During the process of the US-China standoff, Southeast Asian countries have become the focal point in the battle for influence. With tensions escalating in the South China Sea, the Philippines is pivoting towards the US-Japan alliance in both security and economic aspects. This shift may affect the entire Southeast Asian region’s stance towards the Belt and Road Initiative, as these countries may have to give up their neutral position and make choices.
In a trilateral summit between the US, Japan, and the Philippines, the leaders announced the establishment of the “Luzon Economic Corridor” to improve connectivity between Subic Bay, Clark, Manila, and the province of Batangas in the Philippines. This move is the latest initiative by the US and Japan to counter China’s influence in the Indo-Pacific region.
According to a joint statement and White House briefing, the US government’s US International Development Finance Corporation (DFC) plans to open an office in Manila. The DFC will host the Indo-Pacific Business Forum in Manila in May, where the three parties will discuss and promote more investment in the Philippines.
The US and the Philippines are also strengthening cooperation in semiconductors and critical minerals. The US Trade and Development Agency (USTDA) is providing funding to a Philippine nickel mining company, whose minerals are key elements in the battery and energy storage supply chain. Additionally, companies like Meta, GreenFire Energy, UPS, and Astranis are prepared to invest in the Philippines.
American economist Davy J. Wong told Epoch Times that the Luzon Corridor is a great opportunity for the Philippines to improve its industrial structure with the help of Japan and the US, including orders, loans, and personnel training. For the Philippines, it is at least a great opportunity to enhance its industrial structure.
Yao-Yuan Yeh, a professor of international studies at the University of St. Thomas in the US, stated that the US and Japan are heavily investing in the Philippines to gradually shift advanced technology production from China to the Philippines. He emphasized that the US and Japan’s cooperation serves as a reference for Southeast Asian countries and demonstrates the commitment of the US in the region.
Yeh mentioned that the US may share risks through cooperation with other countries like Japan, South Korea, Canada, Australia, and New Zealand – these are the most likely candidates. By jointly investing, they can alleviate the burden on the US.
Feng Chongyi, associate professor at the University of Technology Sydney, noted that the prospects for the Luzon Corridor project are promising. Once the Philippines distances itself from China and embraces democratic countries, funds and technology will flow in. Taiwan and to some extent South Korea are also likely to engage once the project succeeds.
Regarding the Belt and Road Initiative, Yeh pointed out that the underlying strategic goal is to create its own production chain and market, resembling a form of neo-colonialism where poorer countries are controlled as markets. He highlighted that most of China’s investments primarily serve its own interests, whereas America’s investments are more strategic and focused on the long-term perspective.
Yeh noted that while the Belt and Road Initiative has made significant investments, the funds may not always be fully disbursed, leading to substantial debt risks once the investment is completed. Moreover, the initiative often employs Chinese labor for projects, minimizing local employment opportunities and opening avenues for speculative transfers.
Both Yeh and Feng expressed scepticism about the sustainability of the Belt and Road Initiative, emphasizing the resistance it faces from many countries globally. Yeh added that this model may ultimately end unsuccessfully.
Feng pointed out that the Belt and Road Initiative has largely become a failed project, initially conceptualized to combat overcapacity issues but later used for political and strategic purposes by state-owned enterprises to earn foreign exchange. He highlighted that the majority of projects of the initiative are non-profitable, with the domestic financial situation in China posing limitations on sustaining them.
The “Luzon Economic Corridor” project is the latest attempt by the US to enhance its influence in the Asia-Pacific region and counter China’s Belt and Road Initiative. The US government has launched numerous initiatives and invited democratic countries like Japan and Taiwan to participate.
In September 2020, Washington and Taiwan signed a framework agreement to assist in the construction of infrastructure and the energy sector in the Indo-Pacific and Latin America, aiming to curb China’s expansion in the region. This aligns with Taiwan’s New Southbound Policy, which President Tsai Ing-wen announced in 2017, involving a $3.5 billion infrastructure financing plan.
Feng stated that the US is strategically positioned against its main rival, China, with a focus on East Asia. The US, Philippines, and Taiwan have entered agreements for military base construction in Philippine islands close to Taiwan, representing a part of infrastructure development with the aim of mutual defense, thus benefiting Taiwan as well.
The Philippines serves as a model, leading to potential cooperation with Malaysia and Indonesia in the future. With both technological expertise and financial resources, the US and Japan are redirecting investments to these countries to counterbalance China’s influence.
Epoch Asia reported in 2023 that about 50% of China’s regional investments flowed to Southeast Asia, with Indonesia as the largest recipient. However, investments in the Philippines, Mongolia, Myanmar, Papua New Guinea, Tajikistan, and Turkey dropped significantly due to political and economic risks.
Wong suggested that the success of the Luzon Corridor project is intertwined with the geopolitical conflicts between Beijing and neighboring countries in the South China Sea and East China Sea. This factor significantly impacts the relations between the Philippines, Malaysia, Indonesia, Vietnam, and Beijing, making the Luzon Corridor more appealing to these countries.
He highlighted that for Southeast Asian nations like the Philippines, Malaysia, and Indonesia, the USA and Japan will be the primary targets for closer ties. The ultimate effects of these relations will depend on the results of the power struggle between these nations and Beijing.
Summing up, Wong emphasized that these countries may lean more towards the US and Japan if they perceive a conflict of interests with Beijing rather than cooperation. The economic assistance from Beijing might influence their decisions, especially when it comes to countries like Indonesia with significant nickel deposits.
However, these dynamics represent a significant geopolitical rivalry in Asia involving Beijing, Washington, and Tokyo.
Yeh pointed out the dilemma facing the US – how much investment is necessary to counterbalance Beijing’s influence? He stressed the importance of pooling various resources to outmatch China’s influence and potentially replace the Belt and Road Initiative with a new economic cooperation model.
He concluded that as China faces economic challenges internally and abroad, the likelihood of hefty foreign investments decreases. Therefore, the US needs to demonstrate greater commitment and earnestness to sway these countries towards cooperation.
Editor: Lin Yan#