COVID-19 seen ‍further slowing China ODA

As China grapples with the new coronavirus disease (COVID-19) outbreak, the economic giant may temporarily set aside the granting of financial assistance to areas outside the mainland, including loans for the Philippines’ ambitious “Build, Build, Build” program.

Socioeconomic Planning Secretary Ernesto Pernia said China’s new ambassador to the Philippines, Huang Xilian, had admitted the two countries needed to meet regularly to fast-track cooperation in infrastructure development.

But Pernia said it might be difficult to hold bilateral meetings between Philippine and Chinese economic officials given the spread of the coronavirus in and out of China.

Pernia, who heads state planning agency National Economic and Development Authority (Neda), said a plan to meet in Beijing to discuss more projects had been postponed.

He said China was expected to ramp up public spending to compensate for any slow down to be caused by the virus on its economy.

However, these expenditures may be limited within China, hence “might be a constraint” for countries like the Philippines that were awaiting official development assistance (ODA), Pernia said.

Pernia earlier described the pace of Chinese ODA flows into the Philippines as “rather slow.”Besides slow internal Chinese government processes in approving loans, the Philippines has also been “very cautious and strict in scrutinizing” financing agreements and implementation contracts. In 2016, Neda’s Investment Coordination Committee (ICC) issued guidelines detailing the process of choosing Chinese contractors for China-assisted projects after President Duterte sought closer political and economic ties between Manila and Beijing.

The ICC rules had been put in place to avoid a repeat of the Northrail and ZTE anomaly-laden projects entered into with Chinese firms by the Arroyo administration.

China had committed $9 billion in ODA (grants and loans) for the Philippines’ big-ticket infrastructure projects.To date, only two loan agreements had been signed with China—$62.1 million for the Chico River Pump Irrigation Project and $211.2 million for the New Centennial Water Source-Kaliwa Dam.