Our country’s expanding security-linked trade alliances are drawing China’s close attention, much like our growing military alliances.
But while China specifically warned that the Balikatan was akin to “playing with fire,” it remained quiet on a crucial trade alliance coincidentally announced with Balikatan.
China’s silence, however, doesn’t mean China won’t later say something about the Philippines formally joining “Pax Silica, a US-led initiative that seeks to secure trusted supply chains for advanced technologies.”
Now, if Pax Silica’s sounds more about trade and economics, its geopolitical and security implications are not.
The US State Department, for instance, says Pax Silica is a key pillar of the US economic statecraft strategy, aimed at reducing dependence on rival economies, which only could mean China.
The Americans also say Pax Silica is designed to align industrial development with economic competitiveness and security concerns across its “member economies” which currently include Australia, Finland, India, Israel, Japan, Qatar, the Republic of Korea, Singapore, Sweden, the United Arab Emirates and the United Kingdom.
As a “flagship effort,” Pax Silica seeks to establish supply chains across the globe for artificial intelligence (AI), semiconductors, critical minerals and other strategic resources and technologies.
Generally, Filipino economists and geopolitical experts welcomed Pax Silica, with one analyst broadly describing the initiative as “geo-economics,” meaning “defense cooperation now crossing into the economic side.”
In any case, the Philippines and the US, in line with Silica, announced plans for a 1,620-hectare industrial hub inside the Luzon Economic Corridor, a trilateral industrial effort involving the Philippines, the US and Japan.
The hub, say news reports, will be known as a “Golden Node,” or an AI-native investment acceleration hub and is meant to start building the next generation of manufacturing ecosystems “that will define global supply resilience for decades to come.”
No specific details are yet known about the “Golden Node,” except that the hub is expected to offer US companies access to critical minerals that bypass China’s controls, the Wall Street Journal reports, adding that the hub will have diplomatic immunity and will operate under US common law, the first such arrangement in the world.
The Marcos administration has yet to extensively comment on “Golden Node,” particularly over its constitutionality and its economic and job benefits.
Generally, however, the “Golden Node” is part of recent US efforts to rewire worldwide production networks in order to break China’s hold on critical industries such as rare earth minerals processing and battery supply chains, crucial for the AI century.
The Philippines’ reserves of nickel, copper and cobalt make it a natural candidate for such rewiring, says the US.
The US, however, didn’t say if the “Golden Node” is partly also a response to what could be the next battleground of the intense US-China trade rivalry: the so-called “rules of origin” strategy the Americans are thinking about.
Basically, “rules of origin” is the dry, technical mechanism by which the Americans try to limit Chinese content in goods exported to the US.
China is closely watching developments in the “rules of origin” issue, as it directly impacts its economic influence over most Southeast Asian countries.
Surprisingly, the Philippines doesn’t face risks with the “rules of origin” scheme since our export economy generally remains “anchored in its ties with Western and like-minded economies,” unlike the rest of China-dependent Southeast Asian countries.
In short, it’s all about making us understand and proving to us that China isn’t the only economic or development lifeline as previously believed.