneficial for our economy. As a political
economy student, I believe that it is important to tackle countries’ influence on our economy. The
Philippines has a habit of borrowing money from other countries, they heavily rely on foreign
investments to produce infrastructure projects and boost our economic state, and given the friendly
relationship with China now, without a doubt the Philippines will borrow money from them. Since
the Philippines is a known corrupt country, I fear that the debts owed by the country will be left
unpaid thus resulting in an economic collapse similar to that of Sri Lanka.

BODY
 An article published on Duren Schulze talked about the relationship between China and the
Philippines in which they stated that the West Philippine Sea (a.k.a. the South China Sea) is the
reason why our good and passive relationship with China ended. the Spratly Islands – a group of
7,500 islands and reefs have been claimed by multiple countries as their own. China however,
insisted their “nine-dash line,” which first appeared in 1947 atlases, as the basis for its claim. The
line, it said, is a historical demarcation of its continental shelf, although the line itself has no fixed
coordinates. The “nine-dash line” which appears in Chinese maps, claims the majority of islands
and seas within its boundary as China’s national boundary. This included Spratlys island, allowing
the Chinese to build artificial islands, damaging the ecosystem of the West Philippine Sea in the
process. However, China’s self-proclaimed demarcation contradicts the UNCLOS or the United
Nations Convention on the Law of the Sea. Despite diplomatic negotiations and resolutions,
tensions between the countries reached a breaking point in 2012 with the Scarborough Shoal
Standoff, in which Chinese surveillance vessels prevented the Philippine Navy from arresting
Chinese fishermen anchored within the atoll. This standoff, as well as other maritime aggressions
by China such as building artificial islands, illegal fishing, harvesting of corals and live sharks led
the Philippines to file a case with the UN-backed Permanent Court of Arbitration (PCA) in The
Hague, Netherlands. On July 16, 2016, the PCA tribunal ruled in favor of the Philippines. In a 501-
page decision, the PCA said that China violated Philippine sovereignty over its EEZ and
continental shelf based on the rules set forth by UNCLOS, which overrides China’s “nine-dash
line” rule. However, since China didn’t participate in the proceedings and trial of the PCA, they
rejected the ruling claiming it has no binding force. But since the Philippines had already won the
trial, it puts them into a higher ground in the eyes of the world and adds international diplomatic
pressure on China.

An article published by Andrea Chloe A. Wong on the Foreign Service Institute website of
the Philippine Government wherein she talked about how the territorial disputes between the
Philippines and China were still in the Spotlight for years, it didn’t hinder both countries to
maintain cooperation in other areas. Given the wide-ranging and comprehensive ties between the
Philippines and China, other aspects in the relations, such as bilateral trade, Tourism promotion,
Sports and Cultural exchange and lastly, Media and public opinion, prompt them to cooperate for
their mutual benefit. Although the late President Benigno Aquino III prioritized protecting
territorial sovereignty, he did make sure to cooperate and make friendly relations with China on
other issues to improve economic growth

In 2016, when former President Rodrigo Roa Duterte rose to power, our overall
relationship with China improved. On October 2016, former President Rodrigo Duterte announced
his “seperation” from the United States, declaring his friendly relationship with China as both
countries agreed to resolve their South China Sea dispute through talks. Duterte made his
comments in Beijing, where at least 200 business people had attended. “In this venue, your honors,
in this venue, I announce my separation from the United States, Both in military, not maybe social,
but economics also. America has lost.” these are the words from former President Rodrigo
Duterte’s speech in Beijing as Duterte wanted to prioritize our friendly relationship with China
despite disputes over territorial claims. In return, the U.S. State Department said it was “baffled”
by Duterte’s speech and sought an explanation to these remarks as both the state department and
the White House were still in shock since the U.S and the Philippines had a long-standing alliance.
A few hours after Duterte's speech, his economic policymakers released a statement. “We will
maintain relations with the West but we desire stronger integration with our neighbors,” said
Finance Secretary Carlos Domingo and Economic Planning Secretary Ernesto Pernia.

Duterte left Beijing in 2016 with $24 billion of Chinese loans and investment pledges for
his ambitious infrastructure overhaul, or the “Build, Build, Build Program”. However, only a
fraction of China’s pledged support has materialized after 2 years, resulting in criticisms from
people that imply the relationship built up with China was practically useless. According to Lema
and Petty (2018) public Philippine government documents analyzed and reviewed by Reuters
showed that only three of the pledged projects - two bridges and an irrigation facility, have started,
which is valued at around $167 million.

