Can the Philippines’ become China’s ‘plus one’ amid South China Sea tensions?

The Philippines is positioning itself as an emerging secondary hub in China-based firms’ global supply chains to avoid the brunt of US tariffs, but analysts are split on whether its growing investment appeal can be sustained without deepening strategic vulnerabilities in its fraught relationship with Beijing.

The director general of the Philippine Economic Zone Authority (PEZA), Tereso Panga, said in a social media post on Monday that the Philippines was being eyed as the “next preferred destination in Asean with the emerging China plus one, plus one business strategy,” referring to the country as a viable investment alternative amid the 20 per cent tariffs imposed on Chinese imports by US President Donald Trump.

Vietnam had historically been the first choice for China-based companies for expansion due to its proximity, he said, a sentiment that was made clear during PEZA’s meetings in various Chinese cities, including Xiamen, Chongqing, Shenzhen, and Dongguan, where officials presented investment opportunities in the Philippines.

But he said the Philippines had become an increasingly attractive option. He noted the Aoxing group in Dongguan – a producer of audiovisual equipment for brands such as HP, Epson, and Skyworth – chose the Philippines for its “redundant manufacturing facility intended for the US export market”, referring to a secondary site that helps firms maintain production and avoid tariff-related disruptions.