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US-China tensions

Philippines pushes deals with Chinese company blacklisted by US

Manila says it is 'not a vassal state' and needs Chinese money for infrastructure

Philippine President Rodrigo Duterte attends a meeting with the Inter-Agency Task Force on the Emerging Infectious Diseases at the Malago Clubhouse in Malacanang on Aug. 31. (Photo courtesy of the Presidential Communications Operations Office)

MANILA -- The Philippines will push ahead with infrastructure projects backed by Chinese companies that have been blacklisted by the U.S., President Rodrigo Duterte's spokesperson said on Tuesday.

State-owned China Communications Construction Company has faced fresh scrutiny in the Philippines after its subsidiaries were among those sanctioned by Washington last week for their role in Beijing's reclamation and militarization of disputed areas of the South China Sea.

A CCCC consortium, which includes CCCC Dredging Group, one of the companies that have been sanctioned, is teaming up with MacroAsia, controlled by Philippine billionaire Lucio Tan, for a $10 billion Sangley airport project in the province of Cavite, south of Manila.

President Duterte will not follow Washington's move against Chinese companies because the Philippines is an "independent" country and needs investors from China, presidential spokesperson Harry Roque said, adding that the Sangley airport project would go ahead.

"All other projects involving Chinese companies that are banned in the United States can continue in the Philippines," Roque said in a press briefing. "We are not a vassal state of any foreign power and we will pursue our national interest."

Buildings clearly visible on China-occupied Subi Reef in the disputed Spratly Islands in the South China Sea in 2017.   © Reuters

Cavite Gov. Jonvic Remulla last week said he would wait for the president's directive, while Foreign Affairs Secretary Teodoro Locsin Jr. said he would recommend the cancellation of contracts with companies involved in South China Sea reclamation.

Opposition Senator Risa Hontiveros on Tuesday called for a probe into the "possible collaboration and collusion by entities within the Philippines" in China's island-building actvities in disputed waters.

On Tuesday, China's ambassador to the Philippines Huang Xilian slammed the U.S. for "driving a wedge between China and regional countries" and hailed Manila and Beijing's cooperation, which he said was always based on "mutual benefit and win-win results."

"I believe that any attempt to undermine the normal economic cooperation between China and the Philippines will never succeed," the ambassador said in a statement.

Philippine President Rodrigo Duterte meets with Chinese President Xi Jinping at the Great Hall of the People in Beijing, China, in April 2019.   © Reuters

Before the U.S. move, the Philippine defense establishment had opposed the bid by Chinese interests for the Sangely airport project due to national security concerns. The Philippine Navy maintains facilities near the site, which faces the navy's headquarters across Manila Bay.

The Philippine government, however, is seeking to revitalize an economy battered by the coronavirus pandemic through infrastructure projects.

The economy recently plunged into its first recession in 29 years due to the coronavirus pandemic.

"Our national interest is to ensure the completion of flagship projects under Build Build Build," Roque said, referring to Duterte's signature $180 billion infrastructure program.

CCCC was blacklisted by the World Bank in 2009 for eight years over fraudulent practices in a road project in the Philippines.

But since coming to power in 2016, Duterte has courted Chinese companies for investments in telecoms and other infrastructure.

China Harbour Engineering Company, a CCCC unit that was not subject to the U.S. sanction, has partnered with Philippine company SM Group and Davao tycoon and Duterte campaign donor Dennis Uy for reclamation projects in Manila Bay.

The company also signed a memorandum of understanding to conduct feasibility studies for a railway project linking Clark and Subic Bay, which are former U.S. air and naval bases located to the north of Manila. Such studies are usually stepping stones to actual construction deals.

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