Geo-Politics

If China Attack the Philippines, Will the United States Help?

In 2012, China and the Philippines engaged in a standoff that would alter the course of the status quo in the South China Sea. The Scarborough Shoal incident, marked by China’s assertive actions against Philippine fishing boats and subsequent effective capture of the shoal, set the stage for a significant shift in regional dynamics. This event highlighted the importance of territorial disputes and power struggles in a region where overlapping maritime claims have fueled longstanding tensions among neighboring nations.

Following the Scarborough Shoal standoff, Washington’s stance gradually evolved from ambiguity to specificity. The United States, a longstanding ally of the Philippines, expressed deep concern over China’s actions and issued stern warnings of “severe consequences” should it reclaim Scarborough Shoal. This shift marked a turning point in U.S. engagement with regional disputes, reflecting a more pronounced commitment to upholding international law, freedom of navigation, and the peaceful resolution of conflicts in the South China Sea.

Times have changed since 2012, and with that, geopolitics in the South China Sea has transformed. The once uneasy peaceful coexistence among nations has given way to a heightened and confrontational environment, where major powers vie for influence and strategic control. The increased militarization of disputed islands, assertive maritime maneuvers, and the pursuit of territorial claims have intensified the complexities of the geopolitical landscape.

Against this backdrop, the question arises: Would the United States come to the aid of the Philippines in the event of a Chinese attack? For this, we’ll analyze historical alliances, tracing the trajectory from the Scarborough Shoal incident in 2012 to the establishment of the Bilateral Defense Guidelines in 2023. This exploration has tracked the evolution of U.S. engagement in the South China Sea, examining the transition from ambiguity to specificity in response to China’s assertive actions.

The U.S.-Philippines Mutual Defense Treaty: An Enduring Commitment

The U.S.-Philippines Mutual Defense Treaty was signed on August 30, 1951. This treaty, forged during the Cold War era, established a commitment whereby both nations pledged to support each other in the event of an armed attack. The treaty’s language, framed in the context of collective defense, reflected the geopolitical realities of the time and aimed to deter external aggression in the Asia-Pacific region.

The main points of the treaty include

Collective Defense: The core principle of the treaty is collective defense, where both parties commit to supporting each other in the face of an armed attack. It underscores the mutual interest in maintaining peace and security in the Pacific region.

Armed Attack: The treaty defines an armed attack against either party as an attack on both, triggering the obligation to respond. The commitment extends to the metropolitan territory of either party, as well as territories under their jurisdiction in the Pacific region.

Consultation: In the event of an armed attack or the threat of aggression, the treaty emphasizes the importance of immediate consultation between the United States and the Philippines to determine the appropriate response. This reflects the collaborative decision-making process inherent in the alliance.

Joint Defense Commission: The treaty establishes a Joint Defense Commission, composed of military representatives from both nations, tasked with formulating strategic plans and recommending courses of action in the event of an armed attack.

Termination and Duration: The treaty outlines termination provisions, requiring one year’s notice by either party. The initial term of the treaty was set for an indefinite period, with periodic reviews to assess its continued relevance.

Subsequent Agreements: Over the years, both nations have entered into additional agreements and arrangements to supplement the Mutual Defense Treaty, enhancing military cooperation, interoperability, and regional security efforts.

As a cornerstone of U.S.-Philippines relations, the treaty has played a pivotal role in shaping responses to regional security challenges.

Bilateral Defense Guidelines: Reinforcing Commitments in a Shifting Landscape

In May 2023, U.S. Secretary of Defense Lloyd J. Austin and Philippine Secretary of the Department of National Defense Carlito Galvez took a decisive step to fortify the U.S.-Philippines alliance by establishing the Bilateral Defense Guidelines. This significant development served to reaffirm and clarify the terms under which mutual defense commitments, as outlined in Articles IV and V of the 1951 U.S.-Philippines Mutual Defense Treaty, would be invoked.

The Bilateral Defense Guidelines specifically highlighted that an armed attack in the Pacific, including any incident within the South China Sea, targeting public vessels, aircraft, or armed forces—encompassing Coast Guards—of either nation would trigger the mutual defense obligations stipulated in the treaty.

These guidelines represent a strategic response to the evolving geopolitical dynamics in the South China Sea, where China’s assertive actions have heightened tensions. By explicitly including public vessels, aircraft, and armed forces, including Coast Guards, as triggers for mutual defense commitments, the U.S. and the Philippines address the spectrum of potential scenarios in the contested waters.

Comparative Analysis with Other Historical Alliances

In the realm of historical alliances, the development of these Bilateral Defense Guidelines showcases a contemporary approach to addressing evolving geopolitical challenges:

NATO’s Collective Response: Drawing parallels with NATO’s Article 5, the Bilateral Defense Guidelines share a common objective of providing specificity to alliance commitments. Both agreements underscore the importance of a clear understanding of the circumstances under which collective defense obligations would be activated.

ANZUS Treaty and Consultative Measures: Similar to the ANZUS Treaty, the Bilateral Defense Guidelines prioritize consultation and cooperative efforts. However, the Bilateral Defense Guidelines go a step further by clearly outlining specific scenarios, enhancing the predictability of the alliance’s response.

SEATO’s Regional Focus: In contrast to the now-dissolved SEATO, which faced challenges due to its regional focus, the Bilateral Defense Guidelines address the contemporary realities of security dynamics by explicitly referencing the South China Sea, a hotspot for geopolitical tensions.

The establishment of the Bilateral Defense Guidelines reflects a pragmatic response to the complexities of the modern security landscape. By providing detailed parameters for mutual defense commitments, the U.S. and the Philippines demonstrate a commitment to adapt their alliance to current challenges, ensuring clarity and responsiveness in the face of potential threats. As major powers vie for influence in the South China Sea, these guidelines serve as a testament to the agility required in navigating geopolitical shifts while upholding shared strategic objectives.

