A recent report by AidData finds that, from 2000 to 2022, Beijing channeled over $9 billion in state-directed development finance to the Philippines, making China one of the island nation’s top lenders. The study, Beijing’s Big Bet on the Philippines: Decoding two decades of China’s financing for development, as well as the underlying dataset, is available online and was produced by AidData, a U.S.-based research lab at William & Mary’s Global Research Institute.
The research team—Samantha Custer, Bryan Burgess, Narayani Sritharan, Divya Mathew, and myself—went beyond traditional bilateral instruments of development finance. Our report also analyzes FDI and state-owned entity involvement in syndicated lending, for example. Examining FDI, we find that Chinese firms made nearly $22 billion of inbound commitments to the Philippines from 2010 to 2023. Alongside this, examining some 200 Chinese loan- and grant-financed projects, from big-ticket infrastructure to smaller-scale goodwill projects, we consider the connections between a network of 37 Chinese state-owned enterprises, bankrolled by more than 100 international creditors, and the 136 known recipients of PRC-development finance in the Philippines.
Our study sheds new light on China’s various financial activities in the Philippines at a critical moment in their bilateral relationship. The warm relations shared during former Philippine President Rodrigo Duterte’s tenure (2016-2022) have given way to a more icy tone, especially over territorial disputes in the South China Sea/West Philippine Sea. On May 31, during a speech at the Shangri-La Dialogue in Singapore, current Philippine President Ferdinand Marcos Jr. warned China against escalation, stating that “if by a willful act a Filipino—not only a serviceman, but even a Filipino citizen—is killed…that is what I think is very, very close to what we define as an act of war and therefore we will respond accordingly.”
Tracking China’s financing flows across successive Philippine administrations, we find that Beijing bankrolled the priorities of former presidents Gloria Macapagal Arroyo and Duterte with gusto, ramping up financing by 950 percent under Arroyo and fast-tracking new projects at an unprecedented rate under Duterte. Frosty relations under Benigno Aquino III (2010-2016) tempered enthusiasm for new projects—a pattern that is likely to be repeated with the Marcos Jr. administration.
To enable this first-of-its-kind analysis, we drew heavily from AidData's Global Chinese Development Finance Dataset, Version 3.0, while also utilizing a variety of other datasets to provide insights into Beijing’s engagements—including AidData’s Chinese Public Diplomacy data, economic data from the Philippine Statistical Authority and the World Bank, social and governance data from Varieties of Democracy, and public opinion data from Gallup World Poll and Asian Barometer.
We consolidated these myriad sources into a new, supplementary dataset that accompanies our report, enabling custom analyses. We’ve also released a new data tool, a mini dashboard, that allows anyone, regardless of data science expertise, to easily explore the data and use evidence to answer questions on China’s investments in the Philippines. To ensure quality assurance and to coordinate future dissemination efforts, we’re partnering with Asia Society Philippines, an independent, non-profit educational institution.
With information on the specific location of Chinese development projects, we uncovered the geographic distribution across the Philippines’ 17 regions (see figure below). We find that the National Capital Region, the country’s political epicenter and home to many of its largest companies, received the highest number of projects (45) and the second-most funding by value ($1.3 billion). This region also had the highest concentration of recipient entities (64) partnering with Beijing and was one of the top five destinations for Chinese investment per capita ($95 million). The Davao and Ilocos regions were also top destinations for Chinese investments per capita—$46 million and $42 million, respectively. Davao, the home of former President Rodrigo Duterte and current Vice-President Sara Zimmerman Duterte-Carpio, attracted the second-highest number of projects in the country, with 26 projects between 2000 and 2021.
Chinese-financed development projects in the Philippines, 2000-2021
Beyond examining (1) the patterns of Chinese financial flows (including development finance and FDI) and (2) the financial players used by China to channel its investments, we also wanted to understand (3) the specific outcomes associated with these investments, including project completion rates and environment, social, and governance (ESG) risks. We find that over half of Beijing’s development finance dollars ($4.5 billion) was funneled through Chinese implementers with tarnished performance track records, characterized by higher exposure to ESG risks or facing direct or indirect sanctions.
What’s more, the substantial financing that China invested in the Philippines did not appear to garner significant affection. According to the Gallup World Poll, approval of China’s leadership among Filipinos over time has severely lagged behind that of other donor countries like the U.S. and Japan, as well as their own government.
While Beijing’s development finance in the Philippines grew dramatically over the past two decades, its support has fluctuated across Filipino leadership, and it is smaller and less generous compared to certain other donors. For example, Japan provided nearly $22 billion in development finance to the Philippines from 2000 to 2022, more than double China’s $9 billion. However, China has outpaced the U.S., which invested less than $5 billion in similar projects over the same period—yet the Filipino approval rating of U.S. leadership has consistently stayed well ahead of China’s.
Our study provides a preliminary foundation for understanding China’s broad financial reach in the Philippines, giving policymakers visibility on not just the amount of money involved, but also the key players facilitating these investments and the outcomes they produce. China’s presence in the Philippines will continue to evolve, and the enduring economic and strategic interests of both nations ensure continued interaction. As geopolitical interests from new and traditional donors, economic dependencies, cultural histories, and domestic politics intertwine, further research is needed to unpack the implications, positive or negative, of China’s financing in the Philippines.
