China’s plan for the Philippines

Oops. Strategy revealed. [Photo source: PhilStar]

By JoeAm

As I look at what is happening in and around the Philippines, I don’t think it is a great mystery as to what China’s plan for the Philippines might be. I mean, figuring it out is easier than reading tea leaves.

The Main Goals

The first thing we have to recognize is that China operates for China’s interests, as is proper. Life’s not a charity. And we can figure that two top-line interests are in play, one strategic, the other pragmatic.

  1. Rise to the nation’s proper place of global dominance equal or superior to the United States. Defend the nation. End the abuses that have transpired throughout history.
  2. Feed the nation. Keep the economy growing and stable. Keep Chinese citizens employed, reasonably happy, and reasonably safe.

Action Plan

Given the two main goals, what are the action steps China can deploy regarding the Philippines? It is pretty straightforward, I think:

  1. Capture the seas.
  2. Control government.
  3. Dominate the land.
  4. Provide living space and jobs for Chinese.
  5. Use cheap Filipino labor to make money.
  6. Push eastward to mine the Philippine Rise and acquire mid-Pacific islands.

There might be ancillary goals like drug running to give the Philippine government more tools to work with in controlling matters. And there might be contingencies such as orchestrated collapse of the Philippine economy if the yellows get frisky (pull out the gambling workers and watch the real estate industry collapse and bring down the banks). But if things go to plan, that won’t be necessary.

If we tried to eyeball a “percentage completed” accounting of progress on plan achievement, we might pencil in something like this:

  1. Capture seas: 75%
  2. Control government: 65%
  3. Dominate the land: 5%
  4. Provide living space: 5%
  5. Use the labor: 1%
  6. Push east: 1%

American Interests

American Secretary of State Pompeo visited the Philippines last week. It was a fairly typical State visit, both sides expressing their affection for the other, and Secretary Pompeo softly nudging the Philippines on human rights. The Secretary did give a harder, clearer reading about the American understanding of the Mutual Defense Treaty: it DOES include the contested seas, and the US would respond militarily if Philippine ships or islands were attacked militarily by China.

We can see this is pertinent to the first Chinese action step, “capture seas”. What is interesting is that China need not take any hard military action because 75% control is sufficient to move forward with other goals. The US can float her boats all over the place, the Chinese will put up the usual protests, and China will remain in control, gradually building up capabilities and working on the other action steps.

The US has no boats to float in Philippine governmental affairs. US work to fight terrorism with the Philippines is of mutual benefit so can continue as a separate, compartmentalized operation that does not affect China. China will continue to acquire land and ports and commercial projects and become dominant on the land.

The US is irrelevant, beyond the seas.

Philippine Interests

What are Philippine interests in this global partnership with China?

Well, there seem to be three groups with different takes on it:

  • One group consists of those who operate from inside the Chinese embrace. We can include the primary agents (Duterte, Go, Cayetano, Uy, Locsin) and those who are willing enablers (Angara, Poe, Pacquiao, Sotto, Pimentel, Villar, Arroyo and the whole lemming House of Representatives) who are helping China secure her goals. They gain personally by doing so and don’t care who is master.
  • The other consists of those who would argue that China’s interests penalize Filipinos and that ought not be allowed. The Philippines ought to manage her domestic affairs to prevent foreign dominance, as the Constitution says. And she ought to enforce her human rights obligations. In this group we find the ‘yellows’, in the main, and a few latent patriots like Senators Villanueva and Lacson. They object to some aspects of China’s soft invasion, like massive illegal immigration.
  • The needful masses who don’t know and don’t care about any of this.

Looking at China’s plan, we immediately focus on action step number 2 because that determines how the Chinese (and Filipino agents) manage goals 3 through 6.

The 65% completion figure means China is in control of Philippine government today . . . she has her preferred President well in hand and work is being done assertively on many fronts to “move in” to the Philippines: ports, construction, Chinese immigrants and workers, control of resorts and Marawi, land acquisition for agriculture, investments in telecom, casinos, reclamation in Manila Bay, control of Clark Green City, and possibly ship-building in Subic.

It’s impressive.

However, it is worth noting that 65% is closer to 50% . . . and loss of control by China . . . than it is to 100% and total, assured control.

So Filipinos DO have a say in matters, right now.

By 2022, they may have none.

What does it mean for us?

If China’s plan succeeds, it means the Philippines will become a lonelier place for those of us who are fond of Filipino autonomy. It will become busy with Chinese interests and people, none of whom are really enemies of Filipinos, even if they do take the best jobs. The Philippines will become closer to China than even Taiwan, with a compliant leadership doing the orchestrations of domestic affairs, for generous receipts.

There will still be schools and jobs, and jobs overseas, for even the Chinese need domestic help. Filipinos who are studious in science or law, and Mandarin, may still find their way forward in professional occupations, business, health care, security agencies, and government agencies.

The law and justice will be tools of an increasingly autocratic State, as they are becoming now. Moral principles assuring fairness and kind treatment will disappear. Advocating for human rights will be declared unpatriotic. Filipinos will mostly be laborers for Chinese strawbosses. Order-takers.

