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Opinion | South China Sea: Philippines must softly manage disputes or miss out economically
- Manila’s ‘assertive transparency’ strategy is touted as a model for managing maritime disputes but it diminishes key economic opportunities
- As Chinese investment pours into other Southeast Asian countries, the Philippines can reduce geopolitical risks without acquiescing to Beijing
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The Philippines is going all in with the United States and bracing itself against lost Chinese largesse. President Ferdinand Marcos Jnr will fly to Washington next month to attend the US-Japan-Philippines trilateral leaders’ summit. It will be his fourth visit to the US since taking office as president less than two years ago.
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His trip comes as tensions in the South China Sea intensify and economic ties with Manila’s top trade partner begin to suffer. A recent report by the Griffith Asia Institute at Griffith University indicates a 100 per cent drop in China’s construction and non-financial investments in the Philippines last year. Based on the data, the only other Southeast Asian country in this category is strife-torn Myanmar, proof of how much the maritime dispute between China and the Philippines has affected economics.
This gives a whole new meaning to Marcos’ visits to the US, Japan, Australia and Germany to court investments and diplomatic support. It also raises the salience of the recent American trade and investment mission to Manila led by US Commerce Secretary Gina Raimondo.
Chinese finance and supply chains are transforming Southeast Asia’s infrastructure, renewable energy, mineral processing and electric vehicle landscape. But the Philippines is being left out. Does Manila’s drive to reduce China’s role in its economy come at the price of losing out to its peers in the Association of Southeast Asian Nations?
The Philippines’ “assertive transparency” regarding disputes in the South China Sea has imposed reputational costs on China. Having done so without suffering backlash was hailed as a vindication, making Manila’s approach worthy of emulation by other claimants. But this faulty view discounts lost opportunities.
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China not openly employing economic coercion does not mean the Philippines did not take a hit. Funding for three major railway projects was scuttled. Chinese inbound tourism dropped from a record high of 1.7 million arrivals in 2019 to fewer than 264,000 last year.
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