Introduction
Amid escalating tensions in the South China Sea, where territorial disputes between China and the Philippines have raised concerns of potential conflict, the Philippines stands out as an economic stronghold. Despite China’s aggressive actions, including interference at the Second Thomas Shoal and clashes at sea. The Philippines has exhibited impressive economic resilience on the economic front. With a remarkable GDP growth of 7.6% in 2022, the country’s fastest since 1976, and consistent growth from 2012 to 2019, ranging between 6% to 7% of GDP. Even amidst the challenging geopolitical landscape, the nation’s robust economic performance, reflected in significant indicators such as the S&P Global and the Philippines Manufacturing PMI, not only showcases resilience but also underlines the potential role of economic stability in deterring any unforeseen aggression. An economically strong Philippines emerges as a crucial factor in maintaining regional stability and countering external threats.
Current Perception of the Philippines’ vulnerability to Chinese aggression
 In August 2023, the Philippines lodged accusations against China, alleging the use of a water cannon on Filipino supply boats delivering essential provisions to Sierra Madre troops. Subsequent incidents in October involved the Philippines accusing the Chinese coastguard of deliberate collisions with its resupply boats, resulting in heightened tensions. More recently, China faced accusations of firing water cannons and causing engine damage to Philippine boats, prompting Manila to label the actions as a “serious escalation.” In response, Beijing accused the Philippines of trespassing on its territory, issuing a warning that bilateral ties were at a “crossroads.” Amidst these escalating tensions, analysts in Manila contend that traditional diplomatic approaches have faltered, leaving the Philippines with no recourse but to collaborate with allies. Recognizing that actions to safeguard national interests may be perceived as provocations by China, there is a growing consensus that an economically strong Philippines is crucial for deterring Chinese aggression. Rommel Jude G Ong, a professor and former Filipino naval officer, suggests that strengthening the Philippines’ ability to deter China, both unilaterally and in collaboration with the US and strategic partners, is the optimal course of action in the face of the evolving geopolitical landscape.
A robust Philippine economy is a crucial deterrent against Chinese aggression
 The Philippines faced potential vulnerabilities in its export sector in 2023 due to weakened growth in the US and Western Europe, although the rebound in China’s economic growth is anticipated to provide a mitigating effect. Imports soared during 2022, with surging prices for world oil and gas being a significant factor contributing to a further sharp deterioration in the current account balance for the year. In December 2022, the Philippines central bank, Bangko Sentral Pilipinas (BSP), revised down its current account projection for 2022 to a notable deficit, attributing it to a widening trade deficit caused by economic recovery and rising oil prices. Despite these challenges, the IT-BPO sector has emerged as a crucial contributor to the Philippine economy, witnessing substantial growth in exports. Looking ahead, the Philippines is forecasted to become one of the Asia-Pacific region’s trillion-dollar economies by 2033. This economic strength becomes a key deterrent against potential Chinese aggression, further underlining the importance of maintaining a robust Philippine economy for the nation’s security and prosperity. The concept of “collective resilience” is recognized as a strategic approach to deter economic coercion by any aggressive regime, emphasizing the need for nations to unite and retaliate collectively against high-dependence trade should China act against any member of the alliance.
The Philippines acknowledges the pivotal role of economic strength in bolstering its defense mechanisms. A substantial surge in the proposed 2024 defense budget to 233 billion Philippines Pesos ($4.1 billion) reflects a proactive approach amid escalating tensions with Beijing. With an allocation strategy, 144 billion Philippines Pesos for personnel expenses, 69 billion Philippines Pesos for maintenance, and 17 billion Philippines Pesos for the capital outlay. Noteworthy is the exclusion of appropriations through the Revised Armed Forces of the Philippines (AFP) Modernization Program (RAFPMP), potentially propelling the total 2024 allocation for the Department of National Defense to over 366 billion Philippines Pesos. The focus on the Philippine Army, Philippine Air Force, and Philippine Navy emphasizes a comprehensive approach to military readiness.
Likewise, the dynamic nature of modern warfare necessitates an agile response from the Philippine Army. The challenges posed by hybrid and unrestricted warfare demand continuous advancements in joint-ready and combined arms capabilities. The Philippine Army Education, Training, and Doctrine is tasked with aligning its vision with the PA’s needs. A clear roadmap from 2023 to 2029 outlines the development efforts, ensuring that education and training programs evolve under doctrinal principles.