And Doctor Jose Rizal will shudder in his grave, understanding full well that moral indolence is the worst kind of indolence.


78 Responses to “China’s plan for the Philippines”
  1. Micha says:

    Duterte’s Philippines is like a wife who finally had the courage to stand up and say enough to her abusive and domineering husband only to run into the arms of a new lover who turns out to be equally abusive and domineering.

    The abused wife (inangbayan) could have pursued the path of reclaiming her dignity and honor, as many formerly abused women do, by standing on her own two feet, build a career or livelihood (national economy) and become more self reliant.

    Duterte’s Philippines could have treated both China and the US as peers in the international community of nations instead of masters by which to become subservient.

    Pompeo’s briefing speech at DFA with Locsin stressed the new nature (surprise!) of Phil-Am relationship along the lines of partnership instead of dominance. Which is just as well if indeed true or pursued more concretely and not just empty words pleasing the ears but devoid of substance. In fairness though, that aspect of relationship requires more work or doing on the part of the Philippines than it is on the US provided that the latter will actually give us enough independence to craft domestic policies instead of, as in the past, operating on the shadows of the Washington Consensus.

  2. edgar lores says:

    1. It is in the context of our international relations that we appreciate the significance of the virtue of independence that Justice Carpio speaks of.

    2. In our relations with the US before and China now, we get to see the extent of our amoral interdependence. It resides not only in the transactions within the family, the clan, the tribe, and the nation but beyond our shores.

    3. We are as children and must have someone or something to cling to.

    4. In the same way that we do not yearn for freedom, we equally do not yearn for independence. Then we would have to make difficult decisions of what clothes to put on, what shoes to wear, and which way to comb our hair.

    5. If you saw how Duterte dressed for his meeting with US Secretary of State Mike Pompeo, you will know how difficult it is to be an adult.

    5.1. The man has no conception of what is proper, what is protocol, what is pride!

    5.2. Is it any wonder that we have fallen into the clutches of the Dragon not like a damsel in distress but like a pliant prosti?

    6. The future of the country is bleak as delineated in the closing section of the blog. We, a free people, are enchaining and enslaving ourselves to the cruelest of countries that the world has ever seen.

    • Micha says:

      We can kiss our independence goodbye everytime we incur debt denominated and payable in currencies other than our own.

      The dumbest and stupidest thing Duterte did was to beg and acquire loans from the Chinese to finance his build build build projects.

      He prostituted the country with those loans. It is also an easy source of corruption in the manner those monies are allocated. There’s a big chance that his sidekick Bong Go’s senatorial campaign is being financed, in whole or in part, by Chinese monies.

      • karlgarcia says:

        Why not have a bayanihan fund that earns interest of 4 trillion php annually to fund our budget.

        Let us say the one percenters number 1.07 million
        If they all give a million that is more than1,000000,000 ,000

        More than 1 trillion from the one percent of the population

        If the 99 percent can give 3 trillion, we are financed for a year. If we do it yearly then we are financed yearly.

        If only life is not complicated.

        • Micha says:

          The national gov’t could source all its funding via congressional fiat. Taxes do not fund gov’t spending. Taxation is a fiscal policy tool to help stabilize the purchasing power of our local currency.

          Issuing gov’t bonds or treasuries also does not fund gov’t spending except for those we issue for international currencies (dollars, euro, yen, pound, etc.) to cover current account deficits and are therefore used to pay for imported goods and services. All payments in domestic currency can be allocated by congressional authority without necessarily having to tax or borrow.

          • karlgarcia says:

            Thanks again.

          • karlgarcia says:

            I have a problem with the sin tax collections as a source of funding for the Universal Health Care law.
            Let us say less people smoke bbecause they just could not afford smoking. then where do you get your funds for healthcare.

    • It is bleak as an autonomous country, it would appear. There are two elections yet to be had which will pretty much seal the fate of the nation. The character of the Senate in 2019 and the character of the President in 2022.

      Your point 4 is very striking, the absence of yearning for independence. The yearning exists among the educated few who have moral principles like fairness and inclusion, but not among the autocrats and subject who seek either to dominate or do what they are told. It is so unlike Latin American states, I think, and certainly countries like Viet Nam.

  3. sarsibodhi says:

    “The US is irrelevant, beyond the seas.” The US need not fire a single shot to drive the Chinese away from anywhere. This can be achieved by destroying the Chinese economy through tariff wars, imprisoning Chinese executives who violate US embargoes to Iran, not permitting US tech companies who blatantly share tech secrets with their Chinese counterparts to do business in China, etc.

  4. karlgarcia says:

    China can suck up to the Angara’s of Aurora, powers that be in Isabela and Enriles of Cagayan for that Eastern seaboard ambitions.

    Plus, they should closely watch the Quezon Canal Authority development and push it so it would be easy to go from West to East and vice versa.

    The long stalled pacific coast cities will finally come to fruition with China at play.

    Those mentioned above can spell D-O-O-M or C-H-A-NC-E ( opportunity is longer).
    Life is what we make of it, we can make lemonades or keep on obsessing on what to do with the lemons.

