“When Leaders Chose China”
Yes, there are historical precedents where Chinese economic interests were supported by Philippine top officials, notably during the presidency of Gloria Macapagal Arroyo (2001–2010). Arroyo’s administration pursued closer economic ties with China, driven by a strategy to leverage Chinese investment and trade to bolster the Philippine economy. This approach was evident in several high-profile projects and agreements, some of which sparked controversy due to allegations of corruption, lack of transparency, or compromises on national interests. The National Broadband Network (NBN) deal with ZTE Corporation, often referred to as the ZTE scandal (not GTC), is a prominent example. Below, I’ll outline this case and other relevant precedents, critically examining their context and implications.
1. The ZTE-NBN Scandal (2007–2008)
Overview: The ZTE scandal centered on a $329 million contract signed in 2007 between the Philippine government and China’s Zhong Xing Telecommunication Equipment Company Limited (ZTE) to develop a government-managed National Broadband Network (NBN). The project aimed to improve telecommunications infrastructure but became mired in allegations of corruption involving Arroyo, her husband Mike Arroyo, and allies like Benjamin Abalos, then chairman of the Commission on Elections (COMELEC).
Details:
Allegations: The deal was criticized for being overpriced (allegedly by $130–200 million) and lacking competitive bidding. Whistleblower Rodolfo “Jun” Lozada and others alleged that Abalos offered bribes to secure the contract, with kickbacks reportedly reaching up to $130 million. Lozada claimed Arroyo was aware of irregularities but proceeded with the deal.
Chinese Involvement: The contract was signed during a state visit to China, with Arroyo present at the ceremony. China provided a soft loan through its Export-Import Bank to finance the project, tying it to Chinese economic interests. Critics argued this gave China undue influence over Philippine infrastructure.
Outcome: Public outcry and Senate investigations led Arroyo to cancel the deal in October 2007. Abalos resigned as COMELEC chairman, facing impeachment threats that could have implicated Arroyo further. Arroyo admitted in 2008 to knowing about possible corruption six months before the cancellation but cited diplomatic constraints with China as a reason for not acting sooner, stating, “How can you cancel the night before when you are negotiating with a foreign country?”
Impact: The scandal eroded Arroyo’s credibility, with thousands protesting in Manila in 2008 over corruption allegations. It also highlighted concerns about China’s growing economic leverage in the Philippines, as the deal prioritized Chinese firms over American or other competitors.
Critical Analysis: The ZTE-NBN deal exemplifies how Chinese economic interests were advanced through high-level Philippine support, facilitated by Arroyo’s administration. The soft loan and preference for ZTE suggest a strategic alignment with China’s Belt and Road Initiative precursors, but the lack of transparency and alleged kickbacks raised questions about whether national interests were compromised for personal or political gain. The scandal also reflected geopolitical tensions, as the U.S.-backed Aquino administration later pursued charges against Arroyo, framing her China-friendly policies as a betrayal of Philippine sovereignty.
2. Joint Marine Seismic Undertaking (JMSU, 2004–2008)
Overview: The Joint Marine Seismic Undertaking (JMSU) was a tripartite agreement signed in 2004 between the Philippines, China, and Vietnam to conduct joint oil and gas exploration in the South China Sea, including areas within the Philippines’ Exclusive Economic Zone (EEZ). Arroyo’s administration championed the deal as a diplomatic and economic win to reduce tensions and attract Chinese investment.
Details:
Context: The JMSU covered 142,886 square kilometers, with up to 80% within the Philippines’ EEZ, including areas near Palawan. The Philippine National Oil Company (PNOC), China National Offshore Oil Corporation (CNOOC), and Vietnam’s PetroVietnam were involved.
Chinese Interests: China pushed for the deal to secure access to potential energy resources in disputed waters. Arroyo’s administration was seen as “receptive” to China’s commercial incentives, unlike her successor, Benigno Aquino III, who took a harder stance on territorial claims.
Controversy: Critics, including journalists and lawmakers, argued the JMSU compromised Philippine sovereignty by allowing China to explore within the EEZ without acknowledging Philippine rights. A 2008 investigative series by Miriam Grace Go for Newsbreak and ABS-CBN News labeled it a “policy of betrayal,” claiming Arroyo and congressional allies sacrificed territorial interests for Chinese investment. The deal was allowed to lapse in 2008 amid public backlash and legal challenges.
Arroyo’s Role: Arroyo defended the JMSU as a pragmatic step toward regional cooperation. However, posts on X and reports suggest she enabled China’s maritime claims, with one user stating, “Gloria Arroyo is the woman who enabled China to claim maritime features close to Palawan by agreeing to the joint marine seismic undertaking.”
