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Hello mga ka Mobilarians!
Today, we are going to talk about why China wants to expand their presence anywhere in the world. We know that we also become part of this expansion. It may not be a form of invasion but the more appropriate term would be 'hegemony' which means, 'taking its lead or dominance'.
As you well know mga ka Mobilarians, Chinese presence is everywhere and I mean not the Chinese people per se but the deals their government is doing towards other governments in the world. We know for a fact that China had made deals (thru loans) with Sri Lanka, Montenegro, Djibouti, Laos, Maldives, Tajikistan, Kyrgyzstan, Mongolia, Pakistan, Cambodia, Indonesia, Vietnam, and almost all countries except those that are stable and self-sustained.
The loans are given to finance infrastructure projects in a particular country usually under "One Belt, One Road" initiative. The funding is usually carried through their banks like Export-Import Bank (Exim) and Asian Development Bank (ADB). The non-DAC or ODA loan offers an interest rate usually at 3% per year, somewhat higher than the loans offered by Japan at 0.4%-1.2% per year and India at 1.5%-1.75% per year. The two latter countries provide low interest rates, however, they could not provide bigger loan packages. So, most of the time they turn to China. Usually, the loan's duration is given at 15 years and 5 years grace period with a commitment fee of 0.5% and an administrative fee of another 0.5%. Here's the catch, if you want the loan to be paid within 15 years you need to see to it that the project is finished right on schedule to avoid a cost overrun.
Unfortunately, there is another side of the coin that you need to consider when you apply for a loan from China. China has a stiffer and nastier penalties should the borrower is in default of paying or unable to pay the loan within the duration period. We call this term as 'debt-trap diplomacy'. This is a, "type of diplomacy based on debt carried out in the bilateral relations between countries. It involves one creditor country intentionally extending excessive credit to another debtor country with the alleged intention of extracting economic or political concessions from the debtor country when it becomes unable to honor its debt obligations." (https://en.wikipedia.org/wiki/Debt-trap_diplomacy). A situation happened in Sri Lanka where they handed-over Hambantota Airport to China to be under their control for a period of 99 years. A similar situation also happened in Angola which gave China the leverage for Oil Exploration. In Djibouti, part of the deal is to install a Chinese military base which has to function as a support military logistics. However, this has created tensions between them and the Americans who already had an installed base before them.
What could be the impact of these Chinese loans to the Philippines? In my own understanding and analysis, the loans provided could be a leeway for China to compromise our national security. It's like a Pandora's box that once it's opened, all evils could no longer be contained. I suspect that it has to do with the terms and conditions inherent in the loan. Should the Philippines as a debtor unable to pay its debts over a given period of time, the possibilities are:
1. China may demand that the operational control of some infrastructures undertaken by them be in their hands or a Chinese firm for a definite period until the last penny is paid.
2. China may demand for a concessionary offer to jointly or mutually explore the oil reserves or other reserves of the Philippines.
3. China may demand for the installation of military support bases in various strategic locations of the country for support military logistics, disaster and retrieval operation, piracy monitoring and control, and counter-insurgency.
4. China may demand that more Chinese investments be poured in various strategic business locations where government control is less and that they could operate independently.
5. China may demand that more Chinese citizens be given freedom to work in the Philippines or ease in securing employment permits during the duration of the project/s or until the project/s has been deemed completed.
6. China may demand for the free landing of their military assets, including refueling, repair, and logistics replenishment.
7. China may demand for a loan restructuring in favor of the new terms set by the creditor bank; China may demand the payment for more exorbitant interest rates, penalty fees, etc.
8. China may demand that as a support for promoting peace in Southeast Asia, the Ph needs to support the ideals of China.
9. China may demand that should there be any grievances coming from both parties, that should be resolved bilaterally; and matters concerning national interest should be dealt privately and exclusively.
10. China may demand that the Ph respect their 9 dash line as part of their territorial sovereignty.
-----------------------------------------------------
What's your opinion on the above? This can happen in the coming months and I'm sure you have something to say. From my point of view, we are at a disadvantage here. As to why I will explain later. Feel free to share your opinion.