    • Yes, the question to me is, who will run the Philippines in 2050? Filipinos or a new class of Chinese oligarchs with allegiances more to China than Filipinos? Certainly, it is hard to read any deep allegiance to the Philippines from Poe, Angara, Villar, etc.

      • karlgarcia says:

        At least the Villars are still prpudly Filipino and I don’t think the young daughter will go into politics. I maybe wrong again.

  5. karlgarcia says:

    So Panelo I was put under the bus by China by saying that they wouldn’t deport Filipnos.
    Panelo does not care if he keeps on losing face as long as he dresses up and keeps his chin up.

    No problem with Chinese workers so long as there work permits are above board and so long as they behave and if it is true that they are more trained than pinoy so then they must share their training with pinoys especially in licensed manufacturing like shipbuilding, aircraft building, etc.

    But if it just construction then out they go.

  6. karlgarcia says:

    Carlos Jugo’s exchange with Joeam was once a blog discussion here.
    He opined that we should be good neighbors and not be racists or something to that effect
    He may have his reasons.

    Foreign consultants, doctors, professors even basketball or Olympic training coaches have a different pay scale, foreign executives in the boardroom too.

    So that is another hole in the dike, you either plug everything or build a stronger dike.
    We must rethink,reinvent, and reinforce and reimplemplent.

    • If the Philippines got Singapore style emphasis on productivity and honesty with close ties to China, great. But China gives plenty of evidence of having a corrupt rather than honest backbone, and Filipinos would get cut out of the dominant picture either way.

  7. karlgarcia says:

    What or what not to look forward to regarding ARIA.

    What ARIA Will and Won’t Do for the US in Asia

    On the very last day of 2018, U.S. President Donald Trump signed into law the Asia Reassurance Initiative Act (ARIA), which according to the White House “establishes a multifaceted strategy to increase U.S. security, economic interests and values in the Indo-Pacific region.”

    The act represents an attempt by the U.S. Congress to exercise a degree of oversight over the White House’s implementation of the Asia policy that is articulated in the 2017 National Security Strategy and the 2018 National Defense Strategy documents.

    It also puts money where the United States’ mouth has long been by authorizing the appropriation of U.S.$1.5 billion a year for a range of programs in East and Southeast Asia. In doing so, it acts as ballast for the United States’ self-professed Indo-Pacific strategy, which continues to remain mostly in the realm of rhetoric.

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    The act’s appropriations will be a welcome change for U.S. partners and allies in the region, many of whom have watched with disappointment as Congress has cut funding for the Asia Maritime Security Initiative – an older capacity-building initiative – by about half to U.S.$48.2 million.

    The primary motivator behind the act is the challenge perceived in the U.S. Congress – on both sides of the aisle – of dealing with China’s rise. The activities it encourages and the reporting it requires from the executive branch speak to those objectives.

    But it also focuses on other issues, including human rights, terrorism – especially in Southeast Asia – and nuclear disarmament on the Korean peninsula, requiring the president to certify to Congress in writing a justification for any kind of sanctions relief granted to Pyongyang.

    The act recognizes the hierarchies of networked relationships that the U.S. maintains in Asia, which encompass first of all treaty allies like Japan, South Korea, the Philippines, Thailand, Australia and New Zealand. These relationships are then followed by those with strategic partners like India, and security partners like Singapore, Indonesia, Malaysia and Vietnam.

    The new act takes a particular interest in Taiwan and has been welcomed on the island as a renewed show of U.S. congressional commitment. Trump’s signing of the bill presaged Taiwanese President Tsai Ing-wen and Chinese President Xi Jinping’s respective New Year statements on the cross-strait situation, underlining the continued rise in tensions between Taipei and Beijing since Tsai’s 2016 election win.

    Building on the Taiwan Relations Act, the ARIA calls for the U.S. president to support the transfer of “defense articles” to Taiwan and promote high-level official visits, which were also encouraged by the Taiwan Travel Act.

    If it does fall short, it may be in being a little behind the times on the current geographic understanding of the Indo-Pacific in the United States. Broadly, the term encompasses the entire area of responsibility that falls to U.S. Indo-Pacific Command (formerly the Pacific Command), which covers the Pacific Ocean all the way to the westernmost tip of India.

    The ARIA welcomes a continued close relationship with India, but does not measurably move the needle or initiate notable new projects with the United States’ largest democratic partner.

    In a sign of what may be to come, the U.S. navy conducted its first freedom of navigation operation in the South China Sea – in the Paracel Islands – just days after Trump signed the new act into law.

    The bill also calls on the U.S. president to “develop a diplomatic strategy that includes working with United States allies and partners to conduct joint maritime training and freedom of navigation operations in the Indo-Pacific region, including the East China Sea and the South China Sea, in support of a rules-based international system benefiting all countries.”

    In the broader picture of growing U.S.-China confrontation, the ARIA should primarily be seen as a bipartisan show of support for a more engaged U.S. in Asia – and a statement of concern about China’s rise.

    In the end, it is a sign of the times and a recognition that the Trump National Security Strategy’s open assertion of a great power competition between the U.S. and China is shared by lawmakers – Democrat and Republican alike.

