Duterte’s China gambit to Bongbong’s balancing act

31 December 2022

Author: Jenny Balboa, Tokyo University of Foreign Studies and Hosei University

Former president Rodrigo Duterte dramatically changed the foreign policy landscape of the Philippines when he announced his intentions to pivot to China during his term. Duterte’s decision to shift away from the United States and build stronger alliances with China and Russia sent shockwaves through the Philippines’ economy and its political and diplomatic relations.

In pursuit of this so-called pivot, Duterte actively encouraged Chinese investment in the Philippines and teamed up with the Chinese government to finance his own flagship infrastructure project — ‘Build, Build, Build’. Duterte also visited Russia to seek the support of Russian President Vladimir Putin on his new foreign policy path.

By the end of Duterte’s term in June 2022, it became clear that his controversial foreign policy pivot did not yield the expected returns. China failed to fulfill its promise to finance Duterte’s big-ticket infrastructure projects. Despite Duterte’s efforts to attract Chinese investors, China’s share of net foreign direct investment (FDI) remained small — sitting at 1.12 per cent in 2021.

At the same time, the Philippines’ trade deficit with China steadily increased. This is not surprising given that China had always been a significant trade partner due to its links with the Philippines in the regional production chain and the ASEAN–China free trade agreement. Under Duterte’s watch, Chinese exports grew to more than 20 per cent of total Philippine imports. Import increases are not necessarily bad, but it is worth examining whether the surge in imports from China remains beneficial or disadvantageous to the Philippine economy.

In the aftermath of the COVID-19 pandemic, the Philippines finds itself in a dire situation due to rising poverty, inflation, food insecurity and unemployment. The Philippine government’s external debt has grown to US$234 billion (13.5 trillion pesos). Sovereign debt continues to increase, with the debt-to-GDP ratio currently at 63.7 per cent due to the peso’s depreciation against the US dollar and enormous government budget and expenditure needs.

The Duterte administration left the country in a worse situation than when it took over. It became clear that the former president’s China-friendly foreign policy gambit did not improve the Philippines’ economic condition. On the national security front, while Duterte was able to avoid conflict with China in the short run, he completed his term without cutting a deal to moderate China’s aggressive behaviour in the West Philippine Sea.

Despite Duterte’s outbursts against traditional Western allies, the technocrats and economic institutions maintained a business-as-usual attitude. Economic policies were shielded and beneficial policies from past administrations — such as the industrial program from the Aquino administration — were continued. New policies to improve the investment environment were also implemented. By preserving policy stability, Duterte did avert an economically catastrophic scenario of decoupling from the West.

After the Philippines transitioned to a new government under President Ferdinand ‘Bongbong Marcos Jr, foreign policy direction became uncertain. Early on, Marcos stated that he wants to maintain a cozy relationship with China. But some experts argue that he will likely seek a delicate balancing act between China and the Philippines’ Western allies.

Notably, despite the low expectations of his critics, Marcos has earned praises for his handling of foreign affairs, especially his declaration of an independent foreign policy — which resembles his father’s diplomacy — in contrast to the heavily pro-China policy of his predecessor. Compared to the mercurial Duterte, Marcos seems more calculating and circumspect with his foreign policy engagements. His version of an independent foreign policy demonstrates recognition of the indispensable role of the Philippines’ Western allies.

In the months since ‘Bongbong’ became president, US Secretary of State Antony Blinken and Vice President Kamala Harris have visited the Philippines. They assured Marcos that the US is committed to supporting the Philippine government. Those diplomatic missions signalled the renewal of ties between the Philippines and the US. While Marcos expressed zeal to continue the partnership with China, he also made it clear that he will not be as defeatist as the former president when it comes to territorial disputes with China.

On the economic front, Marcos’ plans will focus on creating business, agriculture, tourism and infrastructure jobs. He has actively encouraged foreign investors and tourists to visit the country to support these plans. He also distanced himself from the brutal drug war of Duterte, which made the Philippines the fourth most dangerous country in the world for civilian-targeted violence. Unlike Duterte, Marcos said that his anti-drug campaign will focus on education and rehabilitation, and less on punitive measures.

The domestic and foreign challenges facing his presidency offer Marcos a ‘golden ticket’ to rebrand his politics and redeem his family’s tarnished reputation. Whether he has what it takes to seize that opportunity and achieve gains that will benefit the country remains to be seen. Despite some initial missteps, his initial performance shows there is room for hope.

Jenny D Balboa is lecturer at the Tokyo University of Foreign Studies and the GIS-Hosei University. She is the author of the book, Policy Innovation in a Weak Democracy, published by the Ateneo De Manila University Press and the Kyoto University Press.