Revisiting the Scenario: U.S. “Ironclad” Defense Commitment in 2024

In the hypothetical scenario of a recurrence of the 2012 Scarborough Shoal standoff in 2024, a pivotal question emerges regarding the nature of the U.S. response. Would the United States, as it did in 2012, opt for strong statements of rebuke or, in the face of escalating tensions, be inclined to take a more forceful stance?

Well, in that case, the statements from U.S. Secretary of State Anthony Blinken and President Joe Biden offer insights into a potential U.S. response:

Secretary Blinken’s Commitment: In line with the Bilateral Defense Guidelines established in 2023, Secretary Blinken reiterates the specific conditions under which the U.S. would come to the defense of the Philippines. Any armed attack on public vessels, aircraft, or armed forces, including Coast Guards, in the South China Sea would trigger mutual defense commitments. This commitment encompasses the contested waters, including Scarborough Shoal which depicts direct US confrontation with China.

President Biden’s “Ironclad” Warning: President Biden’s warning to China, emphasizing the “ironclad” nature of the U.S. defense commitment to the Philippines, suggests a readiness to take robust actions to uphold regional stability. This term signifies an unwavering determination to safeguard allies, encompassing potential threats in the South China Sea.

Analysis: A Shift towards Assertive Diplomacy

Deterrence and Regional Stability: The clarity of U.S. commitments, as outlined by Secretary Blinken and President Biden, serves as a deterrence mechanism. By explicitly stating the consequences of any aggressive actions, the U.S. aims to discourage potential escalations, including those around Scarborough Shoal, contributing to regional stability.

Escalation Management through Diplomacy: The hypothetical scenario necessitates a careful evaluation of diplomatic avenues, considering the specific conditions related to the South China Sea.

Global Implications and Alliances: Analyzing the potential confrontation involves considering broader global implications. How the U.S. response, encompassing Scarborough Shoal, aligns with its strategic alliances, the Indo-Pacific balance of power, and the overall global geopolitical landscape becomes critical for political scientists assessing the situation.

Shifts in Geopolitical Dynamics: A hypothetical Scarborough Shoal incident in 2024 would be viewed in the context of evolving geopolitical dynamics, with specific attention to the South China Sea. This potential confrontation aligns with broader trends in U.S. foreign policy, its stance on regional security, and the changing power dynamics in the Indo-Pacific.

Recent Incidents in the South China Sea

In recent events unfolding in the South China Sea, incidents involving China and the Philippines have brought forth a contrast in responses, shedding light on the role of diplomatic efforts and China’s perspective on U.S. involvement.

Collision Incidents: The Philippines has reported “dangerous maneuvers” by China, resulting in collisions between a China Coast Guard ship and a Filipino supply boat within the Philippines’ Exclusive Economic Zone (EEZ). Another incident involved a Chinese militia boat allegedly “bumping” a Philippine Coast Guard vessel. The Philippines’ Defense Minister accused China of intentionally hitting Philippine vessels.

U.S. Statements: President Joe Biden and his administration have echoed the Philippines’ claims, stating that the Chinese vessels “acted dangerously and unlawfully.” This alignment reflects a shared concern about the escalation of tensions in the South China Sea.

Chinese Foreign Ministry’s Position: Chinese foreign ministry spokesperson Mao Ning rebuffed U.S. involvement, asserting that the U.S. had “no right to get involved in a problem between China and the Philippines.” She emphasized that, should the U.S. defend the Philippines, its actions “must not hurt China’s sovereignty and maritime interests in the South China Sea.”

U.S. Restraint Despite Incidents

Threshold for Involvement: Notably, despite the reported incidents and the alignment of statements, the U.S. has not directly intervened. This suggests that the threshold for U.S. involvement might be higher than explicitly stated in public statements by U.S. officials.

Caution in Escalation: The restrained U.S. approach underscores a cautious stance, potentially indicating a preference for diplomatic avenues or a carefully calibrated response. This nuance adds complexity to understanding the practical implications of U.S. commitments in the South China Sea.

China-Philippines Relations Under New Leadership

Strategic Shift: Since President Ferdinand Marcos Jr. assumed office in June 2022, the Philippines has adopted a more assertive stance against China’s actions in the South China Sea. This marks a strategic shift from the previous administration under Rodrigo Duterte, indicating renewed collaboration with the U.S.

U.S.-Philippines Alliance: The Philippines, a crucial U.S. strategic ally, borders potential flashpoints in the Pacific. President Marcos’ alignment with the U.S. contrasts with Duterte’s pro-China stance. The current incidents reflect the evolving dynamics under the renewed U.S.-Philippines alliance.

China’s Perspective: China’s response to the incidents reflects its longstanding position on sovereignty and non-interference. The Chinese spokesperson’s assertion underscores China’s sensitivity to external involvement, particularly from the U.S., in regional disputes.

Economic and Trade Implications of South China Sea Tensions

The South China Sea (SCS), a crucial maritime route handling approximately one-third of global shipping, is embroiled in tensions with significant economic and trade implications. The evolving dynamics in the region, particularly in the event of a conflict, would reverberate across the economies of China, the Philippines, the United States, and the broader global trade landscape.

China’s Economic Vulnerability in Conflict: China’s heavy reliance on maritime trade, with over 60% of its trade-in value traversing the SCS, exposes its economic vulnerability in the event of heightened tensions or conflict. The pursuit of assertive actions, including seismic surveys in contested areas, may amplify economic risks. In the scenario of conflict, China could face disruptions in trade routes, impacting its export-dependent economy and causing diplomatic and economic isolation.

