Philippine businesses are jumping at the chance to make deals with China, but tension is lingering at home

The Chinese government said on Wednesday that Philippine President Rodrigo Duterte will visit China from October 18 to 21.

But even before the visit was confirmed, business leaders and executives in the Philippines were clamoring to take part in Duterte’s trip to one of the world’s biggest economies.

Who will be part of the delegation has not been announced, but on October 11 Reuters reported that business groups and government officials said registration for the trip had been “oversubscribed.”

The number of Philippine entrepreneurs to travel with Duterte swelled from about two dozen to about 250, according to Trade Undersecretary Nora Terrado, as they look to discuss potential deals in the rail, construction, tourism, agribusiness, power, and manufacturing sectors.

“I understand there are 100 more wanting to go,” Terrado told Reuters, adding that the size of the delegation was unusual because the two countries agreed on the visit only about a month ago.

The eagerness to do business with China comes amid an apparent thaw in previously frosty relations between Manila and Beijing, ties that had been strained over China’s assertive territorial claims in the South China Sea, which the Philippines and several other neighbouring countries have rebuffed.

Duterte has not capitalised on a July 12 international-court ruling that dismissed China’s expansive claims. The current Philippine president said in April, prior to his election, that he would be willing to “shut up” about disputes in the sea if China provided aid.

Since Duterte took office in June, he has kept his conciliatory stance toward China, particularly on economic and political matters — a position that appears to have been enabled by China’s more measured approach to issues in the South China Sea.

More recently, business dealings between the two countries appear to be heating up.

On Saturday, Philippine Finance Minister Carlos Dominguez said that Duterte would seek billions of dollars in infrastructure investments from China over the coming months (which Chinese firms are open to providing). The following day, Philippine Agriculture Secretary Emmanuel Pinol said China would lift a ban on fruit exports from 27 Philippine firms as a “gift” to Duterte.

“We are neighbours … this is actually what the president is thinking: instead of fighting, why don’t we just become friends?” said Francis Chua, chairman emeritus of the Philippine Chamber of Commerce and Industry, according to Reuters.

“The clouds are fading away. The sun is rising over the horizon, and will shine beautifully on the new chapter of bilateral relations,” Zhao Jianhua, the Chinese ambassador to the Philippines, said in September.

‘One cannot replace the other’

Despite the apparent enthusiasm among Filipino executives about the potential to work with the Chinese, there are reasons to worry about the footing of the Philippine economy.

Since taking office, Duterte has egged on a anti-narcotics campaign that has driven up homicides in the country. Since June, nearly 4,000 people have been killed — the majority of them by unknown assailants it what are likely vigilante killings. He has also accused public figures of criminal activity with scant evidence, stirring fears among the business community.

Duterte has also railed against the US, raising concerns about the health of Manila and Washington’s longstanding relationship.

“Many investors have been turned off by threatening remarks made by Duterte against the US and China, casting doubt on the future of Manila’s foreign policies and his handling of the economy,” CNBC reported at the end of September.

“A lot of people are hesitant to put their money into the Philippines at this point,” Guenter Taus, who heads the European Chamber of Commerce in the Philippines, told The Economist in September.

Duterte has remained broadly popular through the first three months of his term, but that behaviour has put him at odds with much of the rest of the world.

And a trip to Beijing is unlikely to sooth the frayed nerves the Philippine business community.

“There is still significant concern among businesses about the potential of Duterte’s policies, both domestic and international, to cause instability and upset the economic growth” of the Benigno Aquino administration, which ran from 2010 to 2016, said Gregory Poling, the director of the Asia Maritime Transparency Initiative at the Center for Strategic and International Studies.

Given the size of the Chinese economy, expanded business dealings with Beijing only make sense for Philippine businesses, but deeper relationships with China’s businesses can’t take the place of Manila’s extensive economic ties to the US and other countries.

“They are going on the trip with him because there is no reason to pass up potential opportunities in China,” Poling told Business Insider, “but given that China lags well behind the US, Japan, and European nations on the list of investors in the Philippines, one cannot replace the other.”

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