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Recommended Citation:
del Prado, Y.P, Macaspac, N.P., Sison, A.S. (2022). One Belt One Road: An Analysis on the Philippines’ Official Development
Assistance Pivot to China. Assemblea, Vol. 3, No. 1, pp. 1-26
ASSEMBLEA: An Online Journal of Political Science
Volume 3 Issue No. 1
2022
One Belt One Road: An analysis on the Philippines’ Official
Development Assistance pivot to China
Ybañez Pio C. del Prado, Niña Pamela F. Macaspac, & Amr Solon S. Sison
University of Santo Tomas, Philippines
ypiocdp@gmail.com
ABSTRACT
With the rising tension from the disputed islands in the South China Sea or the West Philippine
Sea, it is unexpected that bilateral agreements with China would propagate under the Duterte
administration. The use of Public-Private Partnerships (PPP) shifted into the use of Official
Development Assistance (ODA) since the Duterte administration's goal of a closer relationship
with China to help the administration attain its goal of the "Golden Age" of infrastructure
development in the Philippines. China's foreign aid has been emphasized through China's Belt
and Road Initiative program that aims to connect Asia, Africa, and Europe to increase trade and
stimulate economic growth. This article then presents an in-depth study of the financial resource
system in the Philippines, given the existing tension in the Philippine-China Relations,
especially in its participation in the BRI, which garnered controversial instances where
participating states failed to repay debts, and surrendered sovereignty rights. A thematic and
document analysis has been applied on why the Duterte administration pivots to China and how
the Philippines could manage its financial resources to negate the possibility of a debt trap. This
study focuses on how the Philippines manages its Official Development Assistance from China’s
Belt and Road Initiative by displaying the effects of the relationship with the conclusion that the
resulting agreements are disadvantageous for the Philippines but is still unlikely that it would
lead to a debt trap in the Philippines' current economy.
Keywords: Official Development Assistance, Chinese Belt and Road Initiative, Duterte
Administration, Philippine Perspective on China
ASSEMBLEA ISSN: 2704-4610
Volume 3 No. 1, 2022
www.assembleajournal.org 2
INTRODUCTION
The Duterte administration rose to the
Philippine presidency in 2016 with an
overwhelming margin of votes, which
presented a decisive mandate to pursue
major programs to boost the country's
economy. The driving "Build Build
Build" program aims at an extensive
amount of funding for the large-scale
infrastructure development in the
country to reduce traffic issues for the
overall ease of transportation (Ito, 2019;
Kreuzer, 2018). As an answer, the
administration modified the financial
resources by seeking Official
Development Assistance (ODA) from
neighboring countries as the former
Public-Private Partnership (PPP) caused
delays in the bidding processes and
weaknesses in public decision-making
(Ito, 2019).
The Belt and Road Initiative (BRI), as
described by Cook (2019), is not limited
to the accomplishment of infrastructure
development projects. It is also known
for its foreign loans and grants that
enable these projects through the Asian
Infrastructure Investment Bank (AIIB).
According to Heydarian (2017), the
Duterte administration has opened an
alliance with China by shifting the
Philippines' foreign policy toward
China. With the participation of the
Philippines in the Belt and Road
Initiative, it is possible to generate a
similar conclusion as with the
Hambantota Ports of Sri Lanka, where
its unmanageable debts resulted in the
yielding of sovereignty for funds (Herr,
2019; Samanarayake, 2019; Tonchev,
2018). With the rising tension between
the Philippines and China, from the
recent maritime disputes and adding the
controversial statements of the Duterte
administration in favor of China, biases
may form that any deal with the rising
power is counterproductive. This study
then explores how the Philippines
manage its Official Development
Assistance from China. The objective
specifies identifying the effects of the
Philippines pivoting to China and
describing how it pays its debts to
China.
Official Development Assistance
In the Philippines, the PPP system is
widely known as it is an established
major financial resource in terms of
economic development (Ito, 2019). The
country has formulated the Build-
Operate-Transfer Law, the first in Asia-
Pacific, indicating the assistance for
building and development projects by
encouraging foreign investors and
coordinating with them (Ito, 2019). The
first PPP projects were launched during
Benigno Aquino III’s Administration as
they have made crucial changes in the
development policy (Ito, 2019).
Nevertheless, the PPP system in the
country continuously progresses;
changing into the inclination to ODA
during the Duterte Administration after
it launched its Dutertenomics in 2016,
which focuses on a large-scale
development plan in the country that
accumulates at an estimated Eight-
Trillion Philippine Pesos (Ito, 2019). As
the project’s cost expensively and need
much tuning for their development,
ODAs have been made an official
financial resource (de Castro, 2019). This
del Prado, Y.P., Macaspac, N.P., Sison, A.S.
One Belt One Road: An Analysis on the Philippines’ Official Development Assistance…
www.assembleajournal.org 3
paper then aims to determine the effects
of the shift from the former financial
resource system, the PPP, towards
ODA, particularly the Chinese financial
assistance for the Duterte
administration’s development plan.
Duterte Administration’s Pivot to
China
The relationship between the
Philippines and China has not been
stable, especially in more recent events.
The territorial dispute in the South
China Sea/West Philippine Sea started
the shift where the Duterte
administration established diplomatic
relations with China by giving up part
of the disputed islands, yielding to
China's Nine-Dash-Line (De Castro,
2019; Domingo-Almase, 2017). The
implication of the Arbitral Tribunal
Award has been overlooked as the
Duterte administration is forming a
friendly affiliation with China for
economic development and the
improvement of his foreign policy; the
administration believes that relying
upon the Arbitral Tribunal would only
provide diplomatic inconvenience (Hsu,
2016; Roberts, 2017). Officially
sacrificing sovereignty on the disputed
islands indicates that the bilateral
agreement between the Philippines and
China bears heavier weight than the
arbitral tribunal's award (De Castro,
2020).
The Duterte administration first seeked
China's trust by venturing financial
assistance and investments to develop
rehabilitation centers for drug
dependents and the country's
construction of railways and roads. The
"Build! Build! Build!" program of the
administration focused on boosting the
economy through large-scale
infrastructure programs that aim to
alleviate road congestion and provide
alternatives for accessibility in
transportation, then is a match for
China’s financial aid. Moreover, the
program seeks to ensure the
sustainability of the country's
waterworks, from dams to drainage
systems. With the ambitious goal, the
cost of construction is sure to be high.
