Philippines bags $18.9 billion in deals from China

PHOTO: AFP

BEIJING - For agreeing to return to the negotiating table to settle a dispute in the South China Sea, the Philippines is getting US$9 billion (S$12.6 billion) in soft loans from China, part of the US$13.5 billion in deals signed during President Duterte's visit to Beijing this week.

Encouraged by the apparent success of his trip, Duterte announced his "separation" from the US on Thursday, declaring it had "lost," and he had realigned with China.

Addressing a group of Chinese and Filipino businessmen after his talks with Chinese President Xi Jinping, Duterte said relations with the US had reached "checkmate."

"The US has lost now," Duterte said.

"I've realigned myself in your ideological flow and maybe I will also go to Russia to talk to (President Vladimir) Putin and tell him that there are three of us against the world-China, Philippines and Russia. It's the only way," he said.

"With that, in this venue, your honours, I announce my separation from the US, both in military, not in social, both in military (and) economics," he remarked.

"I have separated from them. Hence, I will be dependent on you for all time. But do not worry. We will also help as you help us."

Duterte in China to promote economic ties

  • Philippine President Rodrigo Duterte announced his "separation" from the United States on Thursday, declaring that it had "lost" and he had realigned with China as the two agreed to resolve their South China Sea dispute through talks.
  • Duterte made his comments in China, where he is visiting with at least 200 business people to pave the way for what he calls a new commercial alliance as relations with longtime ally the United States deteriorate.
  • His trade secretary, Ramon Lopez, said US$13.5 billion in deals would be signed Duterte's efforts to engage China, months after a tribunal ruling in the Hague over South China Sea disputes in favour of the Philippines, marks a reversal in foreign policy since the 71-year-old former mayor took office on June 30.
  • "America has lost now," Duterte told Chinese and Philippine business people at a forum in the Great Hall of the People, attended by Chinese Vice Premier Zhang Gaoli.
  • "I've realigned myself in your ideological flow and maybe I will also go to Russia to talk to (President Vladimir) Putin and tell him that there are three of us against the world - China, Philippines and Russia. It's the only way," he added. "With that, in this venue, your honours, in this venue, I announce my separation from the United States," Duterte said to applause.
  • "I have separated from them. So I will be dependent on you for all time. But do not worry. We will also help as you help us."
  • China has pulled out all the stops to welcome Duterte, including a marching band complete with batton-twirling band master at his official welcoming ceremony outside the Great Hall of the People, which most leaders do not get.
  • President Xi Jinping, meeting Duterte earlier in the day, called the visit a "milestone" in ties.
  • Xi told Duterte that China and the Philippines were brothers and they could "appropriately handle disputes", though he did not mention the South China Sea in remarks made in front of reporters.
  • "I hope we can follow the wishes of the people and use this visit as an opportunity to push China-Philippines relations back on a friendly footing and fully improve things," Xi said.
  • Following their meeting, during which Duterte said relations with China had entered a new "springtime", Chinese vice foreign minister Liu Zhenmin said the South China Sea issue was not the sum total of relations.
  • "The two sides agreed that they will do what they agreed five years ago, that is to pursue bilateral dialogue and consultation in seeking a proper settlement of the South China Sea issue," Liu said.
  • China claims most of the energy-rich South China Sea through which about US$5 trillion in ship-borne trade passes every year. Neighbours Brunei, Malaysia, the Philippines, Taiwan and Vietnam also have claims.
  • Duterte's tone toward Beijing is in contrast to the language he has used against the United States, after being infuriated by US criticism of his bloody war on drugs.
  • He has called US President Barack Obama a "son of a b****"and told his to "go to hell" while alluding to severing ties with the old colonial power.
  • On Wednesday, to the cheers of hundreds of Filipinos in Beijing, Duterte said Philippine foreign policy was veering towards China. "I will not go to America anymore. We will just be insulted there," Duterte said.
  • "So time to say goodbye my friend."
  • Duterte on Wednesday said the South China Sea arbitration case would "take the back seat" during talks, and that he would wait for the Chinese to bring up the issue rather than doing so himself.
  • Xi said issues that could not be immediately be resolved should be set aside, according to the Chinese foreign ministry.
  • China has welcomed the Philippines approaches, even as Duterte has vowed not to surrender any sovereignty to Beijing, which views the South China Sea Hague ruling as null and void.
  • China offered fresh praise for visiting Philippine President Rodrigo Duterte on Wednesday, lauding "friendly" relations as the combative leader reconfigures his country's diplomatic alliances.
  • Duterte is in China for a four-day trip that is expected to cement his tilt away from Washington and towards Beijing's sphere of influence.
  • Foreign policy under Duterte has dramatically shifted from that pursued under predecessor Benigno Aquino, who took Beijing to an international tribunal over its extensive claims in the South China Sea and won a resounding victory.
  • The move infuriated Beijing but Duterte, who took office in June shortly before the tribunal ruling, has made a point of not flaunting the outcome.
  • At a regular briefing Wednesday, Chinese foreign ministry spokeswoman Hua Chunying said Beijing was pleased to move towards resolving the territorial dispute "through consultation and dialogue".
  • "This is how two friendly neighbours should treat each other," she added.
  • "Anyone who truly wishes for peace, stability, development and prosperity in the Asia Pacific" should welcome Duterte's visit.
  • Duterte will meet top leaders including President Xi Jinping and Premier Li Keqiang during his stay, and was also due to meet members of the Filipino community in Beijing later Wednesday.
  • On the eve of his arrival in Beijing, the firebrand former lawyer was quoted by China's official Xinhua news agency state media saying: "Only China can help us."
  • As Duterte has cosied up to Beijing, he has repeatedly denounced the US and President Barack Obama for criticising his deadly war on crime.
  • He has also suspended joint US-Philippine patrols in the South China Sea, and has threatened an end to joint military exercises.
  • The South China Sea is of intense interest to Washington and it has repeatedly spoken out on the various territorial disputes between China and its neighbours over the strategically vital waters.
  • Tensions have risen between the US and China over Washington's so-called "pivot" to the Asia-Pacific, a move that Beijing says is intended to contain it.
  • In an editorial Wednesday, China's nationalist Global Times newspaper said Washington had treated Manila "as a pawn", adding Duterte was now "redesigning Philippine foreign policy based on Philippine interests".
  • Duterte has said his China trip will focus on promoting economic ties.
  • The Philippines is hoping, among other things, that Beijing will repeal a ban on imports of its bananas - an economic sanction intended to punish Manila for its South China Sea stance.

