China’s debt-trap diplomacy is rapidly ensnaring Southeast Asia

In fact, our foreign secretary’s knee-jerk defence of Beijing whenever questions are raised about its blatant interference in Philippine affairs indicates we are now fast becoming a vassal state of China, joining Laos and Cambodia.
Responding to reports last week of Chinese naval vessels discovered in our sovereign waters off Kalayaan Island, Alan Peter Cayetano was quick to say the presence of such boats, if true, “would not mean anything”. He made the remark even before Beijing could deny the reports.
Cayetano has also defended the government’s decision to permit a vessel from China’s Institute of Oceanology conduct research in Philippine Rise, formerly Benham Rise, which is recognised by the United Nations as part of the Philippines’ continental shelf.
According to Cayetano, a law allows foreign research in Philippine territory so long as a Filipino scientist is aboard the research vessel and the findings of the study are shared internationally. But Carpio said there is no local statute that specifically covers such an arrangement.
Cayetano’s stance could be the Duterte administration’s way of expressing gratitude to Beijing for its financial assistance to the Philippines.
Consider what happened in Cambodia. At the close of the Asean Summit in 2014, Cambodian strongman Hun Sen refused to issue a joint communique that would have called for a stop to China’s militarisation of the South China Sea. Two years later, in October 2016, Cambodia was rewarded with a Chinese pledge of more than $600 million in economic aid and some 31 cooperation agreements.
China is the largest source of development assistance and investment in both Cambodia and Laos. As of 2016, its foreign investments in Cambodia totalled nearly $12 billion, or close to 35 per cent of foreign direct investments in that country. In 2014, China’s investments in Laos exceeded $6 billion and its grants amounted to $187 million.
In the Philippines, China has pledged to finance 12 projects worth a total of $4.4 billion, including the $3-billion south line of the North-South Railway and the $374-million New Centennial Water Source-Kaliwa Dam project in Quezon province. It has also provided a P3.6-billion ($700 million) grant for the construction of two Pasig River bridges and drug rehabilitation centres in Mindanao.
But here’s the caveat: Like Laos and Cambodia, the Philippines could become beholden to Beijing, preventing the exercise of a truly independent foreign policy. This is what Indian analyst Brahma Chellaney has described as China’s “debt-trap diplomacy”.
Chellaney, a professor of strategic studies at the Centre for Policy Research in New Delhi, noted that through its $1-trillion “Belt and Road” initiative (BRI), China is supporting infrastructure projects in strategically located developing countries, often by extending huge loans to their governments.
“As a result, some of these countries are becoming saddled with debt, leaving them even more firmly under China’s thumb,” he said, adding that what China is doing is “commercial and strategic penetration” in countries in need of loans for their development.
Chellaney said a country is ensnared in a debt trap when it is caught in a cycle of interest capitalisation or taking on new loans to pay off interest or principal repayments. “When default occurs, the Chinese move in to gain control of the resources, corporations or installations,” he said.
China’s financial hold on Cambodia, Laos, Myanmar, Thailand and the Philippines ensures a disunited Asean when it comes to Beijing’s aggression in the South China Sea, according to Chellaney. He said countries that are well managed could reap economic rewards from their BRI projects. But others that take from China risk becoming subservient to Beijing.
This appears to be happening now in our country, with the Duterte administration having no qualms in defending China’s incursions into our territorial islands and waters.