Thus, the construction of large-scale
infrastructure led to the Duterte
administration's reliance on other
sources of funds. The increase of tax
from everyday consumer products was
one of the solutions presented by
Dutertenomics and has since been
passed by Congress in 2017. This aids in
alleviating the high expenditure of the
BBB program by generating more
revenue (Ito, 2019). Moreover, the
Duterte administration also declared the
shift of foreign policy using ODA to
open an alliance with the rising power,
China, concerning business, trade, and
commerce (Heydarian, 2017).
Chinese investment firms were
rewarded with the partnership of
building major infrastructures in the
Philippines such as the New Centennial
Water Source of Kaliwa Dam Project
and soon North to South Railway
Project; it is a clear sign that China has
included the Philippines in its Belt and
Road Initiative which debts are backed
with collaterals such as property rights
(Kreuzer, 2018). According to Ito (2019),
although the inclination towards ODA
ASSEMBLEA ISSN: 2704-4610
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could secure longer-term maturity and
concessional terms, this also presents
risks unfavorable for the Philippines.
The Chinese Belt and Road Initiative
The promotion of the Chinese Belt and
Road Initiative was to build connections
among various nations; the Philippines
during Duterte's regime perceived it as
the primary instrument for economic
development and stability (de Castro,
2019). The administration also affirmed
that the BRI's goal of interconnectivity
would result in free trade and market
access in the global arena with mutual
benefits on hand. The administration
officially sought Chinese assistance as
they have recognized the improvements
in infrastructures brought by the BRI in
its neighboring countries with the
additional finance from the enacted Tax
Reform for Acceleration and Inclusion
act to aid in paying for necessary
finances in the BBB program (de Castro,
2019; Katigbak, 2018). The changes in
the financial resource system introduced
from the administration of President
Benigno Aquino III to the Duterte
administration which now moves in the
direction of leaning towards foreign
investment dependency, specifically to
China - creating an effect on the public
and to the Philippine economy due to
the growth of foreign debt and
consequently, subjugation through
China's debt-trap diplomacy.
Philippine Perspective on China
Perception of China in the Philippines
does not necessarily uphold a positive
outlook. Based on the Pulse Survey
Report, the Filipinos have shown
skepticism toward China with a score of
60% to 76% in a distrust rating. The
negative controversies of the
Philippines’ possibility of falling under
a debt trap came along with the Duterte
administration’s softer relationship with
China, which its intentions of loaning
from the superpower (Camba, 2019).
Moreover, with enough debts, China
could utilize the amounts as leverage
over the Philippines on its territorial
disputes in the South China Sea
(Malinao, 2018). Hence, there are
concerns about China utilizing the BRI
in achieving its self-interest goals to
further its economic and geopolitical
power. By shaping trade routes and
seizing the patrimonial assets- or the
alienable and disposable lands that are
referred to be owned by public domain
and declared as unessential for present
use, points for the transportation of
natural resources and goods exclusively
for the benefit of China (Trinidad, 2019;
The Public Land Act 1936 s 8. (Phl.).
In the case of Sri Lanka and its ports
Colombo Port City and and the port of
Hambantota, wherein both of which
were funded by China’s investments,
promises to help lower prices as well as
improve supply chains that ensures
trade volume growth (Samanarayake,
2019; Tonchev, 2018). The
unmanageable debt resulted in the
arbitrary ruling of the wavering of the
$1.1 billion debt in exchange of China
having major control over the
Hambantota project which concluded in
the turnover of the southern seaport of
the completed Hambantota port to
China on a 99-year lease, as well as a
del Prado, Y.P., Macaspac, N.P., Sison, A.S.
One Belt One Road: An Analysis on the Philippines’ Official Development Assistance…
www.assembleajournal.org 5
large part of the Colombo Port City with
the same predetermined course; China’s
debt trap diplomacy which cedes
sovereignty in exchange of funds (Herr,
2019; Samanarayake, 2019; Tonchev,
2018). However, Camba (2019)
emphasized that most reports from the
Philippines overlooked the conditions of
Chinese financial loans, already
presuming high-interest rates.
Additionally, the decentralization of the
Philippines contributed to maintaining
the unlikelihood of a debt trap. The local
government, civil society, and elite
groups have had significant roles in
balancing the proliferation of Chinese
influence and Chinese-funded projects
since they have the power to oppose the
establishment of the project in their
constituency. This indicates that despite
the friendly relationship between the
Duterte Administration and China, state
actors such as elite groups and local
governments could still challenge
China-supported initiatives (Camba,
2019). For instance, the initiative of
establishing PNR railway has been
halted due to the disagreement between
the municipal leaders in Quezon and
Bicol regions as many constituents
would be affected by its construction.
Local conflict has risen as self-interest
also influenced their decisions since
they have competed for train stations for
economic capital and revenue (Camba,
2019).
METHODOLOGY
Analytical Framework
Institutional Theory is centralized on the
idea that organizations and relations are
often influenced by various factors, such
as political decisions, economic
conditions, cultural background, and
historical events (Nguyen, 2009).
According to North (1991), institutions
are necessary to administer the state
towards economic progress. These
institutions constitute both formal and
informal rules that regulate individuals'
social structure and activities for
stability and development. Furthermore,
the theory elaborates these institutions,
mainly the state, as it is the only
institution capable of establishing
cooperation for economic growth, often
utilizes mechanisms that have lower
transaction costs as a high degree of
transaction costs result in insecurity of
property rights (Nguyen, 2009).
Additionally, in cooperation with other
institutions, similarity in goals is being
considered for mutual benefits and to
refrain the occurrence of inferiority and
domination. Nonetheless, a state could
still build projects despite its high
transaction cost through power
bargaining. The institution can provide
privileges to a particular group,
organization, or other state institution
by giving huge benefits and institutional
control in return for their financial
assistance (North, 1991). However,
conflict may persist as property rights
become collateral, which may impede
the state's economic development
(Nguyen, 2009). The framework then
became the pattern of institutions in
planning and producing projects for
economic development; risks are
present, and so are benefits (Nguyen,
2009).