He means it

Defence Secretary Delfin Lorenzana declined to comment, but National Security Adviser Hermogenes Esperon Jr. told reporters that Duterte meant what he said.

Manila and Washington are bound by the PH-US Mutual Defence Treaty in force since 1951.

Duterte cannot scrap the treaty on his own. Abrogation of the treaty requires action by the senate.

Xi and Duterte oversaw the signing of 13 agreements and memoranda of understanding after their talks at the Great Hall of the People in Beijing on Thursday.

The agreements included the establishment of the so-called Joint Coastal Guard Committee on Maritime Cooperation as a prelude to co-operation in the heavily disputed South China Sea.

"In this visit, bilateral relations have fully recovered, and the two countries will return to the track of dialogue and consultation to address maritime issues," Chinese Vice Foreign Minister Liu Zhenmin told reporters after the signing of the agreements.

Liu said China welcomed the Philippines' participation in its so-called Maritime Silk Road and committed to taking an active part in the development of infrastructure, agriculture and finance in the Philippines.

He said Xi agreed to lift travel advisories issued a few years ago to Chinese citizens travelling to the Philippines.

"This lift will encourage more Chinese citizens planning to visit the Philippines," Liu said.

US$12.6 billion in soft loans

According to the Inquirer, during the talks, Xi committed US$6 billion in soft loans to the Philippines from the Chinese government, while another US$3 billion in credit facilities would be made available by private Chinese banks.

Xi also committed 100 million yuan (S$20.7 million), or about US$15 million, for building rehabilitation centres to aid Duterte's brutal war on drugs. Finance Secretary Carlos Dominguez and Presidential Communications Secretary Martin Andanar confirmed this information.

Other deals signed were the Agricultural Cooperation Action Plan 2017-2019, co-operation on animal and plant inspection and quarantine, conduct of feasibility studies for major projects and production capacity and investment co-operation.

The two governments also agreed on establishing economic and technological co-operation; strengthening trade, investment and economic co-operation; preparing draft on economic co-operation and development plans and implementing a tourism plan for 2017-2022.

They also agreed to co-operate on transportation and infrastructure development and to financing co-operation between the Export-Import Bank of China and the Philippines' Department of Finance.

Credit line

The two governments also agreed to share information and to co-operation between the Narcotics Control Bureau of the Ministry of Public Security of China and the Philippine Drug Enforcement Agency, another boost for Duterte's war on drugs.

Bank of China will open on Friday a US$3-billion credit facility for Philippine industries and infrastructure, in a deal to be signed at the close of Duterte's visit.

Businessmen from the Philippine companies described the deal as "nonbinding."

"They want to give us a credit line for any use we may have for it," one company official said. "It will most likely be (loaned out) at market rates," he said.

Eight Philippine conglomerates and corporations will enter into an agreement with Bank of China for the credit facility.

They are JG Summit Holdings, Filinvest Development Corp., Metro Pacific Investment Corp., SM Investments Corp., International Container Services Inc., Ayala Corp., Pan Pacific Renewable Power Philippines Corp. and Udenna Corp.

The credit deal will be signed at the Bank of China headquarters in Beijing.

After overseeing the signing, Duterte will fly back to Davao City. He is expected to arrive there at 10:45 pm local time.

Liu said that after the talks between Xi and Duterte, China resumed giving permits to 27 Philippine companies exporting fruits, including mangoes, to the mainland.

He said China has also vowed to support the Philippines in its responsibilities as chair of the Association of Southeast Asian Nations for 2017.

Liu said the talks did not touch on Filipino fishermen's return to Scarborough Shoal, or Panatag Shoal, which China had seized from the Philippines in 2012.

"However, they did talk about co-operation in fishery. They agreed that the two countries will strengthen fishery co-operation in the South China Sea and also co-operation in terms of fishery products (and) industries," he said.

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