Manila pivot: Duterte to take huge delegation to China

Around 250 Philippine business executives will visit Beijing with President Rodrigo Duterte next week as he puts aside years of hostility to seek a new partnership with China at a time when tensions between Manila and its traditional ally, the United States, are mounting.

There has been no announcement about the delegation, but business groups and government officials said registration to join Duterte on his October 19-21 visit had been oversubscribed. Filipino executives are eager to talk with Chinese business leaders and government officials about deals in a range of sectors, from rail and construction to tourism, agribusiness, power and manufacturing, the sources said.

Initially only about two dozen Philippine entrepreneurs were to accompany Duterte but the number had ballooned to about 250, Trade Undersecretary Nora Terrado told Reuters. “I understand there are 100 more wanting to go,” Terrado said, adding the size of the delegation was unusual because the two sides agreed on the visit only about one month ago.

The trip could signal a transformation in a relationship dogged in recent years by mistrust over rival territorial claims in the South China Sea, and could upset strategic alliances in a region growing wary of China’s influence and military might and where the United States has a strong presence.

An arbitration court ruling in the Hague on July 12 that said China had breached the Philippines’ sovereign rights in the South China Sea had threatened to lead to a further deterioration in ties between Manila and Beijing.

But Duterte, who took office on June 30 after winning an election in May, has instead aggressively courted China and said he wants to reduce the nation’s dependence on the United States. He has said he will hold talks with China on the South China Sea dispute.

His promises to engage with China have in large part come in a near-daily barrage of hostility against Washington, raising questions about whether his overtures carried weight or were simply aimed at boosting his profile at home by espousing a “pro-Filipino” foreign policy.

Clouds ‘Fading Away’

In recent days there have been clear signs of improving business ties. On Saturday, Philippines Finance Minister Carlos Dominguez said in an interview in Washington that Duterte would seek billions of dollars in infrastructure investments from China in coming months. And Philippine Agriculture Secretary Emmanuel Pinol said on Sunday that China would lift a ban on fruit exports by 27 Philippine firms as a “gift” to Duterte.

And the size of the delegation going to China and early comments from senior government officials in Manila signal a new and potentially much deeper economic relationship with Beijing than there has ever been before.

“We do have a very popular president and the president decided that he wanted to have a better relationship with China,” said Francis Chua, chairman emeritus of Philippine Chamber of Commerce and Industry.

“We are neighbours… this is actually what the president is thinking: instead of fighting, why don’t we just become friends?”

Officially, Beijing has yet to confirm Duterte’s visit, but Foreign Ministry spokesman Geng Shuang told a regular press briefing on Tuesday that both sides were in close contact and it hoped Duterte would visit at an early date. He said both sides had the desire to improve relations and China was willing to increase cooperation in all aspects.

“We are neighbours… this is actually what the president is thinking: instead of fighting, why don’t we just become friends”

Beijing’s ambassador to the Philippines, Zhao Jianhua, has been more lyrical in welcoming the transformation. “The clouds are fading away. The sun is rising over the horizon, and will shine beautifully on the new chapter of bilateral relations,” he said at a Chinese National Day reception in Manila last month.

Discussions between officials of the two governments would be held on the first day of the visit and on day two about 600 representatives of private firms from both countries would be addressed by Duterte and Chinese President Xi Jinping, several sources said, citing a tentative programme.

While no concrete deals have yet been finalised, several Filipino businessmen said exploratory talks would be held on cooperating in a range of sectors including industry, finance and low-cost manufacturing.

“We have members who are looking for some tie-up with their like in power, agriculture, financing facilities and joint ventures,” said Sergio Ortiz-Luis, president of the Philippine Exporters Confederation. “They (China) might be offering certain packages, grants on the table.”

Trade Minister Ramon Lopez told Reuters on Monday that Chinese manufacturers could benefit from low manufacturing wages in the Philippines, which could vie with Vietnam for some investments.

Early Signals

Some Chinese companies have already indicated interest in new projects in the Philippines.

China’s CRRC-Dalian Co., Ltd, a unit of China’s CRRC Corp, said in a statement on Monday it had “solid intent” to modernise the antiquated railway system in the Philippines.

And while there has been no firm talk of defence deals, Duterte said last month the United States had refused to sell some weapons to his country but he didn’t care because Russia and China were willing suppliers.

U.S. officials said they were doing their best to ignore Duterte’s hostile rhetoric and taking comfort in the fact that he had yet to translate his words into less military cooperation.

A closer Philippines-China relationship, analysts say, could jeopardise regional efforts to forge a unified position on how to handle China’s assertiveness in the South China Sea.

By engaging with China, Duterte could improve his chances of tackling urgent issues at home, such as weak infrastructure, unemployment and energy security as domestic natural gas reserves run out.

There are oil and gas reserves off Palawan island and at the Reed Bank in the South China Sea but the Philippines lacks the expertise to exploit them. State-run Philex Petroleum has not ruled out resuming stalled joint surveys with China National Offshore Oil Corporation (CNOOC) at the Reed Bank.

Undersecretary Terrado, who heads the trade ministry’s industrial promotions department, said it would be businesses setting the agenda themselves next week, free of government intervention.

“We are allowing market forces to just get it on,” said Terrado.

(Writing by Martin Petty; Editing by Raju Gopalakrishnan and Martin Howell)