Philippines: Economic Toll and Agricultural Deficits: The Philippines, already grappling with economic challenges due to China’s actions, would face exacerbated consequences in a conflict scenario. Interruptions to fishing and petroleum exploration activities, coupled with restrictions on Filipino fishing, could intensify. The trade deficit of US$661 million in agriculture with China in 2022 could escalate, adding to the economic strain on the Philippines.

U.S.: Balancing Security Concerns and Economic Interests: The United States, with a relatively lower reliance on the SCS for maritime trade, would still navigate a delicate balance between security concerns and economic interests. Increased military exercises and deployments in the region signal a strategic commitment, but a full-scale conflict would introduce economic considerations. Disruptions in global shipping routes could impact U.S. trade, necessitating a nuanced approach to maintain equilibrium.

Global Trade Disruptions: The SCS’s role as a vital trade artery for major economies makes it susceptible to disruptions in the event of conflict. Rerouting shipping from Europe, the Middle East, and Africa to Asia and the U.S. West Coast would lead to increased shipping costs and reductions in economic activity worldwide. A military conflict would escalate these disruptions, underscoring the interconnectedness of global trade routes and the potential for widespread economic consequences.

Diplomatic Solutions and Conflict Resolution

Addressing the South China Sea dispute involving the Philippines, China, and the broader ASEAN region necessitates a multifaceted approach, with several diplomatic solutions and conflict resolution strategies already in motion:

Code of Conduct:

The Philippines has been proactive in advocating for a Code of Conduct in the South China Sea. This proposed framework aims to establish guidelines for the behavior of nations operating in the disputed waters, with the overarching goal of preventing conflicts. The development and adherence to such a code could provide a structured basis for managing tensions and fostering stability in the region.

Regional Cooperation:

Recognizing the collective nature of the challenges in the South China Sea, the Philippines has engaged with its Southeast Asian neighbors to discuss and potentially implement a distinct code of conduct for the region. This collaborative approach seeks to unite allies in a shared commitment to maintaining peace. By fostering regional cooperation, nations can collectively address concerns and work towards long-term stability in the South China Sea.

Bilateral Agreements:

In a bilateral effort, the Philippines and China have taken steps to manage maritime disputes directly. Both nations have reached agreements to restart joint oil and gas exploration, signaling a commitment to finding common ground on economic activities in the South China Sea. Additionally, the establishment of a direct communication channel on South China Sea issues demonstrates a willingness to engage in dialogue and manage potential conflicts through diplomatic means.

US Involvement as a Deterrent Power

The United States plays a crucial role in preventing military escalation resulting from the territorial dispute. Washington’s defense treaty with Manila could draw the United States into a potential conflict between China and the Philippines over the disputed territories. This deterrence factor emphasizes the importance of diplomatic resolutions and reinforces the commitment of the international community, particularly the U.S., to regional stability.

Furthermore, the United States has escalated its military presence in the region, contributing to a deterrence strategy aimed at preventing any aggressive actions. This increased presence serves as a clear signal of the U.S. commitment to maintaining peace and security in the South China Sea.

These diplomatic solutions, coupled with the active involvement of the United States as a deterrent force, reflect a comprehensive effort to de-escalate tensions, prevent conflicts, and foster stability in the South China Sea. Continued collaboration and diplomatic engagements are imperative for building trust and ensuring the long-term security and prosperity of the nations involved in the region.

Conclusion

In the ever-evolving landscape of the South China Sea, characterized by historical tensions and recent escalations, diplomatic solutions emerge as the linchpin for stability. The Scarborough Shoal incident in 2012 marked a turning point, prompting a recalibration of alliances, particularly with the United States adopting a more assertive stance. Diplomacy, embodied by the advocacy for a Code of Conduct, regional collaboration, and bilateral agreements, becomes paramount in managing disputes and fostering lasting peace. The U.S., positioned as a deterrent force, reinforces its commitment to preventing conflicts, underlining the significance of diplomatic channels in navigating complex geopolitical dynamics.

Recent incidents underscore the delicate dance of diplomacy, with the U.S. and the Philippines expressing concern over reported Chinese aggression. The cautious U.S. approach suggests a nuanced interpretation of commitments, emphasizing ongoing diplomatic efforts to avoid escalation. As economic implications reverberate globally, the delicate balance between security concerns and economic interests underscores the imperative for sustained diplomatic endeavors. In conclusion, a commitment to diplomatic solutions remains pivotal for ensuring the security, prosperity, and equilibrium of nations entangled in the intricate web of the South China Sea.

Analysis

Is Philippines the Next Japan?

Manila has long cast a longing glance at Tokyo. Japan’s post-World War II economic miracle—a phoenix rising from ashes—is a tale etched into the annals of global capitalism. Now, the Philippines, a nation of 118 million, is attempting its own ascent. But can it replicate the Japanese magic formula?

The archipelago’s economy has been on a tear. Growth rates have outpaced most of Southeast Asia, sustained by a burgeoning call center industry, remittances from overseas Filipino workers, and a growing consumer class. Infrastructure projects, once the stuff of political promises, are now breaking ground. The question is: is this a sustainable boom, or a mirage shimmering in the tropical sun?

I. Economic Growth

The Philippines’ recent economic trajectory contrasts sharply with Japan’s post-World War II economic miracle. Japan’s rapid economic growth from 1945 to 1991, known as the “Japanese Economic Miracle,” was characterized by disciplined fiscal policies, deliberate industrial development, and significant infrastructure investments. This period saw Japan’s economy grow at a rate twice as fast as the prewar average every year after 1955, achieving a peak last seen in 1939 in less than ten years.

