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Northeast Asia

Infrastructure: Japan and China fight over 'the soul' of Asia

Both Japan and China are competing for the right to finance and build new infrastructure worth trillions of dollars in the Philippines and other parts of southeast Asia.


President of the Philippines Rodrigo Duterte (left) with his Chinese counterpart Xi Jinping in 2016

When the president of the Philippines, Rodrigo Duterte, visited Beijing in October 2016, shook hands with his Chinese counterpart Xi Jinping and announced the “separation” of his country from the United States, it felt like a pivotal moment. 

For decades after the Second World War, Manila was Washington’s staunchest ally in southeast Asia. Clark Air Base on Luzon island was run by the US Air Force until 1991, and only Japan gave more to the Philippines than the US in terms of aid commitments.

As the new century progressed, Tokyo’s fear of a rising Beijing forced it to commit more resources to the sprawling island chain. It donated patrol boats and financed and built infrastructure. In 2015, the Philippines signed a $2 billion loan agreement with the Japan International Cooperation Agency to fund a high-speed rail link between Manila and the city of Malolos.

Then came China’s coup. Duterte’s visit ruffled feathers not just in Tokyo and Washington, but across the region. When Xi pledged $24 billion in investment, including $9 billion in soft loans and a $3 billion credit line from the Bank of China, many assumed the die was cast.

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