PHILIPPINE-CHINA RELATIONS:
Brighter prospects after a night of disquiet

Bobby M.Tuazon
Global Times 
(A Chinese daily)
(This paper is written marking the 50th anniversary - June 7, 1975 - of Philippines-China diplomatic relations.)

Philippines’ relations with China have been multifaceted if not intricate, accentuated by unresolved territorial disputes in the South China Sea. Both sides however agree that the maritime row is not the totality of their relations and communication remains open.

Half a century has passed since the establishment of diplomatic relations between the Philippines and China. On rainy June 9,1975 Chinese Premier Zhou Enlai and Philippine President Ferdinand Marcos Sr. signed in Beijing a joint communiqué establishing diplomatic relations between the two countries. (Before Marcos, Philippine diplomatic ties had been mainly with Taiwan, an island province of China.) In so doing, the Marcos government pledged to adhere to the One-China policy which asserts that there is only one government representing China, namely the People's Republic of China (PRC), and that Taiwan is an inalienable part of China. The diplomatic pact was preceded a day earlier – June 8 to be exact - by the signing of the Agreement on Long-Term Trade between the two countries. The 1975 pact had been predated by trade contacts between the two countries in the 9th century.

The diplomatic relations pact yielded concrete results as it was followed by frequent exchange of high-level visits between China and the Philippines.

Trade relations

The two countries’ bilateral relations have had an economic impact. Historical roots of trade between China and the Philippines started during the 9th century, with early trading interactions occurring between Chinese traders and the indigenous people of Ma-i (now Mindoro, an island province west of Luzon, Philippines). These interactions took place along maritime routes and are evidenced by archaeological finds from the Tang Dynasty (618 to 907). The earliest known trade between China and the Philippines, beginning in the 9th century, was a barter system where Chinese traders exchanged silk, porcelain, and other luxury items for local goods like beeswax, cotton, pearls, and tortoise shells. 

Today, China is the largest trading partner of the Philippines. In 2024, trade between the two countries amounted to US$9.44 billion in Philippine exports to China. Conversely in 2024, the Philippines' total imports from China were valued at US$32.8 billion, making China the largest import partner for the Philippines. This represented 25.7% of the Philippines' total imports.

In retrospect, bilateral trade relations gave birth to some negative implications. For instance in 2024, Philippine trade deficit with China was around $9.44 billion representing 12.9% of the total Philippines trade deficit. The Philippines has had a trade deficit with China in 2010-2024 which means that the Philippines' imports from China consistently exceeded its exports. In 2024, China was the Philippines' largest supplier of imported goods, with a significant portion of the country's total imports coming from China. In sum, the Philippine trade deficit with all trading partners for 2024 was $54.33 billion. 

The Philippines’ trade deficits were due to higher import values compared to export values. This is attributed primarily to strong import demand, particularly for raw materials and intermediate goods, which outpaces export performance. The country's reliance on imported goods, coupled with infrastructure gaps, regulatory barriers, and other causes also contribute to the persistent trade imbalance. 

Ethnic roots of Philippine-China relations

Interestingly, the ethnic Chinese population in the Philippines, also known as Tsinoys, is around 1.2% to 1.5% of the total population, representing approximately 900,000 to 1 million people. A significant portion of this population resides in Metro Manila, with the remainder distributed across other major urban centers like Cebu, Iloilo, Davao, and Bacolod. Most of them are engaged in retail trade and finance. Of the top 10 wealthiest families in the Philippines six are Chinese. The Chinese elite wield significant economic influence and have been historically involved in politics, although their direct political participation is sometimes limited by societal perceptions and the dominance of established political dynasties.

Military exchanges

In recent years, military exchanges between the two countries had been on the rise. In April 2002, Philippine Secretary of Defense Angelo Reyes visited China. Two months later in June, Philippine naval fleets visited China for the first time. Following other military exchanges in May 2005, Xiong Guangkai, Deputy Chief of the General Staff of the Chinese People's Liberation Army (PLA) visited the Philippines and held the first Defense and Security Consultation with Philippine Defense Undersecretary Antonio Santos. Moreover, in 2022, the first batch of 130 million RMB military donations from China was handed over to the Philippines’ defense department. 