Japan’s unique political structure, characterized by strong centralized authority, social consensus, and a long-term perspective, fostered an environment conducive to implementing consistent and far-reaching economic policies. This, coupled with deeply ingrained cultural values of respect for authority, discipline, and collective good, contributed significantly to the nation’s rapid post-war recovery. Ezra Vogel, in his seminal work “Japan as Number One: Lessons for America,” highlighted how Japan’s economic policies were marked by a “remarkable coherence and stability.”

In contrast, the Philippines has struggled to achieve steady economic growth despite having abundant natural resources and a youthful labor force. The Philippines’ efforts to emulate Japan’s swift rise have been impeded by policy changes, political unpredictability, and infrastructure deficiencies. While Japan’s economic policies were marked by stability and continuity, the Philippines has faced a more fragmented political landscape, making long-term planning more challenging.

Despite all these challenges, The Philippines’ real GDP is projected to grow by 0.2 percentage points annually between 2024 and 2029, reaching 6.4 percent by 2029. In 2023, approved foreign investments in the Philippines amounted to roughly 889 billion Philippine Pesos, with the power, gas, steam, and air conditioning sectors receiving the largest share. However, no foreign investments were made in the public sector that year, particularly in defense and administration, including mandatory social security. In May 2024, the Philippines’ trade balance showed a deficit of USD 4.6 billion, slightly down from the previous month’s deficit of USD 4.7 billion. The main economic sectors of the Philippines are manufacturing, agriculture, private services, and trade, with agriculture, forestry, and fishing contributing 8.6% of the GDP in 2023.

The construction industry is also a significant player in the Philippines’ economy, with a projected contribution of 7% to the GDP in 2023. The national government’s infrastructure initiative has generated employment opportunities for thousands of Filipinos and attracted foreign investments worth around 14.2 million Philippine Pesos.

The services sector, comprising business process outsourcing, retail, real estate, and tourism, has been a key driver of the Philippine economy. Despite global challenges such as climate change and economic volatility, the country has made progress in poverty reduction, with rates declining from 23.3% in 2015 to 18.1% in 2021.

Economic growth in the Philippines is expected to accelerate to 5.8% in 2024, up from 5.5% the previous year, and reach 5.9% in 2025.

The medium-term economic projection is expected to be sustained by healthy domestic demand, driven by a strong labor market, ongoing public investments, and potential benefits of recent revisions to investment policy that may encourage private investment. With sustained recovery and reform initiatives, the nation is regaining momentum toward its goal of becoming an upper middle-income country, with a gross national income per capita of US$4,230 in 2023.

II. Political Landscape

Japan is seen as having a parliamentary system, whereas the Philippines is a presidential one. The Japanese political system is a bicameral parliamentary constitutional monarchy with a dominating party system. The Emperor serves as the head of state, while the Prime Minister leads the government and the Cabinet, which oversees the executive branch.

The Philippines is a democratic nation with a president who is chosen directly by the populace to fulfill the dual roles of head of state and head of government. The president is a significant political person who leads the executive branch. When assessing the influence of stability and governance on economic growth, Japan and the Philippines offer significant insights. Although Japan’s economic dominance has been bolstered by stability, the democratic administration of the Philippines provides opportunities for response to public demands and participatory decision-making.

III. Infrastructure Development

Underdeveloped infrastructure is a significant obstacle to the Philippines growth. Congested roads, inefficient ports, and unreliable power supply constrain economic activity and deter foreign investment.

The “Build Better More” program, which replaced the “Build! Build! Build!” initiative, aims to improve the country’s infrastructure. According to data from the National Economic and Development Authority (NEDA), as of April 2024, out of the 185 projects that were identified, 35% were still in progress, and less than 1% had been finished since 2022. The primary sources of project funding for this nine-billion-peso project are public-private partnerships (PPP), official development aid (ODA), and the General Appropriations Act (GAA).

Japan’s post-war infrastructure development was pivotal for its economic growth. Investments in manufacturing and heavy industries necessitated rapid urbanization and infrastructure development, creating a solid foundation for industrial growth. “Japan’s development strategy was heavily dependent on infrastructure investments, which became the backbone of its industrialization policy,” wrote Chalmers Johnson in his book “MITI and the Japanese Miracle.”

Japan’s industrialization policy was largely dependent on its infrastructure investments, which enabled effective connectivity and logistics to promote export-oriented companies and economic growth. While promoting economic development through infrastructure investment is a similar objective of both Japan’s post-World War II infrastructure projects and the Philippines’ Build, Build, Build program, they differ in scale, breadth, and historical context.

IV. Industrial Policy and Innovation

Japan’s post-war industrial policy emphasized key industries such as steel, automotive, and electronics. The Ministry of International Trade and Industry played a crucial role in guiding industrial development through subsidies, tax incentives, and preferential financing. Japan also heavily invested in technological innovation and R&D, fostering a skilled workforce capable of driving industrial growth.

In comparison, the Philippines has faced challenges in establishing a robust industrial base. While the country has seen growth in industries such as electronics, business process outsourcing (BPO), and agriculture, it has yet to achieve the same level of industrial diversification and technological advancement as Japan. The Philippine government has recognized the need for industrial policy reforms and increased investment in innovation to drive sustainable economic growth.

The Philippine Development Plan 2023-2028 outlines strategies to enhance industrial productivity, including improving the regulatory environment, fostering innovation, and promoting technology adoption. The government aims to develop a competitive industrial sector by supporting micro, small, and medium-sized enterprises (MSMEs) and attracting foreign direct investment (FDI). Additionally, initiatives to enhance education and skills training are underway to build a workforce capable of supporting a modern industrial economy.

V. Human Capital Development

Human capital development has been a cornerstone of both Japan’s and the Philippines’ economic strategies, albeit with differing approaches and outcomes. Japan’s post-war economic miracle was significantly aided by its investment in education and workforce training. The Japanese government prioritized universal education, with a strong emphasis on science, technology, engineering, and mathematics (STEM). This created a highly skilled and disciplined workforce that could meet the demands of rapidly advancing industries.