In 2020, the government secured a $750 million loan from Beijing’s Asian Infrastructure
Investment Bank (AIIB) to provide support on Local COVID-19 responses. And another loan in
2022, which is around $362 million, that will be used in financing a two-way, four-lane bridge
connecting Davao City with Samal Island. Still, it is still far from China's loan commitment to the
Philippines which is around $1.1 Billion as of 2022.
 While the late President Benigno Aquino III and former President Rodrigo Roa Duterte
had some preferences on which superpower country they will side with, the current President
Ferdinand ‘BongBong’ Marcos Jr prefer to ally himself to both, making him an enemy to none,
current President Marcos Jr. aims to pass foreign policy attempts that balance relationship ties with
China and the United States. President Marcos Jr. on both of his recent state visits was visibly seen
making agreements and seeking friendly relations not only to U.S or China but to both of the states,
simply put he is ensuring that the Philippines has a healthy relationship with the United States and
China.

However, Robles (2022) states on her article that the first test on Marcos’ befriend all
agenda would be balancing the relationship between both, as during his visit to Washington one
of his agenda is the increase of U.S soldiers inside the country and in the event that this happened
it could technically sour his relationship with China in return.

ANALYSIS
 As shown in the data above, the relationship between the Philippines and China has been
more or less, rocky. Starting with territorial disputes during the Aquino administration to having
bilateral trades, agreements, and investments during the Dutert administration and the current
administration opting for friendly relations with both China and the U.S.we can safely assume that
China is somewhat neutral towards the Philippines since throughout history the Philippines and
China have both been trade partners multiple time, however, I fear that this partnership would lead
to the Philippines being comfortable enough in borrowing more from China resulting in the
economy sunk even deeper than it already is, in addition to this, one of my other worries is that
this debt/borrowing relationship might be advantageous for China as they might use this as a means
to exploit the Philippine’s resources, despite China’s statement regarding settling the territorial
dispute, it is evident that their military and maritime advances on the West Philippine Sea are still
ongoing.

One of the most intriguing piece of article on the internet is China’s infamous “debt trap”,
Punongbayan (2019), he stated that the Philippines seemingly withdraw their sovereign rights
regarding properties to China masked by “public service properties'', and in the event a dispute
regarding the loans happen the Philippines also somehow agreed to subject itself to an arbitration
trial on Beijing which is more beneficial to China, lastly the blatant disregard for the 1987
Constitution as China pushes for “confidentiality” regarding the agreement. Punongbayan (2019)
analysation also brought light to how China advances its “debt trap”, first being the infamous
infrastructure projects that China invests in that targets low-return countries, since countries
targeted are often poor they fall even harder as they accumulate debt, then China may impose
themselves to the country and exploit their resources in the form of collateral. Similar to the case
of the Philippines slowly falling to China’s debt trap often disguised as “friendly” loans

RECOMMENDATION
 As a Political Economy student, I do believe that befriending China is overall beneficial
for the Philippines in terms of bilateral trades and agreements, but China’s malice and being
notoriously known as a very exploitative state. Borrowing money from China is good, but
borrowing too much is damaging to the economy. As a political economy student, I hope that the
government reduces their reliance on China as a foreign investor as it is risky, China might use
this accumulated debt to exploit the country.

CONCLUSION

Overall, this study enlightened me on how China exploits countries and similarly our
country to its loans and debt traps. Having friendly relations with China is very risky for our
country as seen in the study, as they use their global market experience to overwhelm their
borrowers economy, as a citizen of the Philippines, I realized the dangers simple friendly relations
on a wide scale, to individuals and people friendly relationships have zero to no damage besides
emotional factors, but on a state-to-state relationship it risks both the citizens and the sovereignty
of the state, as other factors such as China’s “debt trap” might be affecting the economy
unknowingly.

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 MESSAGE TO MY PROFESSOR

As I graduated from your Course, I can proudly say that I learned a lot from you. What I love from
your teaching is the way you teach with wittiness but with profound knowledge so that we can still
learn. You, being an understandable teacher, is also very memorable. Ever since the pandemic
started, most of our professors/teachers are not really very understandable when it comes to
deadline, but you do always understand and care for us. I hope that more teachers/professors be
like you. Also, I love how you communicate with us, the way you share about your experiences,
learnings, and teachings that you also get while studying is amazing. I never had a professor who
constantly inspires us and let us have a glimpse of what it’s like to be in a law school. I will always
cherish the time with you sir and I hope that we can hang around with class soon. Take care and
God bless Sir Jumel.