“De-risking is more essential than untangling.”
This is according to Dr. Renato Cruz De Castro, a professor at the Asian Center of the University of the Philippines, while discussing how the country can veer its essential and critical infrastructure away from China.
“We have to de-risk; it is not acceptable for our critical infrastructure to be significantly run by a company that is more state-owned,” De Castro added.
Under the Belt and Road Initiative (BRI), China financed several major infrastructure projects such as the Chico River Pump Irrigation Project and the Kaliwa Dam. The National Grid Corporation of the Philippines (NGCP) has a 40% stake owned by the State Grid Corporation of China. Additionally, China has remained the Philippines’ largest trading partner, with bilateral trade reaching $41 billion in 2023.
The Marcos administration has started to pivot away from China by withdrawing from key BRI projects in 2023. It has also expanded economic and defense alliances with the United States, Japan, and the European Union. Joint military exercises with France and Japan signal a strategic shift in security policy, while initiatives such as the Indo-Pacific Economic Framework (IPEF) with the U.S. provide alternative trade and investment opportunities.
Japanese firms have also stepped in to fund infrastructure projects once slated for Chinese financing.
This comes after a recent string of alleged espionage incidents, with authorities arresting five Chinese nationals suspected of espionage near the South China Sea. These individuals were allegedly conducting surveillance on Philippine Navy and Coast Guard facilities and had ties to Chinese Communist Party-affiliated groups that had previously donated cash and vehicles to local Philippine authorities.
This incident underscores concerns that Chinese investments may serve as leverage for intelligence-gathering and foreign interference.
Dr. De Castro emphasized that de-risking is a gradual process and that “reducing dependency on China does not mean severing ties completely.”
“The key is diversification—strengthening trade relations with multiple countries to ensure economic resilience while keeping diplomatic lines open,” he added, while highlighting Japan’s growing role in Philippine infrastructure and the EU’s increasing trade engagement as crucial components in this shift.
While full disengagement remains improbable, the Philippines is moving towards a more balanced foreign policy approach, reducing risks while maintaining economic and diplomatic flexibility.
