Duterte to maintain warm Philippine-China relations to boost economy

MANILA, Philippines — President Rodrigo Duterte will maintain his close ties with Beijing despite tensions in the South China Sea as he courts the Asian power for economic largesse, a Fitch unit said Friday.

China claims most of the contested waters, including the West Philippine Sea, and has rejected a ruling from a UN-backed international tribunal that invalidated its assertion to the Sea.

In a research note, Fitch Solutions said Duterte will continue building his country’s relations with China despite strong political pressure at home and recent maritime incidents that suddenly escalated tensions between the two countries.

But Fitch Solutions said Duterte is unlikely to completely align his policies with that of China’s, citing as example his decision to allow Chinese-dominated online casinos to operate here despite China’s opposition due to economic reasons.

“We believe Duterte will align policy in areas which he believes can benefit the Philippine economy,” the think tank said.

Duterte is under growing pressure at home to challenge China — after largely setting aside the standoff for years — with tensions high after a Chinese fishing trawler hit and sank a Filipino boat in June in the disputed waters.

Despite the territorial issues, Manila and Beijing last month signed a series of agreements over joint cooperation in fields including education, and Duterte hailed the "friendship and the value of our ties" between the two countries.

Chinese investment — as a share of total approved foreign investment into the Philippines — has been growing, rising 10.3% during Duterte’s presidency compared to 6.1% and 4.7% over the five and 10-year periods until the second quarter of 2019, data from Fitch Solutions showed.

But Fitch Solutions warned that Duterte’s hope for economic windfall may not materialize as China may gradually reduce its investment abroad over time and become more selective in projects.

Filipinos’ growing mistrust of China and Manila’s continued military cooperation with the US could also stoke turbulence, Fitch Solution said, adding that the long-term direction of Manila-Beijing ties remains somewhat uncertain and will depend on the policy-continuity under Duterte’s successor. — with AFP