Correspondingly, the nature of
transition would be the economic
ASSEMBLEA
Volume 3 No. 1, 2022
www.assembleajournal.org
standing of the Philipp
ines being a
developing country in the context of its
relationship with China, particularly its
cooperation in Build Build
projects under the Belt and Road
Initiative. Its politics is defined with the
Duterte administration’s goal of
coinciding with
China’s economic
growth through its infrastructure
development. Given the history of the
people-to-
people exchange between the
Filipinos and the Chinese, it is of
tantamount importance to include the
recent history of its territorial disputes
in the South
China Sea. It is beyond
reasonable doubt that both parties have
negatively impacted their fundamental
values and beliefs through this history
of clash. The financial loan agreements
could then be considered the formal
rules that were made to achieve
compro
mise driven by informal norms
conceived by the
motives of rational
actors in government positions. Written
loan agreements were formulated to
ratify final negotiations concerning
matters such as transactio
n costs and
property rights that both parties have
agreed upon. Conclusively, patterns of
firms could then be deduced through
Figure 1. Institutional Matrix (North, 1991)
ines being a
developing country in the context of its
relationship with China, particularly its
cooperation in Build Build
Build
projects under the Belt and Road
Initiative. Its politics is defined with the
Duterte administration’s goal of
China’s economic
growth through its infrastructure
development. Given the history of the
people exchange between the
Filipinos and the Chinese, it is of
tantamount importance to include the
recent history of its territorial disputes
China Sea. It is beyond
reasonable doubt that both parties have
negatively impacted their fundamental
values and beliefs through this history
of clash. The financial loan agreements
could then be considered the formal
rules that were made to achieve
mise driven by informal norms
motives of rational
actors in government positions. Written
loan agreements were formulated to
ratify final negotiations concerning
n costs and
property rights that both parties have
agreed upon. Conclusively, patterns of
firms could then be deduced through
the possible outcomes of said
agreements, as the firm's internal
structure could be perceived through its
informal norms.
This research requires the narratives of
the foreign policy shift of the Duterte
Administration towards China and its
relation to China’s Belt and Road
Initiative; thus, primary and secondary
data such as documents and key
informant interviews for validati
were gathered. The documents such as
Agreements on Economic and Technical
Cooperation between the Government
of the Republic of the Philippines and
the Government of the People's
Republic of China through its state
owned banks, Implementation
Agreement
of Two China
Project, Contract Agreement for Civil
Works (Two China Aid Bridges Project),
Loan Agreement on the Chico River
Pump Irrigation Project, Loan
Agreement on The New Centennial
Water-
Source Kaliwa Dam Project, and
Feasibility Study for
12 Bridges on
Pasig-
Marikina River were collected
through the coordination of the
Department of Public Works and
Figure 1. Institutional Matrix (North, 1991)
ISSN: 2704-4610
6
the possible outcomes of said
agreements, as the firm's internal
structure could be perceived through its
This research requires the narratives of
the foreign policy shift of the Duterte
Administration towards China and its
relation to China’s Belt and Road
Initiative; thus, primary and secondary
data such as documents and key
-
informant interviews for validati
on
were gathered. The documents such as
Agreements on Economic and Technical
Cooperation between the Government
of the Republic of the Philippines and
the Government of the People's
Republic of China through its state
-
owned banks, Implementation
of Two China
-Aid Bridges
Project, Contract Agreement for Civil
Works (Two China Aid Bridges Project),
Loan Agreement on the Chico River
Pump Irrigation Project, Loan
Agreement on The New Centennial
Source Kaliwa Dam Project, and
12 Bridges on
Marikina River were collected
through the coordination of the
Department of Public Works and
del Prado, Y.P., Macaspac, N.P., Sison, A.S.
One Belt One Road: An Analysis on the Philippines’ Official Development Assistance…
www.assembleajournal.org 7
Highways, and looking into the official
website of the Philippine Department of
Finance. Document analysis has then
been utilized to examine and interpret
the gathered contracts and agreements,
which aids in the formulation of an
empirical understanding of the Duterte
administration's pivot to China as it
serves as documentary evidence.
Correspondingly, key-informant
interviews were also utilized in the
study through data triangulation. Data
methods were integrated for a more
empirical analysis that prevented the
presence of potential biases as it
established credibility (Bowen, 2009). As
the study focuses on Philippine
economic development, specifically in
the ODA programs, the researchers
selected specific experts for their
knowledge on particular research
objectives. For this study, the
researchers purposely invited personnel
from the Chinese Embassy in the
Philippines, Office of Asia & Pacific
Affairs, Department of Foreign Affairs
(DFA), Academic experts in the field of
Philippine-China Relations, the Bilateral
Division in the Department of Finance
(DOF), and representatives from the
National Economic and Development
Authority (NEDA).
Each expert has been provided with a
different set of questions depending on
their expertise. For instance, the
questions for the Chinese Embassy
centralized on their diplomatic relations
with the Philippines. On the other hand,
the questions given to the DFA were
heavily focused on the Bilateral relations
between the Philippines and China;
hence, the data gathered contributed to
the narrative analysis of the importance
of the Philippine-China relations and
China's BRI in the Duterte
Administration's BBB program.
Conversely, the DOF was given a set of
questions centralized on China's role in
funding the BBB projects and their effect
on planning and implementation. Their
response then has been categorized and
analyzed to fulfill the study's main
research objective, defining the success
of the Chinese-funded BBB projects.
Representatives from the NEDA have
also been purposely interviewed since
the department solely holds the
country's economic growth plans. The
data collected from their answers were
significant as it contributed to
identifying the possibility of the
Philippines falling into a debt trap as in
the case of Sri Lanka. People in the
academe with interests in the
Philippine-China relations were also
interviewed for their expertise and
knowledge about the benefits and
challenges of China's ODA and its Belt
and Road Initiative program in the
Philippines. All the data contributed by
the invited respondents were validated
through narrative analysis, in which
identification of the themes,
categorization of the main ideas, and
formulation of codes was executed to
answer the research question of the
changes in the ODA and its effects after
the Philippine's Pivot to China with the
latter's program of Belt and Road
Initiative during the Duterte
Administration.
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RESULTS AND DISCUSSION
Exemplary Quotes Subordinating Theme
Categorical Theme
“…. the Belt and Road Initiative that is in
line with the government's "Build, Build,
Build" Program embodied in the
Philippine Development Plan 2017-2022,
proves to be of strategic timing and
importance.”
Chinese Embassy
Mutual Interests
Philippines’
Diplomacy pivot
to China
“When the Chinese side determines its
ODAs in the Philippines, it attaches great
importance to the Philippine development
plan and pays high attention to the
Philippines’ needs and to improve
people's livelihood…. for example, the
China-aid Estrella-Pantaleon Bridge.”
Chinese Embassy
China’s assistance in
accordance with the
Philippine
Development Plan
“Increasing financial cooperation to build
a sound framework for investment,
financing, and credit services in Asia….
strengthening the role of the Asian
Infrastructure Investment Bank, and the
Silk Road Fund.”
Chinese Embassy
Financial Integration
The Effects of
Bilateral
Agreements
Between China
and the
Philippines
“The progress of the government-to-
government projects between China and
the Philippines will contribute to
achieving Duterte administration's goal
and bring…. benefits to the Filipinos.”
Chinese Embassy
Opportunity for the
Philippines’ economic
development
del Prado, Y.P., Macaspac, N.P., Sison, A.S.