Japan’s cultural values, such as diligence, teamwork, and respect for authority, further reinforced its human capital development efforts. The Japanese education system and corporate culture emphasized lifelong learning, continuous improvement (kaizen), and innovation. These factors contributed to a workforce that was not only technically proficient but also adaptable and committed to excellence.

In the Philippines, human capital development is recognized as a key driver of economic growth. The government has made strides in improving access to education and healthcare, which are essential components of human capital. However, challenges remain, particularly in terms of education quality, skills mismatch, and underemployment.

The Philippine’s government is working to align educational curricula with industry needs, promote technical and vocational education, and expand access to higher education. Efforts to improve healthcare services and social protection are also part of the broader strategy to build a healthy, educated, and productive workforce.

The Philippines’ young and growing population presents both opportunities and challenges. With a median age of around 25 years, the country has a demographic dividend that can drive economic growth if properly harnessed. Investing in education, skills development, and health services is crucial to maximizing the potential of this demographic advantage.

VI. Trade and Foreign Policy

Japan’s economic success was supported by a pragmatic approach to international relations, focusing on economic cooperation and regional integration. The United States played a significant role in Japan’s recovery, providing financial aid and access to the American market. This fostered a strong trade relationship that was pivotal to Japan’s export-oriented growth.

Strong exports of machinery, electronics, and cars characterize Japanese trade, which has helped the nation achieve a positive trade balance. Japan has pursued free trade agreements (FTAs) to expand its access to international markets and promote economic growth. By promoting trade and fostering economic cooperation, these accords with nations in the Asia-Pacific area, North America, and Europe have been essential in boosting Japan’s economic development.

In comparison, the Philippines has faced a more complex geopolitical landscape. While the country has made progress in establishing trade agreements and regional partnerships, it has had to navigate tensions in the South China Sea and shifting global trade dynamics. The Philippines’ strategic location in Southeast Asia presents both opportunities and challenges for its trade and foreign policy.

The Association of Southeast Asian Nations (ASEAN) plays a significant role in the Philippines’ trade strategy. ASEAN’s economic integration initiatives, such as the ASEAN Free Trade Area (AFTA) and the Regional Comprehensive Economic Partnership (RCEP), aim to enhance regional trade and investment flows. The Philippines has also pursued bilateral trade agreements with key trading partners, including the United States, Japan, and the European Union.

Efforts to diversify export markets and reduce reliance on a few key trading partners are part of the Philippines’ trade strategy. The country aims to enhance its competitiveness in global value chains by improving trade facilitation, infrastructure, and logistics. Additionally, initiatives to promote exports of high-value goods and services, such as electronics, garments, and IT services, are being implemented to boost trade performance.

VII. Challenges and Obstacles

The Philippines’ economic journey is not without its challenges and obstacles. Political instability, corruption, and bureaucratic inefficiencies have hindered the country’s progress. Environmental issues, such as natural disasters and climate change, pose significant risks to sustainable development.

Political instability has been a recurring issue in the Philippines, affecting investor confidence and policy continuity. Frequent changes in leadership and political turmoil have created an unpredictable business environment. Corruption remains a major challenge, with the country consistently ranking low on Transparency International’s Corruption Perceptions Index. Addressing these issues is crucial for creating a conducive environment for economic growth and development.

Environmental challenges also pose significant risks to the Philippines’ economic prospects. The country is highly vulnerable to natural disasters, such as typhoons, earthquakes, and volcanic eruptions. These events can cause widespread damage to infrastructure, disrupt economic activities, and exacerbate poverty and inequality. Climate change further amplifies these risks, with rising sea levels, increased frequency of extreme weather events, and changing weather patterns affecting agriculture, fisheries, and coastal communities.

The Philippine government has recognized the need to address these challenges and has implemented various measures to mitigate their impact. Efforts to strengthen disaster preparedness and response capabilities, improve governance and transparency, and promote sustainable development are underway. The government is also working to enhance climate resilience through initiatives such as reforestation, coastal protection, and sustainable agriculture practices.

End Note:

The Philippines stands at a critical juncture in its economic journey. While it has made significant progress in recent years, achieving sustained and inclusive growth remains a formidable challenge. The experiences of Japan offer valuable lessons and insights that can guide the Philippines in its quest for economic transformation.

Japan’s post-war economic miracle was built on a foundation of strong governance, strategic industrial policy, investment in human capital, and international trade. While the Philippines faces a different set of challenges and opportunities, it can draw inspiration from Japan’s experience and adapt these lessons to its unique context.

To realize its full potential, the Philippines must prioritize good governance, political stability, and policy continuity. Strengthening institutions, improving transparency, and reducing corruption are essential for creating a conducive environment for investment and economic growth. Additionally, investing in infrastructure, education, and healthcare will be crucial for building a resilient and productive workforce.

The Philippines’ young and dynamic population presents a unique opportunity for demographic dividends. By investing in human capital development, promoting innovation, and fostering a competitive industrial sector, the country can unlock new sources of growth and development.

While the road ahead is challenging, the Philippines has the potential to become a major economic player in the region. By learning from Japan’s experience and implementing bold and visionary policies, the Philippines can chart a path towards sustained and inclusive growth, realizing its aspirations of becoming the next economic miracle in Asia.

Analysis

Will China and the Philippines adhere to their most recent “Arrangement”?

