The Asian Voice

China's debt-trap diplomacy: Inquirer columnist

A Chinese national flag hangs from a barrier in a car park in Beijing on Jan 18, 2018.
A Chinese national flag hangs from a barrier in a car park in Beijing on Jan 18, 2018.PHOTO: AFP

In the commentary, the writer cautions about the inflow of aid from China.

MANILA (PHILIPPINE DAILY INQUIRER/ASIA NEWS NETWORK) - This is not the kind of invasion that Supreme Court Senior Associate Justice Antonio Carpio warns about, but a subtle and insidious mode of conquest that could undermine Philippine sovereignty in the long term.

In fact, with the way Foreign Secretary Alan Peter Cayetano is defending China whenever questions are raised on its blatant interference in Philippine affairs, we are now fast becoming a vassal state of China, like Laos and Cambodia.

To reports on the presence of Chinese naval vessels in our sovereign waters off Kalayaan Island, Cayetano was quick to react that the presence of such vessels, if true, "would not mean anything." He made the remark even before Beijing could deny the report.

Cayetano has also defended the government's action in allowing a research vessel operated by the Institute of Oceanology of the Chinese Academy of Sciences to conduct research in Philippine Rise, formerly Benham Rise, which is recognised by the United Nations as part of the Philippines' continental shelf.

According to Cayetano, a law allows foreign research in Philippine territory so long as a Filipino scientist is aboard the research vessel and the findings of the study are shared internationally. But Carpio said there is no local statute that specifically covers such an arrangement.

Cayetano's stance could be the Duterte administration's way of expressing gratitude to Beijing for its financial assistance to the Philippines.

Consider what happened in Cambodia. At the close of the Asean Summit in 2014, Cambodian strongman Hun Sen refused to issue a joint communiqué that would have called for a stop to China's militarisation of the South China Sea.

Two years later, in October 2016, Cambodia was rewarded with China's commitment of economic aid worth more than US$600 million and some 31 cooperation agreements.

China is the largest source of development assistance and investment in both Cambodia and Laos. As of 2016, its foreign investments in Cambodia totaled nearly US$12 billion (S$15,688 billion), or close to 35 per cent of foreign direct investments in that country. In 2014, China's investments in Laos exceeded US$6 billion and its grants amounted to US$187 million.

In the Philippines, China has pledged to finance 12 projects worth a total of US$4.4 billion, including the US$3.01-billion south line of the North-South Railway and the US$374.03-million New Centennial Water Source-Kaliwa Dam project in Quezon province.

It has also provided a P3.6-billion (S$92 million) grant for the construction of two Pasig River bridges and drug rehabilitation centers in Mindanao.

But here's the caveat: Like Laos and Cambodia, the Philippines could become beholden to Beijing, preventing the exercise of a truly independent foreign policy.

This is what Indian analyst Brahma Chellaney has described as China's "debt-trap diplomacy."

Chellaney, a professor of strategic studies at the Center for Policy Research in New Delhi, said that through its US$ one trillion "One Belt, One Road" initiative, China is supporting infrastructure projects in strategically located developing countries, often by extending huge loans to their governments.

"As a result, some of these countries are becoming saddled with debt, leaving them even more firmly under China's thumb," he said, adding that what China is doing is "commercial and strategic penetration" in countries in need of loans for their development.

Chellaney said a country is ensnared in a debt trap when it is caught in a cycle of interest capitalisation or taking on new loans to pay off interest or principal repayments.

"When default occurs, the Chinese move in to gain control of the resources, corporations or installations," he said.

China's financial hold on Cambodia, Laos, Myanmar, Thailand and the Philippines ensures a disunited Asean when it comes to China's aggression in the South China Sea, according to Chellaney.

He said countries that are well-managed reap the economic rewards from their projects. But rogue countries or leaders that take from China could become subservient to it.

This appears to be happening now in our country, with the Duterte administration having no qualms in defending China's incursions into our territorial islands and waters.

The writer is a former news editor of the Manila Standard, who teaches journalism at the Pamantasan ng Lungsod ng Maynila. The Philippine Daily Inquirer is a member of The Straits Times media partner Asia News Network, an alliance of 23 news media.