What Marcos’ presidency means for U.S.-China relations

A landslide victory is on the cards for the Philippines’ Ferdinand “BongBong” Marcos Jr., seen here at his campaign headquarters in Mandaluyong City, Manila on Monday.

Veejay Villafranca/Bloomberg via Getty Images

It seems almost certain that Ferdinand Marcos Jr., the late dictator’s namesake son, will become the Philippines’ next president.

The unofficial vote tally so far shows that Bongbong, as he is popularly known back home, is poised for a landslide victory – ahead by a wide margin against his closest rival, incumbent Vice President Leni Robredo. Official results are expected towards the end of the month.

A presidency of Marcos Jr. would be very different from the six years under President Rodrigo Duterte, said Victor Manhit, chief executive of the consultancy BowerGroupAsia.

“Duterte was a small-town mayor, a mayor who became president. Marcos Jr. is much more cosmopolitan in his upbringing. He has a better understanding of what’s going on in the world,” he said. at CNBC on Tuesday.

What this means for foreign policy

With Southeast Asia the main theater of a struggle for dominance between the United States and China, the countries of the region are caught between the two rival powers.

The presidency of Marcos Jr. will be followed closely in this context. In the South China Sea, China is embroiled in maritime disputes with a number of countries like Indonesia, Malaysia and Vietnam, as well as the Philippines.

“When he started his campaign, Marcos Jr. started with a calm stance on China. areas contrary to Philippine national interests,” Manhit said.

Marcos Jr.’s sense of the Philippines’ place in the world could lead politics in a direction radically opposite to that of Duterte, he said.

However, another analyst said the new leader is likely to have less leeway than his predecessor.

“The Philippines tried an outstretched hand, and China bit it. That’s why the Duterte government has re-embraced the US alliance and gotten tougher with Beijing over the past two years,” said Gregory Poling, Principal Investigator and Director of the Southeast. Asia Program at the Center for Strategic and International Studies in a note.

“The Filipino public and bureaucracy are even more suspicious of China than they were six years ago following their historic South China Sea arbitration victory,” said Poling.

“Marcos Jr. may try to revive Duterte’s early contacts with Beijing, but he is unlikely to throw the US alliance overboard as part of that effort,” he said.

What this means for trade and business

Before the pandemic hit in 2019, the Philippines was one of the fastest growing economies in the world, but its service- and remittance-driven economic model has been hit hard by Covid-19.

Marcos, who will inherit a large budget deficit, did not elaborate on his plans to get the economy back on track after the devastation of the pandemic.

However, everything indicates that infrastructure development will be at the heart of his program.

Frank Thiel, president of AmCham Philippines, said he was “moderately optimistic” that Marcos will continue to support projects launched by Duterte.

“The ‘Build, Build, Build’ infrastructure program has been a great success, we hope it will be continued and expanded,” he said, referring to Duterte’s infrastructure project to create jobs and reduce poverty in the country.

“It is clear that infrastructure development will be at the heart of Marcos’ agenda – although questions remain about the precise priorities, how he will fund them and to what extent private/foreign capital will be used,” said Peter Mumford , practitioner. head of South and Southeast Asia at Eurasia Group, in Tuesday’s note.

On the trade front, a Marcos presidency could mean that a free trade agreement between the United States and the Philippines is back on the table, according to Thiel.

“We think this can be an opportunity. It’s a new administration. New ideas, new plans, new programs,” Thiel told CNBC. “Squawk Box Asia” on Tuesday.

Marcos is broadly pro-FDI, but one of the key watch points under his administration will be whether corruption and cronyism – already notable risks in the Philippines – worsen.

Pierre Mumford

Practice Leader, South and Southeast Asia, Eurasia Group

“Marcos is broadly pro-FDI, but one of the key watch points under his administration will be whether corruption and cronyism – already notable risks in the Philippines – escalate,” Mumford said.

His landslide electoral victory is a plus as it gives his presidency a good start.

“In particular, it will create a strong initial gravitational pull on members of Congress – especially useful with the Senate, which tends to be more independent-minded – and will mean that more technocrats/economists will be willing to serve in its cabinet” , Mumford said. mentioned.

CNBC’s Abigail Ng contributed to this report.

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