It is for a value of 4,900 million dollars for three new sections. The new Philippine president wants it to be renegotiated. The Chinese are accused of not having disbursed the investments and aid promised to Duterte, the predecessor of Marcos jr. The crisis in Sri Lanka highlights the dangers of excessive indebtedness to China. Laos, Pakistan, Maldives and Bangladesh are also under observation.
Manila () – The government of the new president Ferdinand Marcos Jr announced this weekend that it is “withdrawing” from the agreement with China for the financing of three railway projects. The Philippines’ position is that the terms of the deal, worth $4.9 billion, must be renegotiated because China has not met its financial commitments.
Manila and Beijing had signed the cooperation agreement in 2018, during Duterte’s presidency. At the start of his tenure, Marcos Jr’s predecessor had put aside territorial disputes with China in the South China Sea. An approach strongly criticized within the country (and by its American ally), among other things because the Chinese have not fulfilled their promises of concessions for billions of dollars in investments, aid and loans.
The rail projects in question concern the Subic-Clark, South Long-Haul and Davao-Digos sections. From a Chinese perspective, they are all part of the Belt and Road Initiative, Xi Jinping’s infrastructure plan to make China the hub of world trade. In 2016 there were only 77 kilometers of railways in operation in the Philippines, and before World War II there were 1,100.
The Marcos jr administration stated that it will consider “other” financing options to carry out the three projects. A Chinese government official told Reuters that Beijing is willing to discuss the matter with Manila.
Several observers warn Asian “client” states that, in the long run, borrowing from China could lead to systemic problems, as is happening in Sri Lanka. Beijing’s gravest fault is encouraging often fragile governments to venture into costly infrastructure projects that do not guarantee economic returns. And it also does so by supporting political figures accused of corruption and bad governance, as is the case of Rajapaksa in Sri Lanka itself.
For their financial exposure to China under the Belt and Road label, most analysts also keep an eye on Laos, Pakistan, the Maldives and Bangladesh.
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