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Philippines – ‘on the map’

China’s cartographers will be working on a new version of the map they produced in 2014 to launch the country’s massive ‘One Belt, One Road’ initiative – a vast land and ocean enterprise that seeks to connect large parts of Asia to Europe and Africa through a collaboration of trade, technology exchange, people-to-people cooperation and infrastructure building. (The map above is the original. The added Philippine detail represents a guess by The Volatilian™ at what the next version will look like).

On that original map the Philippines – like Taiwan – was given a wide berth. As things stood then, the chances of its inclusion were zero – diplomatic tension was high; in 2012 former Philippine president Benigno “Noynoy” Aquino had put China in the dock at the Permanent Court of Arbitration in The Hague for its island-building activities on Philippine-claimed rocks in the South China Sea.

But Beijing never wrote off the Philippines as a participant in the 21st Century Maritime Silk Road the sea section of the dual trade routes – the overland section, from Beijing to Turkey (and later beyond) is via the Silk Road Economic Belt. China held out hope that its small neighbour to the south would eventually be part of the project.

Despite the burning of Chinese flags by protesters at anti-China rallies in Manila – graced by members of the then administration; despite the bellicose rhetoric from Aquino and others, practically threatening to go to war with China; despite the media lampooning of the Mainland, painting it as an egregious bully; despite the Washington-Brussels double act, their saber-rattling and sanctions threats – despite all that China left the door open.

Just after the map was unveiled, one Chinese official said this in reference to the Philippines’ absence. (Like Taiwan, its name didn’t appear on the chart). “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 China has been true to its word. That’s why in May, President Rodrigo Duterte will be in Beijing once more. He will be attending what the Chinese Foreign Ministry has described as a ‘multilateral summit’. In fact, that undersells it. This is a gathering of the clan chiefs – up to 60 of them from countries along the Belt and Road. And the purpose is to hardwire international cooperation; to put in place the administrative and regulatory mechanisms that will bind participating countries in a trade chain from the shores of southern China to the cities of Europe and the ports of Africa.

Duterte’s presence was requested by China’s Vice Foreign Minister, Liu Zhenmin, when he met with Philippine Secretary of Foreign Affairs, Perfecto Yasay Jr, in Manila at the beginning of the week. Confirming that he will be there for the meeting, Duterte added: “I look forward to meeting President Xi Jinping again”.

The turning point came when Duterte decided to deal with the issue of Scarborough Shoal by means of bi-lateral talks – Manila and Beijing – and without third parties such as Washington and Brussels. Back in November – Oceans of potential – we wrote this. “But now it’s behind them, there’s no reason why that map cannot be redrawn to include the Philippine ports. And we know there will be willingness on the Chinese side to do that”.  Given what we knew about Duterte’s desire to move away from Washington and Beijing’s desire to capitalise on the rift, it was a safe bet.

We won’t reiterate what we’ve written about the Maritime Silk Road in the past; for those who are interested, these articles provide further analysis of this project – Rough rocks with a silk lining … Oceans of potential … Calming the waters with a flood of trade.

Overseas investors, however, should factor in the Philippines’ inclusion on the map. Investment in port infrastructure, ship-services, haulage transport and logistics firms are obvious sectors to consider. But the goods for shipping themselves, and the factories and plants that make them should be explored. And of course, the agriculture and fisheries sector.

These are exciting times for the Philippines. Once threatened to be left in an oxbow lake – isolated from this historic ocean-silk trade path by political bickering and posturing – it now has the opportunity of being part of a huge intercontinental grouping that will bring world markets within its grasp. Geographically, it was always well placed, sitting astride the cross currents of the South China Sea and the Pacific Ocean, close to the busy shipping corridors through which US$5.3 trillion in goods sloosh annually. It would have been an economic tragedy if all that had passed it by.

Of course, proponents of that other ambitious scheme, the now-floundering Trans Pacific Partnership (TPP) – the proposed US-led free-trade agreement between 12 Pacific Rim countries – will not be happy with this new development. First, the Belt and Road has every chance of succeeding while TPP has little chance – just-inaugurated US President Donald Trump says he’ll send it to the dump. And secondly, the Philippines, which never signed up for TPP, despite aggressive efforts by Aquino to deliver his country to this Western-dominated club, is now clearly doubling down on Duterte’s decision to strengthen Philippine-China ties.

For former US ambassador to the Philippines and TPP salesman, Philip Goldberg – who twice left an embassy post under a cloud; in both cases for allegedly consorting with the opposition to the government that was hosting him – and his pal, former US president and TPP driver, Barack Obama, this new map, when it’s produced, will be the final straw that breaks the back of a Washington-loaded US-Philippine foreign policy which they tried to engineer and control.

But all that’s history. Now what’s important is how the Philippines capitalises from its position on the map and how it can tap into the Chinese Government’s US$40 billion Silk Road Fund. Set up in 2014 and backed by the state-owned China Export-Import Bank and policy-lender, China Development Bank, the fund will make infrastructure and resource investments in countries along the Belt and Road.

Of course, there’s a long way to go yet before the Maritime Silk Road becomes a reality – a fully functioning trade route. But the news alone, that the Philippines has a seat at the table, should be enough to breathe new life into a struggling export sector and a battered agricultural sector. And the possibilities of the Philippines becoming a thriving and leading Asian entrepôt – as it was in the days of the 16th Century Maritime Silk Road – should boost the country’s entrepreneurial spirit.

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