China said on Monday it welcomes the Philippines to “negotiate cooperation on railway projects” as Manila seeks to discuss any potential financial deal with Beijing on infrastructure construction.
“China will continue its infrastructure cooperation with the Philippines to build more benchmark projects there,” Foreign Ministry spokesperson Wang Wenbin said at a press conference in Beijing.
The statement came after new Philippine President Ferdinand Marcos Jr. ordered his administration to renegotiate financial terms with China on rail projects worth $4.90 billion, as agreed by the previous Rodrigo government. Duterte.
“China welcomes the Philippines to negotiate cooperation on railway projects with China,” Wang said, according to Chinese daily Global Times.
Cesar Chavez, head of transport in the Philippines, said: “The official development assistance loan agreements for the three railway projects have been considered ‘withdrawn’ after the Chinese government failed to respond to requests for funding. made by the Duterte government.
He added that the new infrastructure construction team has been tasked with “reactivating negotiations” with China for the funding of three railway projects – two in Luzon and one in Mindanao.
The Chinese embassy in Manila said on Sunday that Beijing was “open to cooperation on railways and other infrastructure projects, and ready to continue discussions with the Philippines.”
Carlos Dominguez III, the Philippines’ former finance secretary, however, expressed doubts that Beijing will grant a lower interest rate on loans for the construction of railways.
“I understand that the Chinese financing agency will ask for interest rates above 3%,” Dominguez said.
Japan offering a lower interest rate prompted the Marcos administration to ask Beijing to lower its rate to a competitive level.
The Marcos administration is only considering official development assistance and public-private partnerships, a break with the Duterte administration which relied on foreign loans and grants to fund projects.
Amid the economic onslaught of the COVID-19 pandemic, the Marcos administration is working to narrow the fiscal gap to 3% of gross domestic product by 2028, from a record high of 8.6% the last year.
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