What happened to the billions China pledged the Philippines? Not what you think

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Forget claims about duplicitous Beijing and the South China Sea. The delays in Chinese investment into the country are entirely predictable – and not evidence of something more sinister

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Philippine President Rodrigo Duterte. Photo: Reuters

Alvin Camba

Published: 12:30pm, 5 Aug 2018Updated: 2:38pm, 7 Aug 2018

Here’s a quiz. How often in these past weeks have you read about the duplicitous Chinese tricking other governments with false investment promises? Quite a lot, probably, given the volume of reportage on the supposed pullback of Chinese cash in the Philippines. These reports argue that China’s US$24 billion commitment to the Philippines, comprising US$15 billion in foreign direct investment (FDI) and US$9 billion in aid, has barely materialised since an agreement in October 2016 in which the funds were committed.

These reports also allude to the Philippines’ decision to “give up” its South China Sea claims in exchange for investments, suggesting it was then left high and dry as China turned off the tap. To be sure, the Duterte administration did abandon the Philippines’ previous position on The Hague tribunal verdict that rejected Chinese claims based on its “nine-dash line”.

China has been militarising some of the islands in the South China Sea. Photo: AP

The Chinese have since been heavily militarising some of the islands, Filipino fisherfolk have faced harassment and China has gradually increased its presence in the area. But linking these political manoeuvrings to delays and cancellations of Chinese FDI and aid projects as part of Beijing’s “plan” to elicit geopolitical concessions overlook the real factors that impact investment.

Why is China suddenly seeking Filipino English teachers?

Investment cancellation and delays occur mostly due to factors in the host state. For example, a hydropower project by Power China Guizhou and Philippines Greenergy Development Corp encountered trouble acquiring funds from shareholders because of the uncertainty regarding the recently signed Bangsamoro Basic Law (BBL) that allows a high level of autonomy, including some aspects of sharia law, to the Muslim areas of the southern Philippines. All major investment projects in Mindanao province have been delayed as a result of the new arrangement, as investors are still figuring out the implications for them.