China aims to overwhelm the Philippine economy with its excess capital, make it dependent on Chinese loans and grants, impose neoliberal economic policies, plunder and exploit the country’s labor and natural resources, control the key aspects of the economy, and lock the Philippines in a perennial state of exporting cheap and low value-added raw and semi-processed goods and importing capital goods and consumer commodities.
Having been at the center of the imperialist global value chain, China has long become the top destination of Philippine exports of raw materials and semi-manufactures and has become the primary source of the country’s imports.
Over the past two years, China has moved more quickly to further strengthen its economic presence in the country. Its official development assistance has shot up to $63.5 million last year from $1.5 million in 2016. Foreign direct investments (FDI) from China grew at a faster rate reaching $1.043 billion in the first two years under Duterte, close to 85% of its total FDI over six years under the previous Aquino regime ($1.231 billion) and more than that ($825 million) under Arroyo’s nine-year reign.
China seeks to accelerate its economic domination of the Philippines by investing in large infrastructure projects in order to mobilize its idle capital and provide a market for its surplus steel and cement. It has enticed Duterte with promises to spend $15 billion in dams, roads, bridges, sea ports and railway projects and provide loans of up to $9 billion in the next few years.
These promises of fund infusion, however, remain largely unfulfilled. But bureaucrat capitalists are drooling over the potential kickbacks to be pocketed in the form of so-called “finder’s fees.” The big bourgeois compradors and Duterte dummy capitalists eagerly await the partnership with Chinese corporations to make large profits in state-guaranteed projects.
Perpetuation of Philippine economic backwardness
By applying the same method of economic colonialism on the Philippines, China will merely perpetuate the backward, agrarian and non-industrial character of the Philippine economy which has long been dominated by the US and Japan monopoly-capitalists. Philippine addiction to China loans will make it a debt slave of China, in addition to being dependent on loans and grants from IMF-WB, the ADB, the Japan ExIm Bank and other creditors.
Up to the present, the Philippines remains a semicolony and military stronghold of the US imperialists, with which China is now locked in an intensifying trade war and challenging US economic, political and military domination.
Although fast catching up, China still trails behind the US and Japan in terms of investments and loans to the Philippines. In the field of portfolio investments or infusion into the Philippine stock market and other financial instruments, the US remains the top source of capital with 43% share compared to China’s share of 6%.
Economic policies, such as the imposition of the TRAIN law, continue to be influenced primarily by the IMF, US-controlled credit rating agencies and such groups as the Partnership for Growth.