One Belt One Road: An Analysis on the Philippines’ Official Development Assistance…
www.assembleajournal.org 9
“The Philippine government has sufficient
safeguards to ensure that…. the
processing of projects will be done
properly and transparently… The
Philippine government’s projected debt
exposure to China is only 1.67% of total
debt.”
DFA
Philippine national
security
The Effects of
Bilateral
Agreements
Between China
and the
Philippines
“Under Constitution and laws, ODA-
funded projects cannot allow
appropriation or takeover of assets in the
event of default which, in the first place, is
unlikely.”
DFA
Philippine
sovereignty rights
“..these projects are driven by the demand
for financing by the Philippine
Government, not the availability of
financing from China.”
DOF
Duterte
Administration’s
reliance on financial
assistance
Philippine
Financial
Agreements with
China in BBB
Projects
“With China’s comparative advantage in
terms of technology, equipment and
materials, and human resources, it is
considered an attractive partner for the
Philippines.”
NEDA
China as significant
development partner
Philippines’
Diplomacy pivot
to China
“The Chinese government does not
explicitly state during consultations that
these forms of assistance are part of BRI.”
NEDA
Infrastructure
Development
Assistance
“Main motivation of China is to capitalize
on different political temperatures and to
increase their influence in the
Philippines.”
Informant 1
Characteristic of
Chinese ODAs
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“We shouldn't just depend so much or
overly rely on anyone’s country so This is
why diversification is very important…...
if you’re dependent on them, you're
making yourself vulnerable to economic
sanctions.”
Informant 1
Risks of making
diplomatic relations
with China
The Effects of
Bilateral
Agreements
Between China
and the
Philippines
“China's economic statecraft is also for
commercial profit… this economic
statecraft does not only reflect its
projection of soft power”
Informant 2
Main motivation of
China in joining ODA
program
Philippines’
Diplomacy pivot
to China
“If you compare, China still has lower
interest rates compared to other
countries.”
Informant 2
Lower interest rate
Philippine
Financial
Agreements with
China in BBB
Projects
Table 1: Thematic Analysis of Key-Informant Interviews
Table 1 presents the thematic analysis of
the gathered data from key-informant
interviews which further describe the
Philippine - China relationship through
its diplomacy and the effects of its
bilateral negotiations. These key-
informants range from the Philippine
government departments that are
directly involved in the management of
the PH - China relationship to
international relations experts in the
academe. Three themes were identified
from both the document analysis and
key-informant interviews that answer
the research objectives; these are (1) the
Philippines' diplomacy pivot to China,
(2) the Philippine financial agreements
with China in Build Build Build projects,
and (3) the effects of bilateral
agreements between China and the
Philippines through the Belt and Road
Initiative.
The Department of Foreign Affairs and
the Department of Finance affirm the
unlikelihood of the Philippines to suffer
from a debt trap with the provision of
data. They have also disclosed its effects
of increased employment rates that
aided in the lessening of poverty from
2015-2019 as an advantage of
infrastructure development in the
country during the implementation of
the Build Build Build projects in general,
not particular to the bilateral projects
with China. Concerning the national
sovereignty and security of the country,
it is assured that there are enough
safeguards as well as the proper
management and transparency in the
implementation of these projects.
Moreover, the Chinese embassy narrates
the relationship with the Philippine
government’s demand for financing,
with China contributing financial
del Prado, Y.P., Macaspac, N.P., Sison, A.S.
One Belt One Road: An Analysis on the Philippines’ Official Development Assistance…
www.assembleajournal.org 11
assistance for the country’s economic
development.
Informants from the academe
compliment the data given by the
different government departments
through their expert analysis describing
the perception of the Duterte
administration to China as a source of
economic opportunity as well as the
possible motivation of China in the
engagement of bilateral agreements
with the Philippines.
Statement in Loan and Grant Agreements
Basic Theme
Categorical
Theme
Art. 2.2 Chico River Pump Irrigation Project
and The New Centennial Water Source-
Kaliwa Dam Project
“Interest rate The rate of interest applicable to
the Loan shall be two percent (2%) per
annum.”
Loan Interests
Philippine
Financial
Agreements with
China in BBB
Projects
7.2c Chico River Pump Irrigation Project and
The New Centennial Water Source-Kaliwa
Dam Project.
“...declare all the principal of and accrued
interest in accordance with this Agreement and
all other sums payable hereunder to be,
whereupon the same shall become,
immediately due and payable by the Borrower
without further demand, notice, or other legal
formality of any kind.”
Consequence of
noncompliance
Art. 8.1 Waiver of Immunity “...the Borrower
does not waive any immunity of its assets
which are (i) used by a diplomatic or consular
mission of the Republic of the Philippines, (ii)
of a military character and under control of a
military authority of defence agency of the
Republic of the Philippines, or (iii) located in
the Philippines and dedicated to a public or
governmental use. (as distinguished from
patrimonial assets and assets dedicated to
commercial use).”
The Philippines’
sovereignty
rights
The Effects of
Bilateral
Agreements
Between China
and the
Philippines
Art.8.4 Governing Law “This agreement as
well as the rights and obligations of the parties
hereunder shall be governed by and construed
Rules and
Regulation
Philippines’
Diplomacy pivot
to China
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in accordance with the laws of China.”
Art. 8.5 Chico River Pump Project and The
New Centennial Water Source-Kaliwa Dam
Project “... If no settlement can be reached
through such consultation, each party shall
have the right to submit such a dispute to the
China International Economic and Trade
Arbitration Commission (CIETAC) for
arbitration. The arbitration shall be conducted
in accordance with the CIETAC’s arbitration
rules in effect at the time of applying for
arbitration. The arbitral award shall be final
and binding upon both Parties. The arbitration
shall take place in Beijing.” or the“...Hong
Kong International Arbitration Centre
(HKIAC)- for The New Centennial Water
Source-Kaliwa Dam Project for arbitration. The
arbitration shall be conducted in accordance
with the HKIAC arbitration rules in effect at
the time of applying for arbitration. The
arbitral award shall be final and binding upon
both Parties. The seat of arbitration shall be in
Hong Kong.”
Arbitration
process
Philippines’
Diplomacy pivot
to China
Art. 8.8 Chico River Pump Project and The
New Centennial Water Source-Kaliwa Dam
Project “ the borrower shall keep all the terms,
conditions, and standard of fees hereunder or
in connection with this Agreement strictly
confidential. Without the prior written consent
of the Lender, the Borrower shall not disclose
any information hereunder or in connection
with this Agreement to any third party unless
required to be disclosed by the Borrower to
any courts of competent jurisdiction, relevant
regulatory bodies, or any government
institution...of the Borrower in accordance with
any applicable Philippine law.”
