Keeping sea lanes open is a main concern of members of American Chamber of Commerce in the Philippines
It’s an uneasy time for Asian nations as the rivalry between China and the United States intensifies and uncertainty hangs on whether they can resolve their trade war beyond the 90-day truce. In this special series the South China Morning Post explores how the China-US rivalry is affecting four countries in Asia. In the final part, Sarah Zheng looks at the Philippines.
With no clear end to the US-China trade war in sight, businesspeople in the Philippines – already hit by an inflation crisis – increasingly fear they could get caught in the crossfire if the confrontation between the two economic powerhouses spilled over into the South China Sea.
While Philippines President Duterte has pushed for a rapprochement with Beijing, lured by promises of massive Chinese investment in the country, the archipelagic state still maintains its long-standing defence treaty relationship with the US.
Although inflation in the Philippines eased off in November after surging to a nine-year high earlier this year of 6.7 per cent, the central bank has raised interest rates five times this year, citing “continued uncertainty” amid “tighter global financial conditions and trade tensions among major economies”, a loose reference to the impact of the US-China trade war.
“I’m hearing more [about] the South China Sea issue and the possibility of a military confrontation, than a cold war [that] turns into a hot war,” Ebb Hinchliffe, president of the American Chamber of Commerce in the Philippines, told the South China Morning Post .
While some of the business group’s members are feeling pain from the prolonged trade battle, their greater worry is that the conflict will spill over into the South China Sea, where Manila and Beijing are both claimants, bringing even bigger problems to the Philippines’ business community, Hinchliffe said in an interview.
“Existing companies are more concerned about keeping the sea lanes open and how it plays with the Philippine politics,” he said. “The Philippine government is shifting more towards China and less away from the United States, [while] the United States is confronting China.”
Those relationships “are what’s driving this uncertainty about the South China Sea or the West Philippine Sea issue”.
The South China Sea has long been a flashpoint for conflict in the region, particularly since the Philippine government filed and won a case against China’s “nine-dash line” claims in an international tribunal in 2016.
Duterte said at a regional summit in Singapore in November that if Sino-American tensions in the disputed waters were to escalate into war, the Philippines would be “the first to suffer”.
“China is there,” he told reporters. “That is a reality, and America and everybody should realise that they are there.”
As the months-long trade war drags on, Beijing has stepped up its efforts to assert its authority over the disputed maritime region.
Critics cite its building and militarising of artificial islands as well as the near-collision of a Chinese military ship with a US Navy ship as examples of its desire to push back against America’s presence in the controversial waters.
