What a difference a year makes… more to the point, what a difference a couple of changes of government make. Twelve months ago, the United States was heralding its Trans Pacific Partnership (TPP), a proposed global-trade juggernaut that would be anchored on East Asia. Meanwhile, China’s ‘Belt and Road’ initiative – a grander scheme altogether – was little more than a twinkle in the eye of its originator, Chinese President Xi Jinping. And in each of these trade groupings the Philippines was stakeless.
It hadn’t signed up to TPP – former president Benigno “Noynoy” Aquino had wanted to as had his mentor in the task, then US president Barack Obama. But conflict with the Philippine Constitution and trying to get that resolved had left insufficient time before the end of Aquino’s term. Meanwhile, by his handling of a territorial dispute with China in the South China Sea, Aquino had virtually ensured his country’s exclusion from the 21st Century Maritime Silk Road, the marine component of the China-led bloc. Thus, in terms of large emerging global trade alliances, the Philippines had been left high and dry.
Today, while TPP is taking on water after US President Donald Trump withdrew his country from it as soon as he took office in January; China – which was never invited to join the TPP – is showcasing its Belt and Road to the world. And the Philippines – once persona non grata with the plan’s architects – has now become a component part of the biggest trading titan the world has ever conceived.
Just in crude numbers, this project transcends 65 countries and is home to 60% of the world’s population which, in turn, represents more than a third of global gross domestic product. Given those figures, it’s hard to come up with an argument for not joining.
Let’s back up a bit. Xi proposed his dual land-and-ocean scheme in 2013. A year later, a map was produced showing the envisioned overland trade route of the Silk Road Economic Belt and the marine path of the 21st Century Maritime Silk Road – a rough facsimile of China’s ancient sea-trade passages. What was conspicuous on the sea route was that the Philippines had not been included while every other part of Southeast Asia – the other nine states that make up the Association of Southeast Asia Nations, the Philippines’ regional peers and trade rivals – were.
That wasn’t caused by some error on behalf of the cartographers; it was deliberate. It was a direct consequence of Aquino’s confrontational approach to settling a dispute with China over a small group of South China Sea islets and cays known as Scarborough Shoal.
Rather than enter into bilateral discussions to deal with the issue – which Beijing had urged –Aquino, encouraged by Obama, elected to internationalise the issue by filing a case against Beijing with the Permanent Court of Arbitration in The Hague. He supplemented that with months of bellicose rhetoric that ended up savaging Philippine exports to the Mainland. It’s not surprising then that the Philippines was left off the map. However, China never closed the door.
At the map’s unveiling a Chinese official – referring specifically to the Philippines – had this to say: “With the future development of the 21st Century Maritime Silk Road, I think that there will be more opportunities for both sides to have future developments”. More pointedly, he added: “If you [the Philippines] want to join in and put more passion and attach more importance to it, I think that depends on your government, because China is open to all countries who are ready; who prefer to join the initiative”.
And Beijing stayed true to its word which is why tomorrow and Monday Philippine President Rodrigo Duterte will be seated at the top table for the Belt and Road Summit being held at the 270,000 square metre China National Convention Center (CNCC) in Beijing and at the picturesque Yanqi Lake (photo) some 50 kilometres northeast of the Chinese capital.
He’ll be among 29 heads of state from four continents, ministerial-level representatives from 80 other countries and around 1,000 official delegates who’ll be at the CNCC and “the lake where wild geese take a rest” for China’s biggest production of the year – a mega forum that will explain and promote the vastness of this Chinese-bankrolled transcontinental infrastructure enterprise. They’ll get a clearer view of the blueprint for linking Asia, Africa and Europe via a network of roads and railways, ports and shipping routes. And they’ll see first hand the trade potential that being a member of this bloc has for each of them.
We believe that the 21st Century Maritime Silk Road was always a factor in Duterte’s calculus when weighing his foreign-policy options. While seeking peaceful coexistence with his large northern neighbour and repairing the damage of the previous four years which saw Manila-Beijing relations plunge to all time lows was high on Duterte’s agenda, from an economic point of view he knew he couldn’t afford to let his country be excluded from a global initiative that could breathe new life into Philippine trade – a sector that was in troubled straits.
Isolation from this grouping, plus the inability to access infrastructure funds – the Chinese Development Bank alone has set aside US$890 billion for around 900 projects – would leave the Philippines marooned and deliver a massive handicap in terms of its competitiveness just within Asean. The spectre of the Philippines as the “Poor Man of Asia’ most likely loomed.
Thus, even while he was still campaigning for the presidency, he was already playing down the South China Sea issue. And he’s done so ever since – even despite the arbitration court’s ruling in the Philippines’ favour. This doesn’t mean he’s forgotten it or is ignoring it, it means that in the bigger picture – the one that shows the Philippines’ future – it doesn’t figure so large.
Furthermore, had things been different and Trump had carried the baton for Obama with TPP, Duterte still would not have joined. First, the Constitution aside, there was already plenty of opposition to it domestically; but secondly, given his determination to forge an independent foreign policy – leaving the Washington-led one of the past behind – he was not likely to get back into bed with the US on a trade arrangement which brought with it a power element that sought to build a sphere of influence for the Americans right in his backyard.
Naturally, on trade alone, he was always going to gravitate to the organically grown local model. And as things turned out, right now that looks like the only game in town.
What’s happened then is quite remarkable. The Philippines, which had one way and another been cast adrift – shot itself in the foot, cut off its nose to spite its face; choose whichever metaphor you like – as far as membership of a vast new trade initiative was concerned, is now at the forefront of the biggest one in history.
The top table chair that had previously been removed from the Philippines – Aquino had showed no interest in joining in any event – tomorrow will be occupied by the country’s president; a man whose friendship China highly values.
Looking back to the wretched state of trade and other relations between Manila and Beijing during the last lingering days of the Aquino administration and the state of play between these two nations today – capped by the Philippines inclusion on the 21st Century Maritime Silk Road – it wouldn’t be exaggerating to suggest that Duterte has managed to make a silk purse out of a pig’s ear.