Confidentiality
The Effects of
Bilateral
Agreements
Between China
and the
Philippines
Art. 1:Agreement on Economic and Technical
Cooperation Between the Government of the Financial Philippine
Financial
del Prado, Y.P., Macaspac, N.P., Sison, A.S.
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Philippines and the Government of the
People’s Republic of China The government
of the People’s Republic of China agrees to
provide the Government of the Republic of the
Philippines with a grant of Five Hundred
Million Renminbi Yuan (RMB Yuan
500,000,000), of which Two Hundred Sixty-
Four Million Eight Hundred Thousand
Renminbi Yuan (RMB Yuan 264,800,000) shall
be used to partially finance the expenses of the
Binondo-Intramuros Bridge and Estrella-
Pantaleon Bridge in Manila. The balance of the
grant shall be disbursed to finance other
projects to be mutually agreed by the two
sides. The funds will be given through China
Development Bank.
Assistance
Financial
Assistance
Agreements with
China in BBB
Projects
Article 11: Contract for the implementation of
civil works, The China-Aid Bridges project in
Manila, Philippines Binondo-Intramuros
Bridge and Estrella-Pantaleon Bridge) "In
terms of ownership. The Project, including all
assets and other improvements constructed
therein or otherwise contributed or introduced
and all additional or enhancement works as
well as the intellectual property rights over
contract documents... shall remain with the
Republic of the Philippines."
The Philippines’
sovereignty
rights
The Effects of
Bilateral
Agreements
Between China
and the
Philippines
Table 2: Document Analysis
Table 2 then shows the document
analysis from the gathered loan and
grant agreements for the BBB projects of
the Duterte Administration, which
specifies the description of the projects,
financial assistance of China, and
consequences of non-compliance
assuming that the Philippines defaulted.
The analysis indicates the preferential
buyer’s credit loan agreement which
explains the partnership between the
Philippine Government and the
Government of the People’s Republic of
China in the implementation of the
CRPIP and the Kaliwa Dam. China,
through its Export-Import Bank, lends
the sum of USD 62,086,837.82 to the
Philippines for CRPIP’s construction
which has been considered as the first
flagship project that is financed by
China under the BBB program and is
implemented by the China CAMC
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Engineering Company, Ltd. On the
other hand, the agreed upon loan
lended by China in the administration
of the Kaliwa Dam project is at the
amount of USD 211,214,646.54 and still,
will be implemented under the same
Chinese contractor. As per the signed
contracts, both of the projects will be
funded through China’s Export-Import
Bank and will have a loan interest of
two percent (2%) per annum.
Sovereignty rights and obligations of
each party are also defined in the
document; the Philippines has been
given diplomatic immunity rights,
except for the country’s declared
patrimonial assets, while the loan
agreements shall be governed in
accordance with the laws of China.
The study has also analyzed the grants
given by China through its
implementation and contract
agreements whereas presented in table
4.1, China has granted the Philippines
with RMB Yuan 500,000,000 or USD
78,077,400.00, which RMB Yuan
264,800,000 or USD 41,349,791.04 will be
used to finance the Binondo-Intramuros
Bridge and Estrella-Pantaleon Bridge in
Manila, Philippines. The remaining
balance or financial assistance by China
will be used to finance other projects
that the parties mutually agreed to. The
funds will be given through China
Development Bank; different from the
financial sources stated in the loan
agreements. The sovereignty rights of
the Philippines in the China-aid projects
are also different as the ownership of
the infrastructure projects-alongside
with its assets and property rights, will
remain in the Philippines.
Philippines’ diplomacy pivot to China
Developing countries form international
alliances for interdependence to grow
national development and achieve
national interests, as is what the
Philippine government expects with its
relationship with China (Trinidad,
2019). As presented in the conceptual
framework of this study, state
institutions normally establish
relationships with others on the basis of
similarity of goals- which in this case is
economic development. The Duterte
administration had established a closer
tie with China with its economic
development plans through
infrastructures and improved foreign
policies, considering China in various
development cooperation in the form of
grants and loans, as well as capacity
support and technical assistance. These
forms of development cooperation are
in addition to commercial bonds in the
international markets and other
economic deals and investments with
private investors, including Public-
Private Partnerships. However, in
contrast to the past administrations, the
stronger relationship between the
Duterte administration and China
resulted in a shift in the country's
foreign policy by opening bilateral
agreements concerning business, trade,
and commerce, which improved
political relations and increased
economic projects development
assistance from China. The stronger
relations garnered the Official
Development Assistance of China
financing the Duterte Administration's
critical infrastructure and development
del Prado, Y.P., Macaspac, N.P., Sison, A.S.
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projects under its 2017-2022 Philippine
Development Plan.
During the State Visit of President Xi
Jinping to the Philippines in November
2018, the Philippines and China signed
the Memorandum of Understanding on
the cooperation and participation of the
Philippines in the Belt and Road
Initiative. The MOU commits
cooperation in the policy dialogue and
communication, infrastructure
development and connectivity,
cooperation in trade and investment;
financial cooperation; and socio-cultural
exchanges. Alongside this, China also
provided grants to support the
implementation of select activities in the
Philippines, technical assistance for
conducting feasibility studies for the
projects, and short-term training
programs. China sees the BRI to be in
line with the administration’s BBB
program to be of strategic timing giving
great importance to the Philippines’
development plan for its economic
development. The Estrella - Pantaleon
Bridge and the Binondo - Intramuros
Bridge under the JICA-Assisted Pasig-
Marikina River Channel Improvement
Project, Phase III, are examples of grants
financed by China to support this
notion. An informant affirms that the
Philippines also benefited from its
diplomatic relations with China as the
Duterte administration- through its
balancing act, could still assert their
rights when the agreement was
disadvantageous for the Philippines and
at the same time engage when there are
opportunities like financial assistance.
In a simplified manner, the
administration seeks China for its
financial support while also trying to
secure its national interests.
Nonetheless, the claim of the
Philippines pivoting to China has been
determined, in which the Philippines
has accepted non-negotiable terms and
conditions of the CRPIP and the Kaliwa
Dam Project loan agreements which
irrevocably centralizes on the interests
of China. In applying North’s theory of
institutions, whereas the state provides
privileges of institutional control in
return of financial assistance, the
Duterte Administration- with its goal of
economic development, nonetheless,
agreed upon the demands of China with
loan agreements confined to its national
interests without considering the
possibility of China’s dominance and
control over the developing
infrastructure as collateral in cases in
which payments could not be made. It
could be seen through foreign loan
agreements under the BRI, that the
CRPIP and the Kaliwa Dam Project,
both of which are upscale, vital projects
and are not grants from China (de
Castro, 2019; Kreuzer, 2018). Both
projects feature, under its MOU, that all
agreements, rights, and obligations of
both parties follow the laws of China.
