The Philippines is strategically enhancing its trade connectivity and geopolitical relations with the United States, Japan, South Korea, and other nations, as tensions with China continue to rise. This repositioning aims to brace against geopolitical uncertainties, especially following conflicts over territorial claims and trade dependencies.
Historically, the Philippines has leaned heavily on trade with China, its largest trading partner. According to reports, the value of goods imported from China reached $52.4 billion, including products like electrical equipment and machinery. Conversely, the Philippines exported around $10.65 billion back to China, mostly composed of electrical equipment and ores. Nevertheless, since President Xi Jinping took office, territorial disputes have increasingly complicated these economic relations. The Permanent Court of Arbitration ruled against China's extensive claims over the South China Sea, affirming the Philippines' obligations under the United Nations Convention on the Law of the Sea.
Recent incidents have amplified these tensions. On October 2023, tensions escalated when Chinese vessels collided with Philippine coast guard ships at the contested Second Thomas Shoal. Following this, Philippine Transportation Secretary Jaime Bautista announced the cancellation of three Chinese-funded infrastructure projects. Bautista attributed this decision to delays from China, noting, "The collision did not influence his decision—rather, China’s delays prompted the Philippines to call on Japan, South Korea, the United States, and the European Union for 'better' deals." This approach exemplifies the Philippines' broader strategy to seek more reliable partnerships as mistrust over previous Chinese deals grows.
Former President Duterte had previously shifted focus toward China, hoping to secure more funding for infrastructure through the Belt and Road Initiative (BRI). Yet, the Philippines has faced substantial cuts and delays for Chinese-funded projects, leading to local discontent due to environmental concerns and uneven distribution of benefits. This culminated with President Marcos's absence from the third Belt and Road Forum hosted by China, indicative of the Philippines' disengagement from the initiative.
Throughout 2024, the Philippines and China remained embroiled in fraught exchanges. Following multiple confrontations between coast guard vessels—one resulting in injuries—a reaffirmation of U.S. commitments to defend the Philippines was made, particularly concerning the prevailing tensions over the South China Sea. President Marcos underscored this by stating the Philippines would not yield to foreign pressures, upholding stability without instigated conflicts.
The shift away from dependence on Chinese investments has been significantly marked by strategic engagements with other countries. For example, under the U.S.-Philippines Trade and Investment Framework Agreement, discussions focusing on agricultural trade and supply chains were recently held, highlighting the intent to solidify these bilateral ties. The Philippines remains open to trade with all countries, including China, explicitly stated by the Secretary of Socioeconomic Planning: "We are open to investments and trade from any country, including China." This dual-pivot policy allows the Philippines to maintain dialogue with China, even as it strengthens ties with other allies.
Collaboration efforts with South Korea have also seen momentum. Several memoranda of understandings (MOUs) have been signed to improve aspects such as tourism, defense cooperation, and infrastructure projects. Earlier negotiations, including initiatives aimed at reducing tariffs and increasing direct business exchanges, have amplified economic opportunities.
One bright spot amid these developments is the burgeoning Philippines semiconductor sector poised for growth amid global demand. The U.S. is backing this initiative, labeling the Philippines as integral to diversifying semiconductor supply chains. U.S. Secretary of Commerce Gina Raimondo’s statement—"The United States is 'all in on the Philippines' as a key player"—encapsulates this growing partnership. Federal support under the Chips and Science Act aims to bolster the country's high-tech industry, facilitating training for 128,000 workers by 2028.
Infrastructure enhancements remain fundamental to supporting this vibrant sector, with numerous U.S. and Asian values supporting new energy projects, including nuclear capacities, aimed at bringing power to developing segments of the economy. Recent agreements concerning civil-nuclear cooperation are poised to innovate energy sector applications, central to the Philippines' long-term energy strategies.
Overall, the strategic maneuvers made by the Philippines demonstrate its commitment to diversifying its economic relationships, fostering stability, and enhancing its trade connectivity. Politically and economically, the Philippines stands out as it seeks to maintain self-sufficiency and openness to international partnerships, securing growth paths even as its historical ties with China become increasingly complex.