    This article first appeared in the South China Morning Post. It is republished here with kind permission.

    • Thank you for that briefing. I think the Philippines has or will benefit from that appropriation. I recall some ‘gifts’ being made to the AFP. But the skepticism that flows through the article is hard to make go away. Sailing ships around is very different than firing a cannon. Even Secretary Pompeo’s assurances that the Mutual Defense Treaty covers the contested seas is one step short of a red button the Philippines can press if attacked, and know that the US is 100% immediately on the way, guns locked and loaded.

  8. karlgarcia says:

    Is the Philippines’ Pro-China Policy Working?

    To the extent that his words matter and policy has followed suit, President Rodrigo Duterte has tried to engineer a dramatic pivot in the Philippines’ foreign policy. Early in his administration, he antagonized traditional economic and political allies like the United States (then under President Barack Obama) and later the European Union (due to its calls to respect human rights in the midst of the Philippine government’s campaign against illegal drugs). Duterte also promptly initiated a rapprochement with China, and most recently he even began discussions of possible joint exploration of the resources in the West Philippines Sea (Manila’s name for the part of the South China Sea it claims). Duterte claimed all of this is part of an effort to build a more “independent” foreign policy for the country.

    There are mixed views on whether and to what extent the country has achieved a truly independent foreign policy, yet one can credit the Duterte administration for its audacity. The Philippines’ relationship with China — even given the territorial disputes — could still be a fruitful one, economically. One question, however, is whether this approach has necessarily yielded more economic benefits for the country.

    This brief analysis outlines a surprising trend in terms of the country’s evolving relationship with China — more inflows of tourists and workers, yet still very little by way of investments and trade. These trends raise both opportunities and risks from an economic development and national security perspective.

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    People Flows

    Arguably, the country’s rapprochement with China has drawn more Chinese nationals to the Philippines. As a matter of fact, from August 2015 to August 2016, there was a marked surge – an increase of about 79 percent — in Chinese tourist arrivals. This was followed by 33 percent and 42 percent growth in 2017 and 2018, respectively.

    China is now the second largest source of tourists, registering about 645,000 arrivals in the first eight months of 2018 and only behind South Korea.

    Figure 1: The number of Chinese tourist arrivals in the Philippines, measured in thousands, from August 2007 – August 2018. Data from the Department of Tourism.

    Table 1: Comparison of tourist arrivals in the Philippines by country of origin (in thousands). Data from the Department of Tourism.

    Shadowing this increase in tourism is a reported increase in the number of Chinese workers in the Philippines. In 2016, at least 41,000 foreign workers were given alien employment permits (AEPs) — a remarkable leap of almost 47 percent from the previous year, which saw only about 28,000 working permits.

    Of these, Chinese nationals account for a remarkable proportion – some 45 percent — of foreigners issued working permits. Though there seems to be a growing number of officially recognized Chinese workers entering the country as early as 2012, a dramatic spike is very evident since 2016. The number of Chinese workers with work permits grew by about 108 percent between 2015 and 2016 in comparison to a mere 7 percent growth for Japanese and Korean workers combined. The number of Chinese workers then grew by 27 percent in 2017.

    Figure 2: The number of foreign nationals issued an Alien Employment Permit (AEP) in the Philippines, 1978-2017. Data from the Philippine Statistics Authority.

    But while the share of Japanese and Korean investments grew by 18.25 percentage points during this period, Chinese investments share expanded by a mere 0.38 percentage points. Clearly, for a smaller share of investments, the Chinese have been sending more workers into the Philippines.

    Meanwhile, Philippines-China trade has also experienced a rather mild improvement, rising from $699.48 million to $939.98 million between August 2017 and 2018, a 34 percent increase. Investments from China are also lagging in terms of magnitude, when compared to other source countries. In 2017, China’s share of new capital investments in the country was only a minuscule 0.9 percent of the overall net equity capital.

    While it is true that the Philippines saw a surge in equity capital from both China and Hong Kong in 2016, data from the Philippine Central Bank reveals that most of this surge occurred only in the last two months of 2016 — immediately after Duterte’s first state visit to China. The fact that this surge was not sustained, and was still smaller than equity inflows from Japan in the same year, underscores the minor character of the investment gains of the China pivot. Central Bank reports indicate that part of the 2016 China investment surge may have been partly caused by the entry of Chinese offshore gaming firms, though other kinds of investment in the financial sector, real estate, and professional services, among other sectors, were also involved.

    Table 2. Net equity capital in the Philippines by source country, 2013 – 2017 (in millions, USD). Data from Bangko Sentral ng Pilipinas (BSP).

    Meanwhile, Philippines-China trade has also experienced a rather mild improvement, rising from $699.48 million to $939.98 million between August 2017 and 2018, a 34 percent increase. Investments from China are also lagging in terms of magnitude, when compared to other source countries. In 2017, China’s share of new capital investments in the country was only a miniscule 0.9 percent of the overall net equity capital.


