South China Sea: Philippines must softly manage disputes or miss out economically

Chinese finance and supply chains are transforming Southeast Asia’s infrastructure, renewable energy, mineral processing and electric vehicle landscape. But the Philippines is being left out. Does Manila’s drive to reduce China’s role in its economy come at the price of losing out to its peers in the Association of Southeast Asian Nations?

02:55

Chinese EV maker BYD launches electric cars in Indonesia

But even with this accommodation, competition from neighbours is chipping away at Manila’s position in the lucrative Chinese market. Vietnam and Cambodia have upped their banana exports, as have Thailand and Malaysia when it comes to other fruits such as pineapples. Logistics works to their advantage, while geopolitics puts Philippine produce at a disadvantage.

China needs critical raw materials for its production. However, Chinese firms may not be keen to invest in Philippine mineral processing, given the political climate. Overall, commodities remain prone to external shocks from weak demand and price fluctuations.

This stands in stark contrast with the Philippines’ neighbours who have plans and the grit to carry them out. Such competition should shape a more nuanced outlook on maritime tensions.

Vietnam’s VinFast has entered into strategic partnerships with Chinese battery makers CATL and Gotion to improve its own EVs. Last year, it was announced that Chinese carmaker Geely is set to invest $10 billion in Proton to produce EVs in Malaysia.

China’s unsettling behaviour in the South China Sea does not invite approval. But neither does the Philippines’ gung-ho line. Subtlety does not equate to acquiescence. Noise does not necessarily translate into productive outcomes.

Unfettered clatter may even raise the stakes for accidents and