Manila’s pivot to Beijing spells peril-not just opportunity-for Chinese-Filipinos

In 1417 the sultan of Sulu, now part of the southern Philippines, sailed to China to pay tribute to Zhu Di, the third emperor of the Ming dynasty.

After the sultan fell ill and died unexpectedly on his way home, the emperor built an elaborate tomb for him in Dezhou, in Shandong province. In recent years that tomb was restored-with financial help from a Chinese-Filipino business leader-and last month trade and cultural groups marked the voyage’s 600th anniversary with a flurry of activities.

Their efforts to play up historic ties between the two nations come amid growing mistrust in the Philippines of the nation’s ethnic Chinese, who comprise about 1% of the population but have an outsize influence over the economy. They are seen as midwives to China’s economic expansion in the region, and a pivot to Beijing by president Rodrigo Duterte places even more opportunities within their reach.

But the social inequality, coupled with ethnic distrust, could erode the decades of trust-building that makes their integration so different from the segregation experienced by ethnic Chinese in Indonesia and Malaysia-nearby nations that also received many of the immigrants who left China in the years prior to the start of communist rule in 1949.

Duterte, who is scheduled to hold bilateral talks with Chinese president Xi Jinping on Saturday (Nov. 11) in Vietnam, ushered in the thaw in relations between Beijing and Manila after taking office in mid-2016. Before then, the relationship was marked more by Philippine anger over China seizing control of reefs, shoals, and other features in the South China Sea claimed by both nations.

Public indignation culminated in Manila opening a case against China’s sweeping maritime claims before an international tribunal in the Hague, which ruled in favor of the Philippines in July 2016. But Beijing dismissed the ruling and has been busy fortifying artificial islands it’s set atop reefs-some quite near the Philippines-complete with airstrips, barracks, and missile shelters.

China’s nine-dash line, with which it dubiously claims most of the sea, intersects with large portions of the Philippine exclusive economic zone, where it legally has sole rights to the natural resources in and below the water. Beijing favors joint exploration of oil and natural gas within the disputed waters, but in the Philippines that could translate to infringing on national sovereignty. Anti-China sentiment could turn into anti-Chinese sentiment. Anti-China sentiment could turn into anti-Chinese sentiment 

Despite the win at the Hague, Duterte has kept the maritime dispute on the back burner, though this weekend he’s expected to ask Xi for clarification on China’s position and express concerns about militarization in the waterway. His focus has instead been on boosting commercial links between the two nations. In October 2016, just four months into his term, he went on a four-day state visit to Beijing, announcing his “separation from the United States” and telling his hosts, “I’ve realigned myself in your ideological flow.”

Although the business sector of the delegation had invited only two dozen delegates, hundreds of businessmen crashed the party. Among them were over a hundred members of the Federation of Filipino-Chinese Chambers of Commerce and Industry.

Upon his return to the Philippines, Mr. Duterte announced that he had scored $24 billion worth of deals. But it remains unclear how much of that is actual investment, and how much is loans to be funneled through the Asian Infrastructure Investment Bank and the Bank of China. The interest rate on loans has not been disclosed, either. Alarmed observers soon warned that the Philippine national debt could balloon dramatically during Duterte’s six-year term.

More recent Chinese migrants who arrived after 1990, known as the xinqiao, have been gaining notoriety in the news, largely because of perceived links to the illegal drugs flowing in from China. In September last year authorities raided a large methamphetamine lab masquerading as a pig farm north of Manila and arrested seven Chinese nationals linked to it. One Chinese businessman was the subject of a senate inquiry last August as the recipient of about 600 kg (1,323 lbs) of meth shipped out of Xiamen, a coastal city in China. As of 2010 there were 61,372 registered Chinese nationals; many more are believed to be in the country illegally.

Chinese migrants also operate a vast network of illegal mining operations throughout the country, achieved in part by bribing local officials and using the loophole of the 1991 Small-Scale Mining Act, which was intended to help disenfranchised indigenous communities. Chinese mining companies operating in the country use the names of local mining groups to avoid attention. In 2012, 97% of the gold mined from the Philippines was carried offshore unregulated, most of it ending up in Hong Kong.

The older generations of Chinese-Filipinos, who now hold Philippine passports and speak fluent Tagalog and English, have been quick to distance themselves from the newer migrants. But the mainstream population is not always able to parse the difference. China’s territorial aggression, as well as its economic expansion, have already resulted in widespread distrust of China.

The Chinese-Filipinos are seen to be collaborators in China’s incursion into the Philippine economy-and vice versa. Philippine investment in China is still greater than Chinese investment in the Philippines. The nostalgic allegiance of the overseas Chinese has been targeted by Xi, who spent 17 years of his government service in Fujian, where many of the migrants come from.

The task of regulation falls on the government. But the laws on foreign ownership are easily circumvented. The finance secretary recently announced that an upcoming constitutional amendment will further ease restrictions on foreign ownership. In the absence of enforceable regulation controlling capital flow, Chinese-Filipinos will have to seriously evaluate what the long-term consequences of their relations with China and Chinese businesses will be-and the tensions these may raise. Awareness must continue to be raised in order to differentiate the issues of territorial sovereignty, aggressive investment, and local Chinese dominance over the Philippine economy.

While the history of friendship between China and the Philippines since the sultan of Sulu sailed to China six centuries ago are worth celebrating, it must also be noted that the journey was that of a subservient vassal. In order for the Philippines to maintain its economic independence from China, the Chinese-Filipinos must remain clear-eyed in defending the interests of the country where they have made their home.

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