Philippines’ ‘China-free’ manufacturing strategy is a high-risk bet

Philippines’ ‘China-free’ manufacturing strategy is a high-risk bet

Despite support and progress on the Luzon Economic Corridor and Pax Silica initiatives, Manila faces many challenges and much competition

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Richard Javad Heydarian is an Asia-based academic, currently a Professorial Chairholder in Geopolitics at the Polytechnic University of the Philippines.

Published: 9:30am, 17 Oct 2026

China and the Philippines recently traded accusations over the medical evacuation of a Philippine serviceman from a grounded naval vessel in the hotly disputed Second Thomas Shoal in the South China Sea. The incident has sparked renewed worries about potential armed skirmishes in a global artery of trade.

But Philippine President Ferdinand Marcos Jnr was also quick to emphasise the economic dimensions of a major conflict. After a decade of rapid economic growth, the Philippines is facing potential “stagflation” due to multiple headwinds.

Both the ill-conceived US war on Iran and the domestic flood-control corruption scandal, which has hobbled infrastructure projects across the Philippines, have hammered the nation’s economy.

Reeling from record low approval ratings, Marcos is doubling down on attracting multibillion-dollar investments from traditional partners. In particular, he is betting on the newly launched Luzon Economic Corridor, which has Japanese and European support, and the US-led Pax Silica initiative. US President Donald Trump is expected to sign a framework agreement for Pax Silica during a visit to Manila next month.