“China-Philippines Most Recent ‘Arrangement’ Has Nothing to Address the Root Cause of Tensions in the South China Sea”

The Philippine government has announced that China and the Philippines have reached an agreement to ease tensions over the disputed Second Thomas Shoal in the South China Sea. This agreement, negotiated by Chinese and Filipino diplomats in Manila, outlines temporary conditions for resupplying Filipino troops stationed on the shoal. Both nations claim sovereignty over the shoal, which has been the scene of frequent confrontations between their forces. The Second Thomas Shoal, also known as Ren’ai Jiao in China and Ayungin Shoal in the Philippines, lies roughly 1,000 kilometers from China’s southern Hainan Island and the western Philippines Island of Palawan. It has been a flashpoint in recent months, culminating in a violent incident on June 17. During this confrontation, Chinese forces rammed and boarded two Philippine navy boats attempting to deliver supplies to Filipino personnel on the shoal. The Chinese forces seized control of the boats, damaged and took several M4 weapons along with other supplies with them. The clash, which resulted in injuries to Filipino navy officers, was captured on video and in photographs. Both China and the Philippines blame each other for the conflict, asserting their respective claims over the strategically significant shoal. The South China Sea is a crucial global trade route with rich fishing grounds and underwater gas reserves.

In addition to China and the Philippines, other nations with territorial claims in the South China Sea include Vietnam, Malaysia, Brunei, and Taiwan. The region is a sensitive area and a potential flashpoint in the US-China rivalry. While the recent agreement between China and the Philippines marks a step towards reducing immediate tensions, it does not address the underlying causes of the broader South China Sea disputes.

Significance & Background of the South China Sea Dispute

The South China Sea is an incredibly productive area, serving as a major fishing ground for China, Vietnam, the Philippines, and other claimant states. The region’s continental shelf harbors significant natural gas and petroleum reserves. The abundance of marine life in the South China Sea is due to the large-scale drainage of nutrient-rich waters from land and the upwelling of water in specific maritime regions. This heavily fished area is a primary source of animal protein for the densely populated Southeast Asian region, with prevalent species including shrimp, shellfish, anchovies, croaker, mackerel, and tuna. Most of the catch, whether fresh or preserved, is consumed locally. The Philippines, in particular, is a major fish-producing nation.

Furthermore, the South China Sea holds tremendous geopolitical significance in the context of global politics. Its strategic location at the intersection of major maritime routes connecting the Indian and Pacific Oceans makes it a focal point for international powers and their interests. The region is critical to the world economy, facilitating the annual flow of goods worth trillions of dollars. Nearly one-third of global trade, including vital energy resources such as oil and natural gas, passes through these waters. Any attempt by China to disrupt this trade would harm the global supply chain and the economies of other countries. Consequently, the South China Sea has become a focal point for the ambitions and rivalries of major powers, including the United States, China, Russia, and Japan.

Ayungin Shoal, also known as Second Thomas Shoal, is a contested reef claimed by the Philippines, China, Brunei, Malaysia, and Vietnam. The Philippine military ship Sierra Madre, intentionally grounded in 1999 to counter China’s territorial claims, is manned by a small contingent of Philippine Marines. For years, these nations have been embroiled in disputes over the territorial status of various islands and reefs like the Ayungin Shoal in the South China Sea. This region, which includes Whitson Reef, the Paracel Islands, Thitu Island, Scarborough Shoal, and the Spratly Islands, is believed to hold significant oil and gas reserves.

In July 2016, the Permanent Court of Arbitration in The Hague ruled against China’s territorial claims in the South China Sea in a case brought by the Philippines. Recently, the Philippine Foreign Ministry announced that the Philippines and China have agreed on guidelines for de-escalating tensions in the South China Sea to facilitate the transfer of personnel and supplies to the BRP Sierra Madre stationed at Ayungin Shoal. The ministry’s statement outlined that both nations have reached an understanding of principles to prevent misunderstandings and miscalculations during the Philippines’ lawful and routine rotation and resupply missions to the shoal.

This agreement was the result of productive discussions during the 9th Bilateral Consultation Mechanism on the South China Sea, held in Manila on July 2, 2024. Despite this progress, China has refused to acknowledge or recognize the court’s ruling, which states that the islands do not form an exclusive economic zone or disputed territory. The Philippine Foreign Ministry affirmed that Manila will continue to uphold its rights and authority over Ayungin Shoal, in accordance with the UN Convention on the Law of the Sea.

Clauses of the Recent Arrangement

According to Manila, China and the Philippines have reached a ‘provisional deal’ for resupply missions in the South China Sea.

The Philippines and China have reached a provisional arrangement for resupply missions to the beached Filipino naval ship, Sierra Madre, on the Second Thomas Shoal, according to a statement from Manila’s Department of Foreign Affairs (DFA). The DFA did not provide specifics about the resupply missions but emphasized that the arrangement followed “frank and constructive discussions” during the Bilateral Consultation Mechanism earlier this month. Both sides acknowledged the need to de-escalate the situation in the South China Sea and manage their differences through dialogue and consultation, agreeing that the arrangement would not prejudice their respective positions in the area.

The Chinese foreign ministry confirmed the temporary arrangement and reiterated its demand for the Philippines to tow away the Sierra Madre and restore the shoal to its original, unoccupied state. A Chinese spokesperson expressed China’s willingness to allow humanitarian resupply missions to the ship’s occupants if necessary before the vessel is removed. However, China firmly opposed any transfer of substantial building materials or attempts to establish fixed facilities and permanent outposts on the shoal, vowing to resist such actions to safeguard its sovereignty.

Despite an offer of assistance from the United States, Philippine security authorities announced that they would conduct the resupply missions independently. White House National Security Adviser Jake Sullivan had stated that the US would do whatever necessary to support its treaty ally in resupplying the Sierra Madre. However, Eduardo Año, his Filipino counterpart, confirmed that the resupply operations would remain “a pure Philippine operation,” indicating no need for direct US involvement at this time.