    Chinese investments have grown dramatically, however, in the areas of real estate and online gaming. In 2016, the Philippine Amusement and Gaming Corp. (PAGCor) issued rules to regulate operations of the Philippine Offshore Gaming Operators, entities who offer online gaming services to foreign players. More than 50 offshore gaming firms were given permits to operate and cater to Chinese clients. The demand for Mandarin-speaking workers, tied together with the more relaxed visa application, helped boost influx of Chinese nationals in the country.

    In turn, the resulting immigration led to a high demand in properties near the areas where online gaming firms are located. Ayala Land, one of the county’s biggest real estate developers, revealed that in 2017, 49.4 percent of its international sales were from Chinese buyers. American and Singaporean buyers followed at 15.2 percent and 5.4 percent of sales, respectively.

    SM Prime Holdings, on the other hand reported a 10 percent increase (from less than 5 percent in the previous year) in international sales from Chinese nationals. DMCI Holdings, another big player in the real estate development industry, also disclosed that more than 50 percent of their international sales during the first quarter of 2018 were accounted for by the Chinese.

    While it’s true that Chinese investors now drive part of the real estate growth in the country today, and that local real estate developers make remarkable profits in the blooming ties between the Philippines and China, this nevertheless leaves the local economy vulnerable in different ways.

    One-Sided Economic Growth?

    The surge of foreign Chinese workers in the country (mostly toward the gambling areas in Manila Bay) has fueled a scramble for properties for living and working areas — anecdotal evidence suggests that this has increased the real estate prices in some areas particularly affected.

    In the last three months of 2017, prices of houses along Manila Bay increased by 27 percent, while condominium unit sales are at an all-time high, with 52,600 units sold in 2017. The increase in housing prices makes living costs for the average family more expensive and may offer them no choice but to move farther away from the areas they prefer to live in.

    Meanwhile, reports from a few local government units cited social problems brought about by the influx of Chinese immigrants, which include excessive drinking and gambling.

    There has also been speculation that a large number of Chinese immigrants illegally entered and are illegally working in the Philippines. In December 2016 to January 2017, more than 1,000 Chinese illegally working in Clark were caught and sent back to China.

    As noted earlier, according to the Department of Labor and Employment (DOLE), only 45,000 foreigners (of these, 29,000 Chinese) have been issued alien employment permits (AEPs) in the Philippines. Yet there are an alleged 400,000 foreigners — most of them Chinese — who are employed by the Philippine Offshore Gaming Operators (POGO). This is almost 10 times the total number of foreigners that received official work permits. If these numbers are true and there are allegations of corruption, then this should be investigated immediately — these raise not simply economic but also national security issues.

    The launch of POGO in 2016 by the Duterte administration increased the number of Chinese nationals applying for AEPs, from 5,412 workers in 2013 to 18,920 in 2016. The AEPs are supposed to be issued to foreigners in the event that no local worker is capable of executing the job. This brings up the question of whether these foreign workers actually perform jobs that Filipinos aren’t able to do.

    Senator Franklin Drilon raised the issue in a budget hearing by DOLE in September 2018. He charged that Filipinos are being robbed of employment opportunities that Chinese workers have already filled in the online gaming industry.

    Similar patterns are apparent in China’s relationship with countries like Cambodia and Laos, as both ASEAN countries have allowed Chinese gambling into their major cities. Thirty Chinese casinos have been already built in Cambodia and an additional 70 are under construction. Upward pressure on the prices of accommodations and real estate properties due to higher demand from Chinese developers has also become common in Laos and Cambodia.

    So far the emerging figures from the economic sphere following the Philippines’ rapprochement with China paints a mixed picture. Investments and trade are not dramatically higher — but people flows, in terms of tourists and workers, are up. From an economic perspective, Chinese tourist revenues are definitely a welcome boon to the Philippines’ tourism industry. But more Chinese workers is less appealing, given the country’s challenges to create enough jobs for the vast majority of its young workforce.

    (Note that China on the other hand, has not been a traditional destination of overseas Filipino workers due to prior restrictions set by the Chinese government. Based on the records of the Department of Foreign Affairs, only about 13,000 overseas Filipinos were working in Mainland China as of 2017.)

    The rising number of Chinese in the country has also raised concerns regarding the Philippines’ national security, particularly since China has continued its very aggressive moves to occupy large parts of the South China Sea. Given pertinent national security issues as regards the country’s relationship with China, these trends clearly need to be monitored using both an economic and national security lens at least.

    *The piece has been updated to provide additional clarity on the equity inflows from China and Hong Kong.

    Ronald U. Mendoza, PhD is Dean and Associate Professor at the Ateneo School of Government, Ateneo de Manila University in the Philippines. He has worked with UNICEF, UNDP, the Federal Reserve Bank of Boston, the Economist Intelligence Unit (EIU), and several Manila-based non-governmental organizations. He is also currently a Senior Fellow with the East West Institute in New York City.

    Miann S. Banaag is a Statistician at the Ateneo Policy Centre, a public think tank housed in the Ateneo School of Government, Ateneo de Manila University in the Philippines. Her current work includes application of empirical and analytical methods in policy research.

