In his column, “About Town” in the 12-February-2019 issue of Manila Standard ‘How are we dealing with our next-door neighbor China?” Ernesto M Hilario reported on the impressions of our distinguished Ambassador to China Jose Santiago “Chito” Sta. Romana, “who spent more than four decades in China after he and several members of a delegation of student activists on a visit to the mainland had no choice but to stay on as they risked arrest by the Marcos regime if they returned to the Philippines.”

With his long experience in China, Chito, who I first met in 2004 in the course of a visit during a Philippine delegation return trip via Beijing from a Boao Forum meeting in Hainan, had been a very insightful informal consultant to our Philippine Council for Foreign Relations (PCFR) CBM Team, the National Security Cluster in our series of dialogues with the Chinese People’s Institute on Foreign Affairs (CPIFA).

Hilario was reporting on the briefing given by Ambassador Chito Sta. Romana a week earlier at the Cosmopolitan Church along Taft Avenue in Manila on Philippines-China relations. The forum was organized by the United Council of Churches of the Philippines. He continues:

“At the outset, Sta. Romana laid down what he described as the strategic framework of our bilateral relations. The starting point of current ties with our next-door neighbor, he pointed out, is the independent foreign policy laid down in the 1987 Constitution. Is it possible to have an independent foreign policy in an interdependent world? Yes, he said. This means being friends to all, enemies to none; seeking unity with all countries, including the big powers; giving priority to national interest; and upholding ASEAN unity and neutrality.”

“The Philippine government has actually made a big shift in its foreign policy. From the traditional close ties with the U.S., we now seek stronger ties with China focusing on economic cooperation, but not forging a military alliance.”

Sta. Romana explained that we have contentious and non-contentious issues with China — the contentious ones involving our disputes on the West Philippine Sea, including Scarborough Shoal and the totality of our Exclusive Economic Zone (EEZ). “The overlapping claims are what complicate matters in the South China Sea.”

Indeed. Although the area is still considered subject to final decision as to ownership other than sovereign rights decided upon by the Arbitral Tribunal, most analysts consider China’s encroachment as non-conforming with the rule of law.

Sta. Romana further explained that the Philippines “has chosen to shift from an adversarial approach to a non-adversarial one, and to focus on diplomacy to settle non-contentious issues, such as economic cooperation, cultural and educational exchanges, people-to-people contacts, as well as joint efforts at countering terrorism and criminality” and that these contentious issues “should not be an obstacle to stronger bilateral relations.”
On the part of the Philippines, we have made a shift in perspective: from viewing China as a national security threat, it is said “we now view it as a development partner.”

Sta. Romana also believes that “There’s also a change in the Chinese perspective. Before, Beijing considered the country a geopolitical pawn of the US. Now, the Chinese consider the Philippines as a friendly neighbor whose national interests are separate from those of its military allies.”

The column also quotes the Philippine Ambassador, “We use diplomacy as a first line of defense, to create a good political atmosphere through high-level meetings and bilateral talks to resolve disputes. When you’re on friendly terms, it’s easier to talk.”

This in essence is how PCFR has managed to develop friendly debate with Chinese counterparts. The column continues:

Here, the envoy cited lessons from history. China had border disputes with Vietnam and Russia, but these were ultimately settled through negotiations and bilateral talks even after armed skirmishes along their borders.

The Philippines has already won gains from bilateral talks, Sta. Romana stressed. We now have access to fishing areas in Scarborough Shoal, thus reducing the level of tension in the SCS/WPS.

China is now our leading trade partner. Our fruit exports, mainly banana and pineapple, can now be found in market stalls in Beijing and elsewhere, even as we still maintain sizable trade with the US and Japan. The Chinese government has also extended grants to build two bridges across the Pasig River, and feasibility studies for infrastructure projects.

The article quotes the Ambassador’s positive rating of the development achievements of the Duterte approach: the Chico River Irrigation Project which will benefit farmers in Cagayan and Kalinga; “the Kaliwa Dam in Quezon province will be an alternative source of water for Metro Manila and benefit residents of Metro Manila, and the South Railway from Tutuban in Manila to Matnog-Sorsogon covering more than 600 kilometers that will facilitate travel to southern Luzon and the Bicol Region”.

Are those identified as a grant really grant aid?

Many analysts consider some of these as really contentious:

• The big increase in the number of Chinese visitors to the country, now reportedly the second biggest tourist arrivals after the South Koreans, with DOT seeing “a 40% growth in the number of Chinese tourists next year.” Some contend that this makes it easy for infiltrators, Chinese agents, drug traffickers and other criminals to enter the country.“
• Foreign direct investments (FDI) from China are already 7th largest as of 2017, according to our Board of Investments (BOI)” which alarms those who feel we should learn from the experience of other countries lured into the “debt trap.” This is far from the truth, according to Ambassador Sta. Romana. Perhaps this can be a subject of a future Maritime Forum.
• The Chinese “working for Philippine Offshore Gaming Operators (POGOs) that are doing business here since gambling is prohibited in the mainland, are mostly on special working permits” or undocumented, as often reported in DZMM and other news media.

The column continues: “For the Ambassador, fears that we would fall into a debt trap with Chinese loans are unfounded since approved infrastructure projects would have to be economically viable, meaning, they would have to pay for themselves. NEDA has rigorous standards in approving projects with 10% rate of return to offset the cost of borrowings. Besides, we can pay our loans as the domestic economy has already reached investment grade according to international credit rating agencies.”

The PCFR Economic Cluster should determine whether this is a valid analysis or not. There are reports that NEDA has been careful with respect to these Chinese loans and that many announcements made by Malacañang are mostly premature. In hindsight, NEDA has agreed with previous administrations, particularly during the term of Gloria Arroyo, that reportedly had disastrous results for the country.

Hilario concludes, “The Philippine economy is growing. Part of this growth would be fueled by the demographic sweet spot where our young labor force can sustain our economic gains. But our Achilles heel is poor infrastructure, and this is where we have to diversify our sources of loans to finance our accelerated infrastructure development program.”

Ambassador Sta. Romana’s final statement: “What is important is that we retain our sovereignty and sovereign rights” is something contentious, according to many colleagues in the Maritime Forum.

We will have to wait and see. 