China also selected contractors for the
projects, whereas China CAMC
Engineering Company, Ltd. was
selected for the CRPIP. At the same
time, China Energy Engineering
Corporation, Ltd. was chosen to execute
the Kaliwa Dam Project.
Further, suppose a dispute concerning
loan agreement emerges between the
involved parties. In that case, it is
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indicated in Article 8, section 5, of both
the CRPIP and the Kaliwa Dam Project
loan agreements that if any unsolvable
disputes arise in connection to the
agreement, the parties concerned have
the right to voice their concerns. Only,
they should submit said concerns to the
China International Economic and
Trade Arbitration Commission
(CIETAC) for the CRPIP and Hong
Kong International Arbitration Centre
(HKIAC) for the Kaliwa Dam Project.
The arbitration would be conducted in
accordance with the CIETAC and
HKIAC arbitration rules in effect during
the time of the arbitration, taking place
in its respective countries, under China's
territory. This potentially demonstrates
bias in the decision-making process of
the arbitration and the resolving of its
issues. Factors within the clauses of the
agreements manifest a favorable
inclination toward China in most
aspects as it endangers the property
rights of the Philippines.
The DOF justifies that the Duterte
Administration prioritizes economic
and infrastructure initiatives to assist
the progress of growth of the
Philippines, as it already is one of the
fastest-growing emerging economies in
Asia. Informants from the academe
affirm that the Duterte Administration
perceives China as a source of economic
opportunities, particularly in
infrastructure projects which is one of
the primary platforms of the BRI.
China's primary motivation was also
described as capitalizing on different
political temperatures and increasing its
influence in the Philippines and for
commercial profit. The Philippine
government should only have to
balance and manage the relationship
with China properly to benefit from it.
Philippine financial agreements with
China in Build Build Build projects
The Philippines’ shift from Public-
Private Partnership to Official
Development Assistance is a mark of
Dutertenomics that aims at relying more
on foreign financial aids as a source to
achieve the country’s economic goals of
infrastructure development (Ito, 2019;
Trinidad, 2019). Hence, a portion but
major BBB projects introduced by the
Duterte Administration have confided
to China’s ODAs; The CRPIP and the
Kaliwa Dam Project. Based on the
discussions of the DOF and NEDA,
Chinese ODAs are more attractive in
financing the implementation of the BBB
projects because of its technology,
equipment and materials, and human
resources advantage. This was because
the terms are substantially more
generous than market loans and interest
rates, which are considered lower than
other countries part of the ODA
program. Also, the loans provided for
establishing the CRPIP and the Kaliwa
Dam project are considered under the
Preferential Buyer’s Credit Loan, which
could cover about 85 percent of the
projects’ costs. The maturity period
given for the facility is about twenty (20)
years-seven (7) years of a grace period,
and thirteen (13) years of the repayment
period, which provides the Philippines
ample time to repay its loans.
Additionally, China generously
provided a grant worth RMB Yuan
500,000,000 or USD 78, 077,400.00, in
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which RMB Yuan 264,800,000 or USD
41,349,791.04 will be utilized for the
construction of the Binondo-Intramuros
Bridge and Estrella-Pantaleon Bridge.
NEDA affirms that the loan and grant
agreements then describe that the
Duterte administration primarily seeks
China as a financial source of economic
opportunity rather than China looking
for developing nations that need loans.
The administration believed that the
Official Development Assistance from
China has an advantage for the
Philippines' economic development as
the loans were under concessional
financing or its interest rates were below
the market value. One of the Informants
explains that this ODA results from the
President's China-friendly policy, which
aims to improve political relations and
increase economic projects or
development assistance from the
Chinese. The administration’s closer ties
with China and prioritization of
infrastructure development then
resulted in an increase in the country's
Gross Domestic Product as the average
of 3% in 2011-2016 increased to over 5%
during the year of 2018 to 2019.
Moreover, it should be noted that
Chinese ODAs only ranked 6th on the
overall ODA partners of the Philippines
as Japan is still the leading ODA
partner; this indicates that China
consumes only about 2.02% of the entire
loans and grants in the country.
Nonetheless, as mentioned by the DOF,
national interests are still significant in
making economic decisions since the
administration has taken principal
considerations in securing ODAs from
China, in which all laws in the
Philippines, rules, and regulations on
the environment, right of way, and
social safeguards should comply during
the projects' implementation.
To explain China’s motivation in
providing financial assistance to the
Philippines, the informant illustrated
the internal aspect of China over the
years since that China’s history affects
its formulation of foreign policies.
During the 1900s, after the Chinese civil
war, China remained a poor and
undeveloped country due to its
economic decline. The undeveloped
country inspired and motivated the
prominent leaders of China to establish
an economic reform that would improve
their economy; in the form of
development aid or now known as the
ODAs. China then utilized their
economy to pursue certain goals from
developing countries, which in this case
is the Philippines. It has also been stated
that the goal of China in providing ODA
changes depending on what they need
thus, it is then arguable that Chinese
ODAs in the Philippines could be an
operation to dismiss the arbitral ruling
and claims of the Philippines in the
South China Sea.
However, bilateral agreements that
resulted from the exchange between the
Government of the Philippines through
the DOF and the Government of the
People’s Republic of China through the
Ministry of Commerce had settled to an
unfavorable agreement for the
Philippines. Interest rates according to
Article 2, sect. 2 of the CRPIP and The
Kaliwa Dam Project’s preferential
buyer’s credit loan agreement proves to
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be a hefty amount for a developing
country like the Philippines, considering
the costly major projects that averages at
USD 137 million, which guarantees the
accumulation of pricey interest rates no
matter the initial rate agreed upon. To
add, in the event of a default in the
agreement, actions to remedy the
situation benefit the Lender, China,
most. With that, the possibility of a debt
trap could still be perceived through the
means of a huge amount of loan and its
interests. Additionally, this kind of
financial agreement which gives China
the utmost advantage could become the
standard/template for future
agreements with them thus, making the
Philippines more economically
vulnerable. Nevertheless, the DOF
emphasized that these projects are
driven by the demand for financing by
the Philippine Government.