Analysis of the Arrangement

Concerns of a military conflict at the Second Thomas Shoal, potentially involving the United States, loom large as tensions between China and the Philippines escalate in the South China Sea. Despite these worries, there are strong reasons to believe that both Beijing and Manila will strive to avoid a military clash. Chinese officials must weigh the regional geopolitical implications and the significant distraction from their current focus on domestic socioeconomic issues. Manila faces an immediate constraint due to an unfavourable military power balance compared to China. Many questions remain about how the United States, the Philippines’ ally, will respond if a naval confrontation occurs in the South China Sea. A critical issue is how Manila and its allies will eventually address China’s gray zone operations, which have proven challenging for regional entities and their supporters, influencing the outcome of current tensions between Beijing and Manila.

Beijing appears ready to seize what it perceives as a favorable moment to capture the Second Thomas Shoal. It has employed water cannons to prevent Filipino vessels from transporting construction materials to repair the BRP Sierra Madre. The Philippines has a strong incentive to strengthen the BRP Sierra Madre to maintain control of the feature long-term. During the prolonged dispute, Manila has sent survival supplies to its marines on the ship, which Beijing claims to have allowed for humanitarian reasons. The Philippines may have covertly supplied limited construction materials to the ship, but there are concerns that the vessel will disintegrate if not significantly strengthened.

The goals of the two countries appear incompatible, and conflict is likely to escalate. From another perspective, China may continue to employ gray zone tactics, gradually depleting Manila’s resources and policy options, enabling Beijing to achieve its short-term objectives. Chinese officials recognize these geopolitical constraints but aim to increase China’s presence and influence in the South China Sea. In the ongoing dispute, Beijing heavily relies on gray zone measures, hoping to ensure the eventual failure of the Filipino vessel on the Second Thomas Shoal. When the warship fails, the shoal might swiftly fall under Chinese control. Beijing expects this strategy to help avert the worst-case regional geopolitical repercussions of a direct military conflict. Many Chinese policy elites believe that the gray zone approach is the best way to address this geostrategic challenge. For more than a year, China has effectively blocked the Philippines’ resupply sorties and prevented ship repairs using these tactics.

As a result, the Philippines is forced to choose between responding to China’s blockade and retaining control of the Second Thomas Shoal. A power imbalance and logistical challenges limit the Philippines’ ability to counter China’s strategy. In the worst-case scenario, Manila may take military action or seek military assistance from non-regional states to resist China’s activities. If this occurs, China is likely to retaliate with substantial military force, citing retribution and self defense.

Root Causes of the Tensions

China’s assertiveness in the South China Sea has steadily intensified, escalating tensions with Southeast Asian claimant nations, particularly the Philippines, near the Second Thomas Shoal in the Spratly Islands. China’s sweeping claims to sovereignty over the sea—and its estimated 11 billion barrels of undiscovered oil and 190 trillion cubic feet of natural gas—have angered rival claimants Brunei, Indonesia, Malaysia, the Philippines, Taiwan, and Vietnam. Countries began staking claims to islands and zones in the South China Sea as early as the 1970s, including the resource-rich and strategically vital Spratly Islands. The inability of Chinese and Southeast Asian authorities to resolve these disputes diplomatically risks undermining international maritime law and encouraging destabilizing military buildups.

China insists that international military forces are not permitted to conduct intelligence activities, such as reconnaissance flights, within its claimed exclusive economic zone (EEZ). The United States, however, maintains that under the United Nations Convention on the Law of the Sea (UNCLOS), claimant countries should have freedom of navigation through EEZs and are not required to notify claimants of military activity.

Recent satellite data reveals China’s growing efforts to expand its territorial control in the South China Sea by physically enlarging existing islands or creating new ones. Beyond adding sand to existing reefs, China has built ports, military stations, and airstrips, especially on the Paracel and Spratly Islands, where it maintains multiple outposts. Notably, China has militarized Woody Island, deploying fighter jets, cruise missiles, and a radar system.

To protect its regional political, security, and economic interests, the US has challenged China’s assertive territorial claims and land reclamation projects through freedom of navigation operations and increased support for Southeast Asian partners. In response to China’s aggressive stance, Japan has provided military ships and equipment to the Philippines and Vietnam to bolster their maritime security and deter Chinese aggression.

Philippine President Ferdinand Marcos Jr., who took office in June 2022, has taken a firmer stance against China compared to his predecessor, Rodrigo Duterte. The Philippines’ most contentious disputes with China center around the Second Thomas Shoal of the Spratly Islands, which lies within the Philippines’ 200-mile EEZ.

Ferdinand Marcos has agreed to increase base access, joint exercises, and weapons exchanges with the United States. In March 2024, US Secretary of Defense Lloyd Austin affirmed that the United States’ Mutual Defense Treaty with the Philippines covers both countries’ armed forces, public vessels, and aircraft in the South China Sea. Meanwhile, Japan has also enhanced its influence by supplying military weapons to the Philippines and Vietnam to enhance maritime security.

End Note

Beijing may wish to refrain from using overt force against Manila in order to resolve territorial and maritime conflicts due to its previous policy preference, regional strategic interests, and the effectiveness of gray zone tactics. Beijing does not, however, intend to forgo using military action as a means of settling conflicts. There is a chance of an armed conflict, especially if Manila takes more drastic measures to make China’s “gray area” strategy ineffectual. The best measures to keep tensions and conflict from turning into war would be to defuse the South China Sea crisis and reopen bilateral talks between Beijing and Manila. Together, Beijing and Manila’s policymakers should take into consideration the ambitious but intriguing idea of creating a maritime park at Second Thomas Shoal with the goal of advancing environmental preservation, scientific study, and cooperative fisheries. For the past ten years, experts from China and Southeast Asia have discussed this topic on occasion, but at the official level, it has not yet been addressed. This possibility might have a favorable effect on regional peace and stability if China and the Philippines give it some thought.

