Xi swept into the Philippines on Tuesday as the first Chinese leader to make a state visit in 13 years. He laid a wreath at a monument to a Philippine nationalist martyr before signing dozens of agreements, including a significant oil and gas exploration deal in the contested South China Sea.
Xi’s visit to the Philippines — once an unshakable U.S. ally with deep historical and cultural ties to the United States — encapsulates how Southeast Asia and the Pacific have become ground zero in the accelerating contest for global influence between Beijing and Washington.
“China and the Philippines are close neighbors with a thousand-year history of exchange, good-neighborliness, friendship,” Xi said at the opening of bilateral meetings Tuesday, “and cooperation is our only correct choice.”
The stakes are high in Manila, where Xi is seeking this week to win over President Rodrigo Duterte with generous investments while having to contend with a Philippine military that remains close to the United States and eager to nurture relations with Washington.
“The Philippines is potentially Xi’s crown jewel in his foreign policy balance sheet,” said Richard Heydarian, a Manila-based defense and security analyst. “No other Chinese president has come this close to eradicating the Philippines from the U.S. sphere of influence, in terms of optics.” Heydarian described the Southeast Asian country as a crucial “swing state” in Asian geopolitics.
When Xi and Duterte announced a deal Tuesday that will pave the way for joint exploration for oil and gas in the South China Sea, it represented the culmination of a turnaround for two countries that were locked in bitter territorial disputes for years before Duterte took power in 2016.
The Philippine strongman first visited Beijing that year, stunning the world by turning his ire toward the United States and promising to find in Xi a new, steady partner who could provide billions of dollars in investments. He has doubled down on that rhetoric, promising to shelve a landmark ruling on the South China Sea between the two countries that negates China’s historical claims to the waters.
On the sidelines of the Association of Southeast Asian Nations summit in Singapore, he accused the United States of stoking tensions with ongoing war games and naval drills in the waters of Southeast Asia. The U.S. Navy conducted drills last week in the Philippine Sea, in international waters east of the Philippines.
China is “already in possession” of the contested South China Sea waters, Duterte told reporters. “China is there. That’s a reality, and America and everybody should realize that they are there.”
The trade-off, Duterte hopes, will be cash. Of the more than two dozen agreements signed between the two countries Tuesday, many related to infrastructure, including in Davao City, where Duterte was mayor before becoming president.
Many Philippine officials say they have no choice but to take Chinese investment. They are puzzled by why so few countries — including, crucially, the United States — have been willing to help in the way that China has in a country that badly needs infrastructure improvements.
There has been Chinese, Japanese and Indian investment in airports, subways and the telecommunications sector. But Philippine Finance Secretary Carlos Dominguez said he was “surprised” that American bidders have not come forward.
“So maybe they have no interest. If that’s the case, that’s fine,” he said in an interview. “If they want to look inward, that’s their sovereign right.”
The Philippines’ sense of being left out pointed to a basic dilemma for the Trump administration: how to square its “America First” doctrine with its effort to keep allies in its orbit — and out of China’s.
Although Xi unveiled his Belt and Road Initiative roughly five years ago to disburse as much as $1 trillion in Chinese funding across Eurasia, Washington has begun to take notice only recently and make countermoves in the past few months.
As Pence and U.S. envoys swept through Asia this month, U.S. officials said they talked up what the Trump administration is pitching as a possible alternative to Chinese investment: a new federal agency created last month under the Build Act that could disburse $60 billion in infrastructure investments to developing countries.
Although the dollar amount may be dwarfed by Chinese initiatives, the new program offers “transparency and built-in tools to counter against corruption and make sure no countries are saddled with debt,” said W. Patrick Murphy, the top U.S. diplomat for the East Asia and Pacific region. “This is not a policy about China or trying to contain China, but there are elements in our approach that offer alternative ways for countries to meet their infrastructure needs.”
And mere weeks after he outlined U.S. grievances toward Beijing in a significant speech in Washington, Pence again delivered a blistering attack on China last week as he told Asian audiences that the United States provided a “better option.” He unveiled initiatives including a $1.7 billion utility grid for Papua New Guinea, the poorest country in the region.
“If Pence’s speech at the Hudson Institute was a starting gun in a new phase of realpolitik, then the Asia summits were confirmation that this is the new normal for the U.S.: There’s going to be a well-organized attempt to push back on China,” said Nick Bisley of La Trobe University in Australia.
So far, it is unclear whether countries have fully bought into China’s largesse, even if it far surpasses U.S. offers. Several Asian governments newly taking power, in countries such as Malaysia, Sri Lanka and Pakistan, have questioned murky deals that previous governments struck with China
The latest backlash came from the Maldives, an island archipelago off the west coast of India known for its idyllic beaches. The country’s new president took office Saturday and said that state finances had been “looted” by the previous administration, which oversaw an expansion of ties with China in the form of major debt-funded infrastructure projects.
The new Maldivian government now plans to scrap a free-trade agreement with China concluded last year. The trade imbalance between China and the Maldives is “so huge,” Mohamed Nasheed, the head of the new president’s party, told the Reuters news agency. “China is not buying anything from us. It is a one-way treaty.”
In Manila on Tuesday, a few hundred protesters gathered outside the Chinese Embassy, shouting that the Philippines was “not for sale” and decrying joint investment and exploration deals.
In recent weeks, Chinese officials have denied that their investments amount to unfair “debt traps” for poor nations. In public, Xi has indirectly chided the United States for what he described as its “arrogance” in the region and positioned himself as a supportive ally of weaker, developing countries.
“Instead of pointing fingers at others, it would be better to match its deeds with its words and truly treat all countries, big or small, as equals,” Chinese Foreign Ministry spokeswoman Hua Chunying said Sunday about the United States.
Zha Daojiong, a professor of international political economy at Peking University and a former senior fellow at the Asia Society, said that the United States historically has been sensitive about its level of influence in Southeast Asia — and that Washington stepped up its efforts there when it began to see Japan as a rival.
Decades later, that probably will happen again.
“It’s the intrinsic nature in that peculiarly American stream of thinking about its dominance or ownership of Southeast Asia,” Zha said. “There is not much China, and indeed Japan before China, can do if the U.S. insists on singling it out as an archrival.”
Kaela Malig in Manila, Joanna Slater in New Delhi and Lyric Li in Beijing contributed to this report.