China on Monday said it welcomes the Philippines to “negotiate railway projects cooperation” as Manila seeks to review any possible financial agreement with Beijing on infrastructure building.
“China will continue infrastructure cooperation with the Philippines to build more benchmark projects there,” said Wang Wenbin, a spokesperson for the Foreign Ministry, told a news conference in Beijing.
The statement came after new Philippines President Ferdinand Marcos Jr. ordered his administration to renegotiate financial terms with China on railway projects worth $4.90 billion as agreed by the previous Rodrigo Duterte government.
“China welcomes the Philippines to negotiate railway projects cooperation with China,” said Wang, according to the Chinese daily Global Times.
Philippines Transportation officer Cesar Chavez said: “The official development assistance loan agreements for the three rail projects were considered ‘withdrawn’ after the Chinese government failed to act on the funding requests” made by the Duterte government.
He added that the new infrastructure building team has been tasked to “reactivate negotiations” with China for the financing of three railway projects – two in Luzon and one in Mindanao.
The Chinese Embassy in Manila had 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, former Philippines finance secretary, has, however, cast doubt that Beijing will grant a lower interest rate on loans for railway building.
“I understand that the Chinese financing agency will be asking for interest rates in excess of 3%,” Dominguez said.
Japan offering a lower interest rate has prompted the Marcos administration to ask Beijing to lower its rate to a competitive level.
The Marcos administration is considering only official development assistance and public-private partnerships, a break from the Duterte administration which relied on foreign loans and grants for funding projects.
Amid the economic onslaught by the COVID-19 pandemic, the Marcos administration is working to cut the budget gap to 3% of gross domestic product by 2028, from a record 8.6% last year.