Primal motivation

“Economics plays a pivotal role in the escalating maritime conflict, and it is expected to be a mainstay as fast-developing nations give China a run for its money.

Has anyone heard about friendshoring?

Strangely, geopolitical experts are pointing to this recent buzzword in trade as a critical reason for China’s aggressive conduct in the West Philippine Sea.

Beijing wants to use its gradually escalating approach in its territorial conflict with the Philippines as an example to other Asian countries seeking to challenge its nine-dash line claim.

A 2016 ruling voided the historic stake of China over practically the entire expanse of the seas between the Philippines and the mainland.

Geopolitical analyst Elizabeth Braw, a senior associate fellow at the European Leadership Network, has postulated that China is stepping up its maritime attacks to disrupt friendshoring operations in the region.

Friendshoring is all about securing the supply chain by moving manufacturing operations to a friendly nation to avoid disruption to business flow.

The US government, for example, has stressed its intention to obtain components and raw materials from “friendly” countries with shared values to increase the security of domestic production.

US Treasury Secretary Janet Yellen set out Washington’s new approach to trade: “Rather than being highly reliant on countries where we have geopolitical tensions and can’t count on ongoing, reliable supplies, we need to diversify our group of suppliers.”

China has markedly increased its maritime bullying in the waters off the Philippines.

Braw said the increased tension has started to stoke nervousness among Western businesses interested in friendshoring their operations to the Philippines.

The water cannon attack on supply ships, which resulted in one of the vessels suffering engine damage and having to be towed back to port, came only a few weeks after two other heavy-handed maneuvers by China in areas that are clearly within the Philippines’ exclusive economic zone, or EEZ.

Most of the incidents featuring Chinese intimidation tactics took place near the Ayungin Shoal, where the landing ship BRP Sierra Madre was purposely grounded.

Ray Powell, the director of Stanford University’s SeaLight group, which tracks maritime gray-zone aggression, identified the objective of Beijing in its maritime aggression as to discourage attempts by nearby countries to follow the Philippines’ example of asserting its rights in waters that China has unilaterally owned.

“China wants to communicate that it has jurisdiction in the South China Sea and gets to decide over activities there,” he explained.

China’s increasing aggressiveness has generated a backlash against the Asian giant in terms of the confidence of its trading partners.

Analyst Braw believes the harassment will continue and even worsen. “Simply being a nuisance in the waters may be China’s whole point, because the altercations are causing considerable anxiety.”

She said the Philippines is one of the countries where manufacturers keen to reduce their operations in China have turned their attention.

Global manufacturers assessing potential new locations for some of their manufacturing see many benefits to setting up shop in Manila.

“The country has a comparatively well-educated labor force that includes many English-speaking workers. It’s mostly friendly with the West. It’s geographically close to China, which would mean comparatively moderate disruption as entire supply chains are shifted,” Braw assessed.

The country also has workable relations with its regional neighbors, which is indispensable to friendshoring efforts, as no single country can replicate China’s extraordinary all-in-one manufacturing solution.

This is where the economic bloc, known as the Association of Southeast Asian Nations, comes into play as an option for China.

Economics plays a pivotal role in the escalating maritime conflict, and it is expected to be a mainstay as fast-developing nations give China a run for its money.

But getting a friendshoring business is not something to be taken for granted; competition is fierce among the prospective beneficiaries of this sudden and rapidly accelerating shift.

In a July ranking of friendshoring destinations published by the consultancy Kearney, the Philippines had dropped three places since the ranking started in 2021. It is now in 12th place, as the slide was mainly the result of significant efforts by Mexico and Colombia to attract US manufacturers.

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