Philippines’ Marcos heads to Beijing with trade, investment and maritime issues on his mind

Philippine leader will seek trade, investment and infrastructure deals, renew talks on joint offshore energy development
Thorny maritime issues on the agenda for Ferdinand Marcos Jnr’s first state visit to major power, amid renewed tensions in South China Sea

Lucio Blanco Pitlo III

Published: 6:25pm, 2 Jan 2023

Why you can trust SCMP

Philippine President Ferdinand Marcos Jnr heads to China on Tuesday for a three-day visit that is expected to set the tone for bilateral ties in the next six years, reel in trade and investment pledges, and a possible settlement to a long-running maritime spat.

The trip will mark a series of firsts for the Philippine president – he will be the first foreign leader Beijing will host this year, and it will be his first state visit to a major power.

Marcos Jnr’s visit comes amid renewed tensions in the disputed South China Sea and the rise of Covid-19 cases in China.

Philippine President Ferdinand Marcos Jnr will be in China for a three-day visit. Photo: AFP

Manila is verifying recent reports of construction activities in hitherto unoccupied features in the Spratlys and protested against the heavy presence of Chinese vessels in its exclusive economic zone as it steps up its own maritime patrols.

Marcos Jnr has previously said the territorial and maritime row does not define Philippines-China relations and that he wants to shift bilateral ties to a higher gear. The visit is an opportunity for both sides to discuss areas of cooperation and differences.

A venue to handle disputes over the West Philippine Sea, probably similar to the vice-ministerial level Bilateral Consultative Mechanism during the previous Duterte government, may be set up. The two sides can also renew hotline communications and regular security talks. This can help ensure that wrangling over reefs, rocks, and waters in the contested sea will not affect overall ties.

Marcos to take up South China Sea row with Xi during Beijing trip

With China being the Philippines’ largest trading partner and one of its key investors, partnership in areas such as infrastructure, agriculture and energy can benefit both sides.

China is a big boon for Filipino fruit growers. Last year, US$490 million worth of bananas were shipped to China. From 2019 to 2021, annual average pineapple exports to its neighbour hovered at around US$100 million, accounting for 70 per cent of the Chinese market. In 2019, the Philippines became China’s second-largest supplier of green coconuts, securing 27 per cent of the market, while in 2020, it was the first Asian country to ship avocados to China.

A deal to export durians is on the visit agenda, with China the biggest market for the king of fruits, having imported 822,000 tons valued at US$4.21 billion last year.

Marcos Jnr is also likely to court Chinese investment to modernise Philippine agriculture, build more irrigation works, grain silos and agri-processing facilities.

The China-funded Binondo-Intramuros Bridge under construction in Manila in March 2022. Photo: Xinhua

Beijing last year completed the Chico River pump irrigation project in northern Luzon. The Philippine-Sino Center for Agricultural Technology (PhilSCAT), built with an initial fund injection from Beijing, is also expected to serve as a conduit for China to transfer advanced farming practices to Filipinos.

China also donated 4 million pesos worth of fertilisers and expressed interest in supplying more given the rising global prices due to the war in Ukraine. China’s largest feed manufacturer, New Hope, invested more than 200 million yuan, increasing Manila’s livestock feed production capacity.

Marcos Jnr pledged to sustain funding for infrastructure to 5 to 6 per cent of the country’s GDP and with his “Build Better More” infrastructure programme finding synergy with China’s Belt and Road Initiative, an agreement renewing Manila’s commitment to Beijing’s connectivity push is likely to be signed during the visit.

Sugar cane fields in Silay. President Ferdinand Marcos Jnr is likely to court Chinese investment to modernise Philippine agriculture. Photo: Bloomberg

China has also been active in the Philippine infrastructure sector, building drug rehabilitation centres and bridges, and a dam to supply water to Metro Manila and neighbouring provinces. Both sides are also renegotiating three railway projects. A framework agreement on three priority bridges is expected to be up for discussion during the visit, as are possible grants worth 1.5 billion yuan and cooperation on digital infrastructure and emerging technologies.

The Philippines is also keen to attract Chinese investment to its power sector, with a new amendment to its renewable energy law now allowing full foreign equity. Here too, China has extended its reach, with firms such as PowerChina involved in coal and solar energy projects across the Philippines.

A worker cuts grass next to solar panels at a solar energy farm in suburban Manila. The Philippines is keen to attract Chinese investment to its power sector. Photo: AFP

Marcos Jnr also expressed willingness to resume talks for a possible joint oil and gas development in the West Philippine Sea and this could be discussed during the visit. A deal for a nickel processing facility, which will increase value added for Manila, is also being eyed. The Philippines is among the world’s largest nickel producers, with China sourcing 70 per cent of its nickel ore and concentrate requirements from the country.

Thus, Marcos Jnr’s visit is expected to bring a windfall of trade and investment pledges and an agreement to deftly handle a long-running maritime spat. But the country will have to do its homework. It has to upgrade the absorptive capacity of its bureaucracies to implement more projects and shore up its defence posture to better stake its claim in the South China Sea flashpoint.

Lucio Blanco Pitlo III is a research fellow at the Asia-Pacific Pathways to Progress Foundation and a member of the Board of Directors of the Philippine Association for Chinese Studies.