The effects of bilateral agreements
between China and the Philippines
through the Belt and Road Initiative
The claim of the debt trap emanates
from the basis of “China-centric” loan
agreements as a lender to high-cost
major infrastructure projects. With the
trend of China’s BRI in its acquisition of
property rights as collateral for the
inability to pay debts, the Philippines,
through the CRPIP and the Kaliwa
Dam, would be at risk of falling under
the debt trap (Magcamit, 2019). The
CRPIP and the Kaliwa Dam Project
could be considered strategic
infrastructures, similar to the
Hambantota ports, where China
controls Sri Lanka’s seaports due to its
inability to pay debts. For instance,
Article 8, section 1 of the loan agreement
is deemed problematic as it indicates
that the Borrower- the Philippines- has
consented to surrender its patrimonial
assets or properties that would be
dedicated for commercial use should it
be enforced in an arbitration award.
Even more problematic would be article
8.8 of the loan agreement wherein it
stated that the terms and contents of the
agreements shall remain strictly
confidential, which secrecy in itself is a
questionable trait. According to section
8 of The Public Land Act of 1936, only the
President has the capacity to declare an
alienated land of public domain as a
patrimonial asset, which will be
subjected to an arbitration process in
case of the occurrence of dispute or any
event of default that is enumerated in
the loan agreement. Thus, the Lender
could attain its complete control over a
natural resource that would be
considered as a patrimonial asset
without violating the binding
agreement.
Conversely, the DFA affirmed that the
Duterte administration has been
prudent in its borrowings and debt
management policy which secures the
country from falling into a debt trap.
The occurrence of a debt trap is
inconceivable in the Philippines as it is
under the constitution that ODA-funded
projects cannot be appropriated and
seized in the event of default. It is
supported by Article 11 of the Contract
for implementing civil works, which
explains that projects under the
Philippine-China contract agreements
and all of its assets should remain in the
Philippines. With high regards to
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people-to-people exchange and their
history, China utilizes the strategy of
economic statecraft, which implies the
use of the Chinese economy through its
ODAs for commercial profit; if the
financial resources were transferred
from China Export-Import Bank, China
would then gain profit through its
interest rates. The increase of financial
cooperation for financing, investment,
and credit services in the continent
strengthens the role of the Asian
Infrastructure Investment Bank (AIIB),
as well as its Silk Road Fund. Therefore,
this economic statecraft justifies the
Philippine-China diplomatic relations,
wherein the Philippines have chosen
China as its Lender with its claim of
lower interest rates and reasonable
conditions. Moreover, almost all of the
infrastructure development under the
Chinese-funded BBB program of the
Duterte Administration has contributed
to the Philippine economy with an
increase of employment rate; this is the
reason why they are very optimistic in
supporting the BRI activities and its
initiatives in the country. In general, the
informants’ answers pointed to the
understanding that the country is in
better economic standing than Sri
Lanka; the notion of a debt trap in the
Philippines had only been conceived
due to the South China Sea dispute.
However, the characteristics of China’s
Belt and Road Initiative are still open for
the possibility of a debt trap since the
informants asserted the potential risks
of agreeing with China. Still, the
informants’ responses still concluded
that joining the BRI program can lose
the country’s national character by
defaulting and not paying the loans. It is
duly because China has a condition to
let go of the arbitration ruling of the
South China Sea, which indicates that
the Philippines would drop its claims
over the island. Rampant corruption in
the country could also contribute to a
debt trap if the financial resources
cannot be maximized as the loans will
remain unpaid should there be an
economic decline. Even so, the
informants remained optimistic about
the BRI because of its economic benefits
in the Philippines so far. Thus, they
otherwise recommended that
diversification and other factors which
do not rely upon sacrificing the South
China Sea and other properties as
collaterals should be alternatively
considered in agreeing with China- to
prevent falling into a debt trap and
losing sovereignty rights.
Understanding China’s motivation in
funding the BBB projects
Naturally, loans benefit the lender more
than the borrower, as the latter needs
more from the former. In the case of the
Philippines’ loan to China in flagship
projects, the Philippines approached
China for financing, which resulted in
“China-centric” agreements. Conveying
the NEDA’s answer, the Duterte
administration has sought to establish
diplomatic relations with China. They
perceived that China would be a
significant partner for the infrastructure
development of some of the BBB
projects. They stated that selecting the
Chinese government as an ODA partner
is beneficial for the Philippines as it
opens more opportunities for
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developing the BBB projects, which
would optimistically affect the country’s
economic development. Therefore, the
Duterte administration pivoted toward
China for its development assistance
that was deemed to boost its economy.
Moreover, the data presents that the Belt
and Road Initiative complements the
Build Build Build program with its
focus on infrastructure projects. Thus,
credit services under the BRI have been
implemented in the Philippines to fund
infrastructure projects. It is then
perceived that both countries would
mutually benefit from the partnership
with the Kaliwa Dam Project and the
CRPIP as its pioneers, should the rates
remain manageable. The success of the
Chinese-funded BBB projects could be
seen through the BRI, which secures a
higher ground for China in its funded
BBB projects by safeguarding its
interests through its loan agreements.
However, despite the assurance from
the Chinese Embassy, NEDA, the
Department of Foreign Affairs, the
Department of Finance, and experts
from the academe- which exclaimed that
China would not influence
infrastructure development programs in
the country, the fact remains the same;
most agree that there is still a possibility
of a debt trap.
As illustrated in the conceptual
framework, the loan agreements of the
flagship projects portray to be leaning
toward China, which guarantees the
success of Chinese-funded BBB projects,
whether the Philippine government
would be able to pay or not. Despite the
cooperative gestures shown by China
with its diplomatic relations with the
Philippines, foreign loan agreements
were perceived to contain non-
negotiable terms that were more
beneficial for China than the
Philippines. Any outcome would be
beneficial for the lender as even in the
event of a default, patrimonial assets of
the Philippines could be seized in place
of monetary repayment. In contrast, the
completion of repayment garners profit
for China from the loans' interest rates.
Still, the Philippines accepted the non-
negotiable terms in the contract for
China’s Official Development
Assistance, notwithstanding the
possibility of alienating the country’s
property rights.
As explained, patrimonial assets are the
lands owned by the Philippine
government that would be disposed of
due to their uselessness for government
projects or national parks. The issue
then is that the President, currently
President Rodrigo Duterte, has the
power to declare which land would be
open for disposition or concession.
Although the flagship projects would be
safe from being used as collateral, other
patrimonial assets could be targeted
depending on the arbitration ruling to
be discussed by both parties. China's
dominance is furthered by the
agreement that all arbitrations
concerning the projects would be held in
China's territories and supervised under
its rulings, proving to be onerous for the
Philippine side. The arbitration also
allows bias against the Philippines as
said arbitration would be administered
under Chinese laws, thus potentially
leaning toward its interests. Even if the
del Prado, Y.P., Macaspac, N.P., Sison, A.S.