  9. NHerrera says:

    From the blog on “hope” we are back to the big realities. This century is supposed to be about the waning influence of the US — hastened by the likes of Trump and his supporters in the US Legislature — and the ascendancy of China and India.

    Speaking of probabilities, it is a question of how a country “sells herself” in that spectrum [I choose not to use the pr … word or the strike-through device employed by edgar] — from that used by Singapore thanks to its leaders, to the extreme other end used by the Philippines.

    But wait. There is a bigger coming force: the force to be unleashed by Climate Change. [I refer the reader to an earlier TSH blog on the subject.]

    Their’s not to reason why,
    Their’s but to do and die:
    Into the valley of Death
    Rode the six hundred.
    Cannon to right of them,
    Cannon to left of them,
    Cannon in front of them
    Volley’d and thunder’d …

    • NHerrera says:

      Off topic

      In my note above, I referred to Trump and his enablers in the Legislature. Here’s my note on the advantage of one who is sufficiently aged and the actions he may take.

      William Barr, the newly installed powerful US Attorney General in one of his answers during his Confirmation Hearing said:

      “I feel I’m in a position in life where I can do the right thing and not really care about the consequences in the sense that I can truly be independent,” Barr said. “I am not going to do anything that I think is wrong, and I will not be bullied into doing anything I think is wrong — by anybody, whether it be editorial boards, or Congress or the President. I’m going to do what I think is right.”

      I hope Barr lives up to that statement.

      Oops, I made that comment too quickly without thinking of Enrile or Estrada. Sorry, folks. [But they are Filipinos.]

      • edgar lores says:

        I have been following NBC News on Individual-1 with great interest.

        Two things stand out for me:

        o The astounding depth of the analyses and revelations — and the interconnection of the dots — despite the redactions of Mueller’s outputs. (Rachel Maddow is a favorite.)

        o The “genius” of American law that can place the sitting President under the microscope… by Special Counsel and the Legislature. (We are lightyears away from this possibility.)

        Other things stand out as well:

        o The intransigence of the Republicans in their defense of Individual-1… although they might agree to deny the existence of a national emergency.

        o The monumental narcissism of Individual-1. Nixon resigned for less.

        o The meticulous way Mueller and the Democrats are gradually tightening the noose around Individual-1’s neck. Trump’s goose is cooked but he doesn’t know it. Perhaps a better metaphor is of the frog being boiled.

        o Mueller and company are leaving no stone unturned… even the prospective pardon of Manafort et al is being blocked by charging the accused with state-level crimes for which federal pardons cannot apply.

        • I think the Democrats will milk this cow until Republicans are destroyed in 2020.

        • caliphman says:

          American law as written is neither smarter or better than Philippine law, the latters constitution being modeled after the former. Its just that in the US the latter is adhered to by the branches and institutions of government in determining how state power is distributed and exercized. Sadly, in the Philippines the law functions more as a piece of paper that those at the pinnacles of government power bend and break, if not use to intimidate opponents and critics alike. The ironic thing is Duterte needs less and less to personally disregard, misuse or abuse the law in muzzling his critics. He has a complicit legislature, judiciary, military and unfortunately an acqueiscent population to enable and do this for him. That the Philippine equivalent of a Mueller or an NBC/CNN or oppoition controlled branch of government being voted in is sheer fantasy in the current situation.

          • Filipino law is more detailed and rigid, I think, and often interpreted in terms of technicalities (like quo warranto removal of CJ Sereno) rather than big-minded values. Building codes are in national law so if the requirements for size of nails changes, it requires an act of Congress. It’s little thinking and control oriented rather than big thinking and inspiring. But you are right in terms of ethical discipline and institutional integrity. The US has a better sense of it in principle and act.

  10. I got blasted for issuing ‘black propaganda’ for this article, on twitter, by a certain Wilson Lee Flores. He wrote:

    18m18 minutes ago
    More Wilson Lee Flores Retweeted JoeAm
    Why this anti #China black propaganda now in the #Philippines? Attempt to politicize & sabotage successful #diplomacy by Pres. #Duterte benefitting #Phil #economy now with booming #tourism, #agriculture #banana exports, #infrastructure cooperation, etc.? @adamgarriereal RT

    Wilson has a hashtag addiction, I fear. I invited him to stop by to join the discussion.

    Here’s his twitter profile:
    Wilson Lee Flores
    @WilsonLeeFlores Follows you
    Writer, real estate entrepreneur, teacher, Pandesal Forum moderator, PhilStar & Pilipino Star Ngayon columnist, baker, economics analyst

  11. caliphman says:

    A simple comment. I do agree that as thr blog states that China’s number one top line interest and strategic goal:
    “Rise to the nation’s proper place of global dominance equal or superior to the United States. Defend the nation. End the abuses that have transpired throughout history.”

    I do believe its second top line intetest should instead be: Read number number one.

    The Philippines to Spain’s regret was a colony that turned out to be a poor economic investment. Not like Mexico and the other Latin American colonies that yielded untold riches of gold, silver, and other already mined bullion. The initial motivation for China as it was for Spain was for the greater glory of the State, Christian nor Communist evangelism not being the former’s driving concern.

