Philippines Drops China as Funding Source, Receives Offers from Japan, South Korea, and India for $5 Billion Railway Projects

Shift in Diplomatic Relations as Manila Seeks Other Financing Options Amid Strained Ties with Beijing and Unfulfilled Loan Negotiations for Critical Rail Projects.

• The Philippines has abandoned Chinese funding for three significant transportation projects amid strained ties, opening the door for potential financial backing from other sources such as the U.S.-dominated World Bank; Japan Cooperation Agency; or Asian Development Bank.
• Japan, India, and South Korea have each offered to finance the three railway projects which are a 44-mile freight railway, and two intercity rail lines, collectively worth $4.95 billion.
• Japan is already a substantial financier of public transportation in the Philippines, with over $6.5 billion committed towards the construction of the country's first subway system, due for completion in 2029.
• Philippines' current President, Ferdinand Marcos Jr., instructed in 2023 for the railway projects to be renegotiated as China had failed to provide a list of contractors. This move represents a clear pivot from his predecessor Rodrigo Duterte's warmer relations with Beijing.
• The shift in financing is part of a broader cooling of interest in China's Belt and Road Initiative due to allegations of 'debt-trap diplomacy' and outcomes that have not met expectations; the Philippines was notably absent from the most recent forum in October.

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