Analysis

Philippines President Vows not to Yield Despite New Provisional Deal with China

zIn a firm assertion of the Philippines’ territorial rights, President Ferdinand R. Marcos Jr. declared that the country would not yield or waver in its stance on the West Philippine Sea. During his 3rd State of the Nation Address (SONA) on July 22, 2024, Marcos emphasized the importance of maintaining the nation’s sovereignty and expressed gratitude for the sacrifices made by the Armed Forces of the Philippines (AFP), the Philippine Coast Guard (PCG), and the fishing communities.

“The West Philippine Sea is not a mere figment of our imagination. It is ours. And it will remain ours as long as the spirit of our beloved Philippines burns bright,” he asserted, drawing a standing ovation from the audience.

The President highlighted the increased strategic efforts to enhance aerial and maritime domain awareness, reaffirming the government’s relentless endeavor to increase the country’s defensive stance through self-reliance and partnerships with like-minded nations. “Laws governing our Maritime Zones and Archipelagic Sea Lanes will ensure that this intergenerational mandate — this duty — takes deep root in the hearts and minds of all our people,” he stated.

A significant development followed the President’s address, as the Philippines and China announced a provisional deal to manage tensions at the contested Second Thomas Shoal. This deal, reached after a series of diplomatic discussions, aims to prevent further clashes in the disputed South China Sea.

Philippine Foreign Affairs Secretary Teresita Daza announced that the agreement signifies both nations’ commitment to de-escalate tensions and manage differences peacefully. “In our desire to de-escalate the situation in the South China Sea to manage differences in a peaceful manner, we emphasize that the agreement was done in good faith and the Philippines remains ready to implement it,” Daza stated.

China’s Foreign Ministry confirmed the arrangement, reiterating its demand for the Philippines to tow away the grounded warship, Sierra Madre, from the Second Thomas Shoal. However, China expressed willingness to allow humanitarian resupply missions to the personnel stationed on the ship if informed in advance.

Despite this, the Philippines maintained its stance against prior notification to China about resupply missions, asserting the missions’ lawfulness and the necessity of preserving national sovereignty. “The principles and approaches laid out in the agreement were reached through a series of careful and meticulous consultations between both sides,” Daza emphasized.

The deal comes after a series of violent confrontations between Filipino and Chinese forces at the shoal, which both nations claim. The Second Thomas Shoal, known as Ayungin Shoal in the Philippines and Ren’ai Jiao in China, has been a focal point of these clashes, sparking fears of a broader conflict involving the United States due to its mutual defense treaty with Manila.

The most severe confrontation occurred on June 17, when Chinese forces repeatedly rammed and boarded Philippine navy boats to prevent supplies from reaching the Sierra Madre. This incident resulted in injuries to Filipino personnel and heightened tensions between the two countries.

The United States and its allies, including Japan and Australia, condemned China’s aggressive actions and called for upholding the rule of law and freedom of navigation in the South China Sea, a crucial global trade route with rich fishing areas and undersea gas deposits.

In response to the tensions, Washington reaffirmed its commitment to defend the Philippines under the 1951 Mutual Defense Treaty. National Security Adviser Jake Sullivan stated, “The US will do what is necessary to ensure its treaty ally can resupply the Sierra Madre on the Second Thomas Shoal.”

Philippine National Security Adviser Eduardo Año confirmed that the resupply missions would remain a “pure Philippine operation,” turning down offers of direct US involvement. “There is no need at this time for any direct involvement of US forces in RORE – resupply mission,” Año said.

The provisional agreement reached by the Philippines and China seeks to manage their maritime differences while preventing future clashes. Both nations recognize the need to de-escalate the situation and manage their differences through dialogue and consultation.

This rare deal with the Philippines could spark hope for similar arrangements between China and other claimant countries in the South China Sea, including Vietnam, Malaysia, Brunei, and Taiwan. However, the successful implementation and longevity of the agreement remain to be seen.

Chinese Foreign Ministry spokesperson Mao Ning emphasized that the temporary arrangement for the delivery of humanitarian supplies reflects China’s goodwill. However, China stood firm on its territorial claims and demanded that the Philippines refrain from fortifying the Sierra Madre with building materials.

The Philippines has consistently rejected such conditions, and the final deal does not include them. Philippine officials stated that the agreement was reached after careful negotiations, excluding prior notification and inspection demands from China.

The Second Thomas Shoal, located about 200km from the western Philippine island of Palawan and over 1,000km from China’s Hainan island, has been a site of repeated confrontations. Both countries assert their sovereign rights over the shoal, which is strategically important and resource-rich.

Manila deliberately grounded the Sierra Madre on the shoal in 1999 to reinforce its claims, maintaining a small contingent of sailors aboard the vessel who require resupply missions that China has repeatedly attempted to block.

The Department of Foreign Affairs in Manila reiterated that the agreement would not prejudice each side’s national positions in the South China Sea. “Both sides continue to recognize the need to de-escalate the situation and manage differences through dialogue and consultation,” the DFA stated.

China’s Ministry of Foreign Affairs confirmed the arrangement, highlighting the mutual understanding to manage the situation at Ren’ai Jiao and ensure humanitarian resupply of necessities to the personnel on the Sierra Madre.

The agreement between the Philippines and China marks a significant step towards managing maritime disputes in the South China Sea. It reflects both nations’ willingness to engage in dialogue and find peaceful solutions to their differences, despite the complex and contentious nature of their territorial claims.

As the Philippines and China implement this provisional arrangement, the international community will closely watch how both nations navigate this delicate situation. The success of this deal could serve as a model for resolving other maritime disputes in the region, contributing to regional stability and cooperation.