"Philippines has mixed reaction to China’s $14bn for clean energy" 11 July 2023

In January, nine Chinese energy companies committed to invest nearly US$14 billion in renewable energy development in the Philippines. The companies expressed interest mainly in solar and offshore wind, but also hydropower, geothermal and biomass. Notable among them was state-owned China General Nuclear Power Group, the country’s largest nuclear power producer.

Energy experts in the Southeast Asian nation have welcomed these investments, but also expressed concern about how the administration, led by President Bongbong Marcos, will ensure projects succeed.

During the term of the former president, Rodrigo Duterte, Chinese leader Xi Jinping promised to support infrastructure construction under the Belt and Road Initiative (BRI), but progress has been limited. In 2016, Duterte returned from a visit to Beijing with $24 billion worth of deals with China, including for infrastructure projects. However, only two dams and two bridges have since been completed, both in Manila. [...]

Angelo Kairos Dela Cruz, executive director for the Institute for Climate and Sustainable Cities, a policy think-tank, said the Philippines has to make progress in attracting the foreign direct investments it needs to develop renewable energy. [...]

Ian Rivera of the Philippine Movement for Climate Justice, said: “We welcome these Chinese investments because they can provide the necessary funding to expand the renewable energy transition.”

Meanwhile, Filomeno Sta. Ana, co-founder and coordinator of Action for Economic Reforms, a think-tank, cautioned that Chinese companies have so far only pledged to invest. [...]

Past Chinese investment

Chinese investors had pledged significant involvement in building inter-island bridges under Duterte’s Build, Build, Build programme, but most big projects were later “deemed unfeasible” by the government and did not materialise. Rosb Guzman, executive editor for think-tank the IBON Foundation, expresses scepticism about Chinese investment in the Philippines. Previous initiatives usually came with onerous conditionalities, as with the Kaliwa Dam and Chico River irrigation project, she says. Despite a number of inquiries on these projects’ constitutionality, the Kaliwa Dam is now 22% complete, and the Chico River project has been inaugurated.

A 2019 press release by IBON revealed that the Duterte government had signed lopsided loan contracts with China, providing resources and state assets as collateral in the event of loan default. In 2022, petitions that sought to have the loans declared unconstitutional were junked by the Philippine Supreme Court.

The Department of Justice has ruled as constitutional the 100% foreign ownership of renewables projects, but Guzman think this could mean projects will not be designed for the benefit of local people.

“China demands that the projects it funds exclusively use Chinese contractors and, more than what has been the [Philippines’] experience with Japan, incorporate the use of Chinese labour. Chinese loans are beyond the scope of Philippine laws and are governed in accordance with the laws of China,” said Guzman.

She said that the country has vast potential to replace fossil fuels, but that it must be wary of the global powers using environmental rhetoric to monopolise these sources, and in the end still produce electricity that is unaffordable for Filipinos. She also noted the opportunities and challenges around investments from both China and the US, in the context of growing tensions and competition between the two economic superpowers, including in the financing of clean energy superpowers. [...]