    There is nothing about the form, extent, manner and goals of China”s loans to the Philippines which is much different from what it is providing or offering other developing countries in Asia, Africa and South America. The Middle Kingdom has the long standing rapidlly growing economy engine that has fed its starving millions upon millions and lifted a huge segment of its population out of poverty. Finding jobs for its unemployed in unstable, struggling, and more corrupt economies overseas is a questionable premise. More likely its use of its own workers in the gaming and other industries reflects its desire to draw from its successful experience with its gambling enclaves in Macau and Hong Kong and cater to the same affluent Chinese bettors used to these venues. That the state controlled corporations financing, managing, and investing in the Build, build infrastructure projects will prefer a workforce they trust and are familiar with should not be surprising.

    What is indeed different that in the Duterte regime, China has found a very subservient partner. But the main focus is the Duterte’s willingness for political or hidden financial reasons to accept China’s encroachment on its territorial or maritime rights as part of its 10 dash claim over most of the China Sea. The infrastructure loans and construction projects as profitable as they are to their Chinese sponsors are subsidiary to attaining the State’s political goal.

    • Nice assessment. Makes good sense. My own quibble is that your lengthy 4th paragraph indeed confirms that my second top line interest indeed is correctly stated. Number three can be see number 1.

      • caliphman says:

        Yes,that fourth paragraph could be more pithy. But saying that China has a global scale development assistance package targetting underdeveloped economies to promote its international influence and prestige is evidence of its need to find work for its teeming unemployed is a non-sequitur. It concentrates and draws on its construction, civil engineering, gaming, communications, transportation and other proven experience and expertise honed within its borders because the host countries see a credible track record and the state is assured it can delliver the goods and amass the political capital and still get financial gain it seeks in return. It makes little sense for China to pursue an OFW strategy in the Philippines when the lack of employment opportunities has forced. Millipns of Filipinos to seek employment overtseas.

  12. Great response and insights from Chris Albert on Facebook:

    Chris Albert Interesting thoughts on Chinas “take over” the world hopes…. Falls short on a few things I think.

    Firstly they do not control 75% of the West Philippine sea. They might “control” 75% of the Philippine stake in it AT THE MOMENT, but that’s about it. At the same time Taiwan is drifting more and more away and ALL other states around it hit the brakes and stope/reverse co-ops and deals. As far as I can see the western nations will not allow this to develop any further. I also think that all it needs there at the moment is one stupid incident and the whole caboodle will blow up around all our ears. (possible war)

    The 65% of take over of the current admin might well be true. I think two things make this a rather weak deal for the Chinese. Firstly the politicians that cover this are mostly self serving. (your Aroyo, Cayetano etc etc list excluded as they have nothing more too loose). The others will flip-flop on a minutes notice.

    The bigger issue for the current admin so is the “populous” There is a real anti China sentiment in the Filipinos. My own asawa, who is a total anti yellow, hates them, all neighbors do too, Arroyo tried this game before albeit not quiet as drastic, and…..failed. I argued with DDS a while back and all they said to the China take over was ……NEVER wait and see… 🙂

    Maybe even more interesting is that China has huge problems internally. To my eyes they made the biggest mistake when they adapted “State” Capitalism. The opening of both property and stocks to the masses created a huge time bomb internally and I am not so sure that even with all the control they put in place, that can manage the outburst if the markets go down and cause a massive loss in peoples money and assets. There silk-road or road and belt plan is faltering too as too many states are realizing what is at stake. The world economy is slowing and while they might be able to buffer this to an extend by pushing local consume, this won’t last too long, especially if vast amounts of wealth evaporates.

  13. Pablo says:

    2 major incentives were missed in my opinion:

    1. You mentioned that a major objective is to keep the Chinese population reasonably happy. Agreed. But the one-child policy led to an imbalance in the genders. Too many guys will be looking for a wife between now and 2050. And an army of loose men is a recipe for disaster. As Tim Harford showed in “The Logic of Life”, it takes only a relatively small inbalance to lead to totsal social disruption. So, the Chinese government needs to provide women of mariageable age to prevent serious problems. A few million Filipina’s could tip the scale. And trust the Chinese to find an acceptable strategy to achieve this.

    2. The Chinese coastline is too shallow. Submarines approaching China proper stick out like a red flag.
    Have a look at the Philippine coastline and you will appreciate why it is very attractive to China.
    Consider the submarines the “poor man’s army” as it takes only a relatively cheap fleet of submarines to disrupt very expensive fleet of surface vessels. And then, getting control of deepwater access is a must.

    Things are changing fast and resistance in any shape or form is not happening. We better goto school and learn mandarin.

  14. Andres 2018. says:

    What China wants is of course global domination and influence, much like with any other big countries.

    China can do this by having allies.

    One country equals one vote in the UN. See what happen to African countries.

    China can get allies by investing on that country.

    China is basically investing on the Philippines.

    What Philippines can do is grab the money and put it in good use.

    Problem is that, the Philippines is using the money on investments that are not profitable. Profitable here means that it is export oriented.

    Although it is good that Philippines are using the money more on social benefits, it is bad business wise. Like you as an individual, loan from the bank and use the money on buying car and phone and television sets and the likes instead of investing it on a business.