Critical Analysis: The JMSU reflects a precedent where Arroyo’s government prioritized Chinese economic and diplomatic ties over strict adherence to territorial claims. While framed as a cooperative effort, the deal’s secrecy and inclusion of EEZ areas fueled perceptions of capitulation to China. This aligns with Arroyo’s broader policy of engaging China economically, but it alienated nationalists and set a precedent for future scrutiny of China-Philippine deals. The lack of transparency mirrors the ZTE scandal, suggesting a pattern of prioritizing foreign investment over public accountability.
3. Other Infrastructure and Investment Deals
Overview: Arroyo’s administration pursued multiple Chinese-funded infrastructure projects, often financed by soft loans from China’s Export-Import Bank. These included railways, bridges, and energy projects, aligning with her $44 billion infrastructure plan (2005–2010) to boost economic growth.
Examples:
NorthRail Project: A $400 million deal with China’s Sinomach to rehabilitate the Manila-Clark railway was signed in 2004. Like the ZTE deal, it faced allegations of overpricing and irregularities, leading to its cancellation under Aquino’s administration. Critics argued it favored Chinese contractors over local or Western firms.
China as a Trade Partner: By 2010, China had become the Philippines’ top trading partner, with Arroyo later boasting in 2019 that bilateral ties reached “new heights” under her watch. She encouraged Chinese investment in sectors like mining and energy, often citing economic stability as her legacy.
Controversy: Many deals were criticized for lacking competitive bidding and favoring Chinese firms, with allegations of kickbacks. The Aquino administration’s 2011 charges against Arroyo included “rigging of major public infrastructure contracts with Chinese corporations” and excluding U.S. bids, suggesting a deliberate tilt toward China.
Critical Analysis: Arroyo’s infrastructure push relied heavily on Chinese capital, reflecting a strategic choice to deepen economic ties. While her defenders credit her with stabilizing the economy (e.g., weathering the 2008 financial crisis through reforms like the E-VAT), critics argue these deals often prioritized Chinese interests and personal gain over national welfare. The pattern of opaque contracts and canceled projects under scrutiny suggests systemic issues in governance.
Broader Context and Historical Precedents
Arroyo’s Economic Strategy:
As an economist with a Ph.D., Arroyo emphasized macroeconomic stability, achieving average GDP growth of 4.5% annually. Her policies, like the Expanded Value-Added Tax (E-VAT) in 2005, reduced the budget deficit and earned improved credit ratings, creating fiscal space for Chinese-funded projects.
Her administration continued the economic liberalization started by predecessors like Fidel Ramos, but her pivot to China marked a shift from U.S.-centric policies, reflecting China’s rising global influence.
Geopolitical Dynamics:
Arroyo’s China-friendly policies contrasted with Aquino’s U.S.-aligned stance, highlighting a geopolitical tug-of-war. The U.S. supported Aquino’s anti-Arroyo corruption probes, framing her as overly accommodating to China.
The International Crisis Group noted in 2012 that Arroyo’s “receptive” stance toward China’s commercial incentives contrasted with Aquino’s “provocative” territorial assertions, shaping China’s aggressive South China Sea posture.
Other Administrations:
While Arroyo’s tenure is the most cited for Chinese economic alignment, earlier precedents exist. For example, Ferdinand Marcos (1965–1986) opened diplomatic ties with China in 1975, securing rice trade deals and early investments, though on a smaller scale.
Rodrigo Duterte (2016–2022) later echoed Arroyo’s approach, pursuing Chinese infrastructure loans under the Belt and Road Initiative (e.g., the Chico River Pump Irrigation Project). However, Duterte’s deals faced similar transparency critiques, suggesting a recurring pattern when Chinese economic interests are prioritized.
Critical Reflection
The ZTE-NBN scandal and JMSU are clear precedents where Arroyo’s administration supported Chinese economic interests, often at the cost of transparency and public trust. These cases reflect a broader strategy to harness China’s economic rise for Philippine growth, but they were marred by allegations of corruption and sovereignty trade-offs. The scandals’ fallout—canceled projects, resignations, and Arroyo’s 2011–2016 detention on plunder charges (later dismissed)—underscores the risks of opaque foreign deals.
However, Arroyo’s defenders argue her policies laid the groundwork for economic resilience, citing growth metrics and China’s role as a trade partner. The truth likely lies in a gray area: while her administration’s intentions may have included economic progress, the execution often favored elite interests and foreign partners over the public. The U.S.-China rivalry further complicates the narrative, as Arroyo’s prosecution under Aquino suggests external pressures to curb China’s influence.