Today, we are going to talk about why China wants to expand their presence anywhere in the world. We know that we also become part of this expansion. It may not be a form of invasion but the more appropriate term would be 'hegemony' which means, 'taking its lead or dominance'.
As you well know mga ka Mobilarians, Chinese presence is everywhere and I mean not the Chinese people per se but the deals their government is doing towards other governments in the world. We know for a fact that China had made deals (thru loans) with Sri Lanka, Montenegro, Djibouti, Laos, Maldives, Tajikistan, Kyrgyzstan, Mongolia, Pakistan, Cambodia, Indonesia, Vietnam, and almost all countries except those that are stable and self-sustained.
The loans are given to finance infrastructure projects in a particular country usually under "One Belt, One Road" initiative. The funding is usually carried through their banks like Export-Import Bank (Exim) and Asian Development Bank (ADB). The non-DAC or ODA loan offers an interest rate usually at 3% per year, somewhat higher than the loans offered by Japan at 0.4%-1.2% per year and India at 1.5%-1.75% per year. The two latter countries provide low interest rates, however, they could not provide bigger loan packages. So, most of the time they turn to China. Usually, the loan's duration is given at 15 years and 5 years grace period with a commitment fee of 0.5% and an administrative fee of another 0.5%. Here's the catch, if you want the loan to be paid within 15 years you need to see to it that the project is finished right on schedule to avoid a cost overrun.
Unfortunately, there is another side of the coin that you need to consider when you apply for a loan from China. China has a stiffer and nastier penalties should the borrower is in default of paying or unable to pay the loan within the duration period. We call this term as 'debt-trap diplomacy'. This is a, "type of diplomacy based on debt carried out in the bilateral relations between countries. It involves one creditor country intentionally extending excessive credit to another debtor country with the alleged intention of extracting economic or political concessions from the debtor country when it becomes unable to honor its debt obligations." (https://en.wikipedia.org/wiki/Debt-trap_diplomacy). A situation happened in Sri Lanka where they handed-over Hambantota Airport to China to be under their control for a period of 99 years. A similar situation also happened in Angola which gave China the leverage for Oil Exploration. In Djibouti, part of the deal is to install a Chinese military base which has to function as a support military logistics. However, this has created tensions between them and the Americans who already had an installed base before them.
What could be the impact of these Chinese loans to the Philippines? In my own understanding and analysis, the loans provided could be a leeway for China to compromise our national security. It's like a Pandora's box that once it's opened, all evils could no longer be contained. I suspect that it has to do with the terms and conditions inherent in the loan. Should the Philippines as a debtor unable to pay its debts over a given period of time, the possibilities are:
1. China may demand that the operational control of some infrastructures undertaken by them be in their hands or a Chinese firm for a definite period until the last penny is paid.
2. China may demand for a concessionary offer to jointly or mutually explore the oil reserves or other reserves of the Philippines.
3. China may demand for the installation of military support bases in various strategic locations of the country for support military logistics, disaster and retrieval operation, piracy monitoring and control, and counter-insurgency.
4. China may demand that more Chinese investments be poured in various strategic business locations where government control is less and that they could operate independently.
5. China may demand that more Chinese citizens be given freedom to work in the Philippines or ease in securing employment permits during the duration of the project/s or until the project/s has been deemed completed.
6. China may demand for the free landing of their military assets, including refueling, repair, and logistics replenishment.
7. China may demand for a loan restructuring in favor of the new terms set by the creditor bank; China may demand the payment for more exorbitant interest rates, penalty fees, etc.
8. China may demand that as a support for promoting peace in Southeast Asia, the Ph needs to support the ideals of China.
9. China may demand that should there be any grievances coming from both parties, that should be resolved bilaterally; and matters concerning national interest should be dealt privately and exclusively.
10. China may demand that the Ph respect their 9 dash line as part of their territorial sovereignty.
-----------------------------------------------------
What's your opinion on the above? This can happen in the coming months and I'm sure you have something to say. From my point of view, we are at a disadvantage here. As to why I will explain later. Feel free to share your opinion.
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