Most of the Philippines’ foreign direct investments come from Japan, the United States, the

Netherlands, and Singapore. China, however, has emerged to be one of the biggest sources of FDI in the
world, jumping from a few hundred million US dollars to US$1.3 trillion in 2015, which necessitate our
policymakers to attract Chinese investments to bolster Philippine development. Hong Kong has also
become the major offshore gateway for many Chinese firms. In 2015, Hong Kong’s FDI stock amounted
to US$1.4 trillion.

Attracting FDI — long-term, managerial control of assets in the host state, via greenfield investments,
joint ventures, and acquisition of controlling stakes — is extremely necessary for developing countries.
Since the 1980s, countries across the globe have competed for FDI in order to achieve their
developmental goals, such as revenue generation, employment, and skills transfer.

Chinese foreign investments, across Philippine Presidents, 1990-2017.

EYE ON PROFITS STILL

When it comes to Chinese FDI, however, there have been growing concerns about its inherent
differences from more “normal, usual” FDI. A popular notion is that that every Chinese firm is fully
control and funded by the Chinese Communist Party (CCP). This is empirically misleading. Many Chinese
firms go to Hong Kong to create subsidiaries in order to acquire financing from international syndicate
loans, which usually come from Western and global private institutions. This goes back to how the
Chinese government tempers the amount of FDI that goes to the developing world. While the conditions
of the loans vary largely, one common feature is the weight assigned to commercial considerations and
financial returns. These conditions make Chinese FDI behave closer to Western and conventional foreign
investments.

The Philippines’ "China pivot" came later compared to its Southeast Asian neighbors. It began in 2016,
shortly after Duterte became president. Within months after his presidential inauguration, he went on a
trip to Beijing and brought home an earmarked US$24 billion worth of FDI, construction contracts, and
ODA.

But many have argued that even after 2 whole years, Chinese investments have not yet reached these
amounts. Notwithstanding the wrong expectations on both sides, this issue brings about a crucial
question: how much is Chinese FDI in the Philippines?
In order to overcome data limitations, I used the Security Exchange Commission’s firm-registration to
create a dataset on the annual number of new firms with Chinese FDI, which is defined as China money
having more than 10 percent of shares.

Figure 1 shows that the number of new firms with Chinese FDI across 6 different Philippine presidents –
from Corazon Aquino to Rodrigo Duterte. Chinese investments in the post-Marcos era initially began in
the early 1990s. The figure also shows, though, that the number of firms vastly increased from 2002
onward, jumping from an average of 309 and 541 during the Arroyo and Aquino administrations
respectively to 1,092 during the first 2 years of the Duterte presidency.