The new Philippine president wants to regotiate the deal worth $ 4.9 billion for three new routes. Chinese accused of not paying up investment and aid promised to Duterte, Marcos Jr's predecessor. Crisis in Sri Lanka lays bare the dangers of being in steep debt to China. Laos, Pakistan, Maldives and Bangladesh also under observation.
Manila (AsiaNews) - Over the weekend the government of newly elected President Ferdinand Marcos Jr announced its 'withdrawal' from the agreement with China to finance three railway projects. The Philippines' position is that the terms of the $ 4.9 billion deal should be renegotiated as China has not fulfilled its financial commitments.
Manila and Beijing had signed the cooperation agreement in 2018, during the Duterte presidency. Earlier in his term, Marcos Jr's predecessor had shelved territorial disputes with China over the South China Sea. His approach was heavily criticised at home (and by the US ally), not least because the Chinese have not kept their promises on granting billions of dollars in investments, aid and loans.
The railway projects in question concern the Subic-Clark, South Long-Haul and Davao-Digos routes. From a Chinese perspective, they are all part of the Belt and Road Initiative, Xi Jinping's infrastructure plan to make China the mainstay of world trade. As of 2016, only 77 kilometres of railways were in operation in the Philippines: before World War II, there were 1,100.
The Marcos Jr administration says it will consider 'other' financing options to realise the three projects. A Chinese government official told Reuters that Beijing is ready to discuss the matter with Manila.
Several observers warn 'client' states in Asia that in the long run being overly in debt to China can lead to systemic problems, as is the case in Sri Lanka. Beijing's greatest fault is that it encourages governments - often fragile ones - to venture into expensive infrastructure projects that do not ensure economic returns. All this while supporting political figures accused of corruption and bad governance like the Rajapaksas in Sri Lanka.
Analysts are also keeping a close eye on Laos, Pakistan, the Maldives and Bangladesh because of their financial exposure to China under the Belt and Road brand.