South China Sea row

China's claim to the South China Sea stands on history and the "nine-dash line", which outlines a broad area within the sea that China considers its territory. These claims extend back centuries, citing historical activities and explorations, including trading routes and naming of islands. China asserts historical rights based on its early maritime activities, including fishing, exploration, settlements, and trade, which predated other nations' involvement in the region. 

In 2016, China's initiative on the South China Sea (SCS) maritime issue - "pursuing joint development while shelving disputes" - was first addressed to the Philippines. In a June 1986 meeting with Philippine Vice President Salvador Laurel, Chinese paramount leader Deng Xiaoping pointed out that Nansha Qundao (南沙群岛 Spratly Islands) belongs to China, adding however that when referring to the matter of differences, "This issue can be shelved for now. Several years later, we can sit down and work out a solution that is acceptable to all in a calm manner. We shall not let this issue stand in the way of our friendly relations with the Philippines and with other countries." In April 1988, meeting with Philippine President Corazón Aquino in Beijing, Deng reiterated that with regard to the issue concerning Nansha Qundao, "For the sake of the friendship between our two countries, we can shelve the issue for now and pursue joint development". Indeed, in Sept. 2004, China National Offshore Oil Corp. and Philippine National Oil Company an agreement for joint marine seismic undertaking on certain SCS areas. The following year, Vietnam agreed to join the Sino-Philippine cooperation. Oil companies from the three countries signed the "Agreement for Joint Marine Seismic Undertaking on Certain Areas in the South China Sea in March, 2005.

Navigating Philippine-China Relations

Locked at a critical juncture in their bilateral relations, the future of development financing between the Philippines and China rests on how the two nations carefully balance economic interests and geopolitical realities. The Marcos government is now cautiously steering toward a more selective, balancing approach: carefully accepting Chinese funding when it fits the country’s needs, while pushing back hard on strategic and security issues.

It’s a tightrope walk. As China becomes more diplomatically and economically engaged in the region and the West cuts back on global aid spending, the Philippines finds itself with fewer alternatives. Manila wants to assert its sovereignty, but it also needs roads, bridges, and power plants. Pragmatism, not ideology, is driving development finance decisions.

The Philippines’ future will be calibrated by its ability to continue walking this fine line: benefiting from China’s development support and without being boxed in by Beijing’s strategic agenda. That’s no easy task. But in a region increasingly defined by economic opportunity and geopolitical tension, it may be the only option left.

Lessons: Chinese foreign policy principles

China's foreign policy is guided by the "Five Principles of Peaceful Coexistence," which emphasize mutual respect for sovereignty and territorial integrity, mutual non-aggression, non-interference in internal affairs, equality and mutual benefit, and peaceful coexistence. China also prioritizes its own security and development interests, while also advocating for a peaceful international environment. 

In contrast, the Philippines by and large lacks well-defined strategic goals – except that with the US underpinned by the 1951 Mutual Defense Pact and the 1998 Visiting Forces Agreement allowing US forces to operate within the country. In brief, Philippine ties with the US have always been defined by defense alliance and with that of other western countries.

American imperial power forced the Philippines to remain dependent primarily on security matters and, through various defense alliances since 1950, serves as the core factor for the instability in the Southeast Asian region. The Marcos Jr. administration is oblivious of the fact that he has made the Philippines a satellite of America in these modern times by tightly embracing defense alliances with the US against China and thus locking the country’s national security interest to its colonial master. In so doing, he has made the Philippines – with all its dangerous consequences – a pivotal part of America’s strategy policy of encircling and containing China.

This is a sad note to mark the 50th anniversary of Philippine-China diplomatic relations.

Nobody wins in either war or instability. Instead of being tied to the hips of America, President Marcos should use the existing bilateral mechanisms established by the two Asian countries to resolve common irritants. His foreign and defense policy team should, once and for all, disallow any form of foreign interference in the country’s critical domestic matters.

Just the same, one should stay in the course of China-Philippine relations aware that ties have their hiccups but that like day and night there are always bright prospects to making such ties brighter and better after a night of disquiet. 

 

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Tuazon is a retired professor from the University of the Philippines and serves as the Director for Policy Studies of the think tank Center for People Empowerment in Government. He has co-authored 16 books and is the sole author of “Spies, Clan Politics, and A New World Order” (2024).