Similarly, economic prowess definitely emerges as a significant diplomatic asset, amplifying the Philippines’ bargaining power in international negotiations, particularly in territorial disputes. Despite strained relations, trade and investment between the Philippines and China continue to expand. The signing of 14 bilateral trade agreements during President Ferdinand Marcos Jr.’s visit to China underscores the resilience. The imperative to reduce dependence on Chinese economic aid becomes apparent, urging diversification of funding sources for critical infrastructure projects, ensuring the Philippines can negotiate from a position of strength.
The Philippines’ rich cultural diversity, encompassing 130 languages and 110 ethnolinguistic groups, stands as a testament to its vibrant identity. Improved living standards driven by a dynamic economy can bolstered public confidence. The country’s economic dynamism, with positive performances across sectors, has led to a decline in the poverty rate from 23.3% in 2015 to 18.1% in 2021.
Economic strength serves as a cornerstone in bolstering the Philippines’ bargaining power during international negotiations, especially concerning territorial disputes. Despite fluctuations in trust ratings, trade and investment relations between the Philippines and China continue to flourish. China stands as the Philippines’ foremost trade partner, highlighting the intricate economic interdependence between the two nations. Notably, President Ferdinand Marcos Jr.’s recent visit to China resulted in the signing of 14 bilateral trade agreements, emphasizing cooperation across various sectors. However, to mitigate risks associated with overreliance on Chinese economic aid, the Philippines must diversify its funding sources for critical infrastructure projects.
The Philippines’ rich cultural tapestry, characterized by 130 languages spoken among 110 ethnolinguistic groups, underscores its diverse societal fabric. Despite this diversity, comprehensive documentation and preservation efforts remain challenging due to sparse data and limited resources. However, sustained investments in cultural preservation can foster a stronger sense of national identity and cohesion. Concurrently, the nation’s economic dynamism, propelled by a burgeoning middle class and robust remittances, has contributed to a decline in poverty rates. President Ferdinand Marcos Jr.’s ambitious goal of reducing the poverty rate to 9% by 2028 reflects a commitment to improving living standards and fortifying the nation against internal vulnerabilities.Â
Challenges and Strategies for Economic Growth
In the pursuit of deterring aggression, particularly from China, the Philippines acknowledges the crucial role of bolstering its economic prowess. A robust economy serves as a formidable deterrent against external pressures and fosters resilience amidst geopolitical challenges.
Addressing structural impediments such as corruption and governance inefficiencies is paramount in fortifying the Philippines’ economic foundation. The Philippines has embarked on significant reforms aimed at enhancing transparency and accountability. Initiatives like the Freedom of Information policy and reforms in public financial management contribute to greater domestic stability and international credibility, thereby deterring potential aggression.
Investing in infrastructure development emerges as another vital component in strengthening the Philippines against external threats. Recognizing infrastructure as pivotal for socioeconomic progress, the country aims to improve connectivity and logistics nationwide. Strategic investments in infrastructure not only foster inclusive growth but also enhance the country’s capacity to deter aggression by promoting economic vitality and strategic resilience.
A skilled and empowered workforce is central to the Philippines’ ability to deter aggression and assert its sovereignty. Investments in education and training programs, alongside initiatives like the Government Internship Program, aim to equip the youth with the skills needed to thrive in a competitive global environment. A competent workforce not only drives economic growth but also enhances the country’s resilience against external pressures.
Diversifying the economy beyond traditional sectors like agriculture and tourism is crucial in reducing vulnerability to external pressures. Embracing new industries such as technology, manufacturing, and renewable energy enhances economic resilience and reduces dependence on any single market, including China’s.
Expanding trade partnerships with regional and global players is essential for reducing reliance on Chinese markets and mitigating risks associated with geopolitical tensions. By fostering closer ties with like-minded allies and promoting sustainable development, the Philippines can counterbalance China’s influence and reinforce its position as a key player in the regional economic landscape.
Promoting sustainable development practices that balance economic growth with environmental protection is imperative for long-term economic stability. By prioritizing renewable energy projects and addressing environmental challenges, the Philippines can build a resilient economy that safeguards its natural heritage and promotes shared prosperity.
Conclusion
In conclusion, the Philippines recognizes that a robust economy serves as a crucial deterrent against external aggression, particularly from China. By addressing structural impediments, investing in infrastructure and human capital, diversifying the economy, expanding trade partnerships, and promoting sustainable development, the nation strengthens its resilience and sovereignty amidst geopolitical challenges. Through concerted efforts and strategic initiatives, the Philippines is poised to navigate uncertainties, uphold regional stability, and safeguard its territorial integrity, underscoring the intrinsic link between economic strength and national security in the face of evolving threats.
