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Belt and Road

China stages comeback in Philippine telecoms and rail sectors

Xi Jinping's state visit opens door for Manila's participation in Belt and Road projects

Visiting Chinese President Xi Jinping and Philippine President Rodrigo Duterte wave to the media before their one-on-one meeting at the Malacanang presidential palace in Manila, Philippines, on Nov. 20.   © Reuters

MANILA -- China is making a big comeback in important sectors in the Philippines including telecommunications and railway, following a series of deals that went wrong, thanks to President Rodrigo Duterte's Beijing-friendly foreign policy.

Marking the first state visit to the Philippines by a Chinese leader in 13 years on Tuesday, President Xi Jinping brought with him billions of funding contracts and investment pledges, giving him a fresh diplomatic edge in the country at the expense of the U.S. amid intensifying competition for regional supremacy between the world's two biggest powers. Just last month, the U.S. said key trade issues with the Philippines had been resolved, paving the way for talks on free trade.

"President Duterte and I both agreed to elevate our relationship into [a] comprehensive strategic cooperation," said Xi, standing alongside Duterte during a news conference to conclude their bilateral meeting and at which reporters were not given the opportunity to ask questions.

Duterte said they discussed the Philippines' "participation in China's Belt and Road Initiative," after U.S. Vice President Mike Pence over the weekend warned that countries accepting loans tied to China's signature infrastructure program could compromise their sovereignty.

China agreed to fund the 18.7 billion pesos ($365 million) Kaliwa dam and take part in the $3.3 billion southern Luzon railway project. A memorandum of understanding on oil and gas development was also signed between the two countries, but it was not immediately clear whether it covered disputed parts of the South China Sea. Xi also gave the green light for the importation of Philippine coconuts to China and the entry of Filipino English teachers.

Construction and engineering company China Gezhouba Group, meanwhile, formally expressed an interest in investing $2 billion in an industrial park at Clark Air Base, a former U.S. military base that Duterte aims to transform into a modern city. China's move comes after Manila complained about U.S. companies' apparent lack of interest in joining the redevelopment.

Ahead of Xi's arrival, the Philippine government on Monday officially named the China Telecom-backed Mislatel Consortium as the country's third major telecom player despite security concerns. The consortium promised to spend 257 billion pesos over five years to carry out Duterte's mission to dismantle the current duopoly.

Xi's visit marks China's return to vital sectors in the Philippines after a history of shady and scuttled deals that damaged bilateral ties. In 2007, a $329 million national broadband network project by Chinese company ZTE was canceled amid allegations of corruption. In 2012, Beijing abruptly canceled a $400 million loan agreement for a railway project when former President Benigno Aquino pressed the Philippines' claims in the South China Sea, much of which Beijing regards as its territory.

But the present political environment has been favorable for Xi. "There is a deep trust and confidence [between our] governments," Duterte said.

Upon assuming office in 2016, Duterte embraced China and made revitalizing ties with his giant neighbor a bedrock of his foreign and economic policy. In July of that year, he set aside Manila's arbitration victory over the South China Sea dispute after a court in The Hague ruled against China.

During a state visit to Beijing that year, he won $24 billion-worth of investment pledges from China as he announced his "separation" from the U.S. following criticism by former U.S. President Barack Obama of Duterte's brutal war on drugs. Since President Donald Trump was elected, ties with Washington have improved.

Hoping to seal a joint exploration deal in the disputed South China Sea waterway, Duterte told reporters in Singapore last week that the "reality" was the area was now "in China's possession." Domestic critics accused him of weakening Manila's claim.

But despite the red-carpet treatment from Duterte, Filipinos remain skeptical about China's motives in their country.

A survey by Manila-based pollster Social Weather Station released on Tuesday showed 84% of Filipinos believed it was "not right" to tolerate Beijing's reclamation and military build-up in the South China Sea. The same survey showed Filipinos' overall trust in China remained "poor" despite Duterte's efforts to improve relations. In contrast, net trust in the U.S. remained "very good," but was "moderate" for Japan.

Early Tuesday, protesters carrying placards that read "Philippines not for sale" and "China, out of PH waters" picketed in front of the Chinese embassy in Makati City. Others took their protests to social media by turning their Facebook profile photos into Winnie the Pooh, the Disney character that has been banned in China after it was used to lampoon Xi.

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