    What the Philippines should do is use the money on activities that can generates export, not on Build-Build-Build.

    West Philippine Sea, if its true that it is abundant in natural gas, go for shared exploitation with China. 70-30, 60-40, in favor of China is a good deal, that is of course assuming that the exploration and the drilling cost is of China.

      • NHerrera says:

        The link

        reports on the research by Capital Economics which examined a range of data including sea freight, electricity generation and financial lending to come up with a proxy gdp indicator [rather than CE’s doubtful view of the Chinese gdp numbers]. Based on that, China’s economy may have only grown by around 5% in 2018 rather than the official rate of 6.6%.

        The link adds:

        Some experts suspect China’s National Bureau of Statistics, which reports much of the country’s data, is more focused on making the government look good rather than giving an accurate reflection of its economic health.

        China’s official growth rate is a lot stronger than those of most major economies, but many analysts doubt its accuracy.

        The bureau is a “Communist Party organ first and an honest statistical broker second,” Derek Scissors, a resident scholar at the American Enterprise Institute in Washington, wrote in a recent blog post.

        Karl, your link gives this paragraph:

        Premier Li Keqiang told the opening session of China’s annual National People’s Congress that the government is targeting growth of 6.0-6.5 percent this year for the world’s second-largest economy, lowering its range from 2018.

        If we believe Capital Economics, the lower end of Premier Li Keqiang’s gdp of 6.0 for 2019 may translate to a proxy gdp even lower than that it estimated for 2018, say hovering in the range of 4.5% – 5.0%. And that may cause a more belligerent attitude towards the Philippines regarding the terms of its Loans and Construction of PH Projects financed by such loans.

  15. karlgarcia says:

    Sen. Nancy Binay asked government officials during the hearing about the participation of Chinese construction workers in 2 bridge projects in Binondo, Manila, which is funded by Beijing.
    Tan said Chinese contractors normally require Chinese workers because equipment being used come with Chinese instructions.
    Binay also questioned the government’s alleged obligation to choose from just 3 contractors endorsed by China for 19 projects.
    Sen. Sherwin Gatchalian, who led the hearing, questioned the government’s decision to finance 19 with China under a “tied up loan.”
    China offers 3.5-percent interest in a 20-25 year payment scheme against Japan’s 0.10-percent interest, he said.
    “Common sense will dictate that we should go to Japan all the time? What is the reason that we go to other lenders?” he said.

    Tan said the government was limiting currency risk while diversifying its funding sources.

    So the instruction manual is in Chinese.

    • And the BIOS of some of those people seems to have been flashed with a Chinese version.

      They thought it was a hairdryer in Kowloon.

    • Andres 2018. says:

      The government will say:

      “Japan could not lend as the amount that China will.”

      “We could not just look into the nominal rates of 3.5% and 0.10% and compare it, many factors running behind it.”

      ….or things like that.

      But i think, PH already exhausted his credit line with Japan.

      • According to Colmenares, the loan agreement for an irrigation project not only has a comparatively high rate, it requires disputes be handled in Chinese courts under Chinese law, and builders may hire only Chinese workers. Well, at some point these kinds of terms become offensive and damage sovereignty, and it would be better not to do the project than to set such precedents.

    • I’ve taken to calling such rationalizations whackadoodle, which means fanatical, because the well being of Filipinos is set aside in favor of China. It is a fancier name than stupid.

  16. chemrock says:

    “And there might be contingencies such as orchestrated collapse of the Philippine economy if the yellows get frisky (pull out the gambling workers and watch the real estate industry collapse and bring down the banks).”

    Absolutely marvellous thinking there. Bet you not a single congee in the great house of congress has any idea on this at all.

    Back in the 70s/80s when I was working in the Moscow Narodny Bank, the Russian bank helped to finance development of a whole swath of properties in the downtown Orchard Road area which was our commercial hub. Those of us in the know suspected exactly what you highlighted here. They had a hand so high up the ass of the country’s economic meter they can engineer big problems for the country.

  17. caliphman says:

    These loan rates and terms are so one-sided and uncompetitive it would be surprising if a hidden gravy train benefiting Philippine and Chinese officials is the driving force behind these projects. Its not that the country’s culture and history is not replete with corrupt government officials enriching themselves at the. expense of the public and clothed under the guise of development. Its just that the extent is probably horrendous given that the loan terms on its face are visibly and blatantly egregious.

    • chemrock says:

      These loans are not just outwardly expensive given that Philippines sovereign debt rating is no longer junk, thanks to Aquino. They are also terribly costly given that these are exim loans. Such loans usually is a subsidised financial package where the creditor country’s objective is export promotion of their products. China has it 3 ways – good interest income, sell products, sell labour. Chinese labour wage remittances will cancel out a significant % of Philippines OFW inward remittances. Take that, mr new president of Bangko Sangtral.

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  1. […] Wilson Lee Flores was complaining about the article I did this past Monday that offered my speculation on China’s plan to bring the Philippines into China’s sphere of influence: China’s Plan for the Philippines […]

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