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loans are manageable and the chances of
falling under a debt trap are unlikely
during the Duterte administration, the
CRPIP and the Kaliwa Dam loan
agreements could still serve as a
template for later cooperation with
China. This enables a standard of
accepting loans a=nd agreements that
risks sovereignty rights which could
prove problematic over time. Even if the
Philippines' economy could manage its
debts during the Duterte administration,
it is not guaranteed that it would
happen in future administrations; thus,
the risk of a debt trap could still remain.
Nonetheless, the debt trap of the
Philippines would not be entirely
similar to the case of Sri Lanka. As
mentioned, it would be improbable as it
is unconstitutional should the
Philippines surrender its sovereignty
rights of the Kaliwa Dam and the
CRPIP. Both projects are considered
vital and therefore not considered
patrimonial assets. This is such the case
because the projects aim at meeting the
demands of water resources with the
provision of an additional 600 million
Liters per day to the water supply of
Metro Manila, which aims at irrigating
7,530 hectares in Cagayan and 1,170
hectares in Pinukpuk, Kalinga that
would benefit the agriculture in the
region, respectively. However, what
China could acquire under its loan
agreements are other patrimonial assets,
such as territories in the South-China
Sea/West-Philippine Sea, which are
heavily contested due to its geopolitical
location and the abundance of
undiscovered natural resources in the
area. Although China assured that the
Code of Conduct between the
Philippines and China concerning the
South China Sea dispute is going
steadily, it is not guaranteed that China
will finally abandon its interest in the
island. In addition, according to the
Philippine Public Land Act of 1936,
section 6, the President, upon the
recommendation of the Secretary of
Agriculture and Commerce, shall decide
upon and classify which lands of the
public domain shall be considered as
"alienable or disposable, timber, and
mineral lands "wherein section 10,
defines alienable and disposable lands
as patrimonial assets. Problems would
ensue should unexplored lands be
classified as alienable or disposable but
has since then been proved to be
abundant in natural resources.
CONCLUSION AND
RECOMMENDATIONS
The analysis of data required the
responses from academic experts in the
field of international relations,
government agencies that handle the
financial resources of the Build Build
Build projects, and documents that
would define the financial assistance of
China. The data collected was analyzed
using thematic and document analysis
to answer the study's objective, which
was to explore how the Philippines
manages its Official Development
Assistance from China’s Belt and Road
Initiative. Three themes were identified
in both of the analyses; these are (1) the
Philippines' diplomacy pivot to China,
(2) the Philippine financial agreements
with China in BBB projects, and lastly,
(3) the effects of bilateral agreements
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between China and the Philippines
through the Belt and Road Initiative.
The findings in the first and second
theme show that the Duterte
administration was able to establish a
closer relationship with China to finance
some of the major infrastructure projects
in its Build Build Build Program
through ODA, particularly the Chico
River Pump Irrigation Project and the
New Centennial Water Source Kaliwa
Dam. The administration primarily
sought China as a financial source of
economic opportunity due to its lower
interest rates than its competitors that
also belong to the ODA program.
However, the idea of a debt trap
emerged in the third theme as one of the
possible effects of the bilateral
agreements with China and its Belt and
Road Initiative program should the
Philippines default in its agreements.
Still, it is arguable that the occurrence of
a debt trap is highly improbable in the
current state of the Philippine economy
as the data shows that the debt exposure
to China is only at 1.67% of the total
debt.
Therefore, the study concludes that the
Philippines, under the Duterte
Administration, pivots to China due to
the need for financial resources to fund
the BBB projects, which resulted in the
balancing of its interests with China.
Nonetheless, the Philippines had
accepted the terms and conditions of the
loan agreements, which centralizes the
interests of China, a risk the Duterte
administration took to secure finance for
economic development through
infrastructure projects. Either way,
China preeminently benefits from the
Philippine-China diplomatic relations.
Its ODA could either help its economy
prosper from its profits or seize
patrimonial assets of the Philippines as
a collateral obligation. Nonetheless,
China’s Belt and Road Initiative
program is continuously deemed to be
beneficial for the country's economic
development; thus, the Duterte
administration remained optimistic with
its relationship with China.
In connection to the suggestions
provided by experts from the academe,
the research recommends that the
Philippine-China diplomatic relations
attain a more mutual understanding,
which does not rely on sacrificing
property owned by the Philippines and
revoking its sovereignty rights.
Diversification must also be considered
in seeking financial resources to prevent
the occurrence of a debt trap. Moreover,
a thorough exploration of the
Philippine-China relations in
accordance with its contentious and
non-contentious aspects should be
performed to resolve the constant
dispute in the South China Sea and
mitigate the misconceptions about
China and its goal of hegemonic power.
To address the issue presented in the
paper, there are four ideal conditions
that could prevent and/or at least lessen
the complications of misconceptions and
the possibility of falling into debt traps.
Firstly, focusing on the misconceptions,
more Philippine-based research and
academic studies on ODAs should be
published to prove arguments rather
than relying on opinion-based
disagreements. The prevention of
del Prado, Y.P., Macaspac, N.P., Sison, A.S.
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misconception could optimistically
improve diplomatic relations between
the two countries. Secondly, before
acquiring more projects, the Philippine
government should prioritize paying its
outstanding balances and prevent its
falling into debt trap by improving the
efficiency of existing projects to generate
more income for the country to balance
its cost-revenue ratio. It is
recommended that the Philippines
government should provide a more
comprehensive payment plan for
projects that are not confidential
(anything not military-related) before
entering into loan agreements to be
available for public viewing as to
determine the standard by which the
government would operate. This
payment plan should be
institutionalized, wherein the Philippine
Congress would utilize a finance
committee that will discuss and oversee
the debt strategies of the executive
branch; this will ensure the security of
the resources in the country and avoid
its falling into debt-trap diplomacy.
Lastly, in regard to its pivoting towards
China, the Philippine government
should be resilient in participating in
dealings to avoid non-negotiable terms
such as the alienation of property rights
in the country. Exploring other options
for ODAs are recommended especially
in instances where sovereignty is at risk.
The Philippines should continue to not
rely solely on diplomatic relations with
China, in which financial resources for
infrastructure development and its
processes are heavily dependent and
beneficial to the Chinese ODA.
However, the study’s recommendations
are not limited to the Philippines’
diplomatic relations with China but to
the entirety of its foreign diplomacy to
refrain from falling into a debt trap or
having economic unfavourability which
is detrimental to the Philippine
economy.
ASSEMBLEA ISSN: 2704-4610
Volume 3 No. 1, 2022
www.assembleajournal.org 24
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