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Philippine President Ferdinand Marcos Jr attended the Belt and Road Initiative (BRI) summit in Beijing, marking the 10th anniversary of the US$1 trillion infrastructure-building program. Chinese President Xi Jinping announced nearly $100 billion in new state policy bank financing for the initiative. However, the Philippines won’t be among the recipients of China’s largesse or shared future as Marcos Jr’s administration swerves away from China’s troubled program for paving its global influence.
The Philippine Department of Transportation has terminated major infrastructure projects with China, favoring Japanese and Western competitors. The Senate reports that China’s investment initiatives in the Philippines are uncertain due to economic and political factors. China’s “pledge trap” diplomacy during Duterte’s administration involved forward-deployed concessions in the South China Sea in exchange for illusory investment pledges. Marcos Jr’s departure from the Belt and Road Initiative (BRI) is rooted in contested territories.
The Marcos administration has retracted its commitment to a “new golden era” of bilateral relations with China, focusing on a stronger US military presence. The Marcos administration is set to gain access to military facilities near the South China Sea and Taiwan’s southern shores under an expanded Enhanced Defense Cooperation Agreement (EDCA). However, the Belt and Road Initiative (BRI) is under strain due to China’s economic slowdown, property crisis, and investment debacles overseas. China’s overall BRI-related activities have declined by around 40% since 2018, partly due to declining financing from Beijing and regulatory hurdles.
A recent Research report found that many recipients of Chinese finance are subject to significant debt distress. China has spent up to $240 billion to bail out BRI recipient nations on the verge of bankruptcy, most notably in Sri Lanka and increasingly in Pakistan and Laos. The heightened China-Philippine sea tensions have coincided with a virtual collapse in bilateral investment deals, with nearly all of Beijing’s infrastructure investment pledges now in jeopardy.
The Philippines is seeking alternative deals from traditional investment partners like Japan, South Korea, the US, and the European Union due to the lack of financial commitment and onerous terms of Chinese-funded projects compared to Japan’s concessional loan programs. The Marcos Jr administration warned of the potential cancellation of Chinese-backed projects due to lack of meaningful progress on the ground. Philippine Senator Sherwin Gatchalian reported that as many as six big-ticket Chinese projects are now being reconsidered due to Chinese delays, concerns over lending terms, and broader geopolitical frictions.
Manila is expected to target Chinese projects such as the Samal Island-Davao City Connector, Chico River Pump Irrigation Project, New Centennial Water Source — Kaliwa Dam Project, Philippine National Railways South Long Haul Project, Mindanao Railway Project Tagum-Davao-Digos segment, and closed-circuit television in Metro-Manila. As the Philippines pulls out of China’s Belt and Road Initiative (BRI), the risk of a more volatile downward spiral in bilateral ties is rising. It remains to be seen whether Japan, the US, South Korea, and Europe will fill the infrastructure gap China had earlier pledged to address.