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Duterte (R) visits Xi in Beijing. Photo: Ng Han Guan-Pool/Getty Images

When the Philippines needed resources to fight its coronavirus outbreak, it turned not to its American allies, but to China.

Why it matters: The Philippines was a U.S. colony for half a century and is America’s oldest military ally in Asia. But the Southeast Asian nation is drifting further from the U.S. and toward America's superpower rival.

Driving the news: While the U.S. has blamed Beijing for the pandemic, Philippine President Rodrigo Duterte has defended China and thanked Beijing heartily for sending medical equipment and personnel.

  • "President Xi Jinping, for all of his goodness to us, wrote me a letter and said that he is willing to help. All we have to do is to ask," Duterte gushed in March.
  • The U.S. also sent help, but Duterte hardly acknowledged it.

Duterte has long touted China as the primary investor in the Philippines, and he pushed for a more “independent” foreign policy — summed up as, "less America, more China."

  • It was in Beijing where Duterte first signaled the Philippines’ economic and military split from the U.S., telling his Chinese hosts in 2016, "I will be dependent on you for a long time."
  • That split became official in February when Duterte announced the termination of the Visiting Forces Agreement (VFA), a major military deal with the U.S.

The termination of the VFA could harm U.S. deterrence capacity in the crucial South China Sea, where the territorial claims of China, the Philippines and four other countries overlap.

  • Duterte's move followed the cancellation of a U.S. visa for Ronald dela Rosa, a Duterte ally and the architect of his deadly drug war.
  • Legislators in Manila unsuccessfully challenged the decision. President Trump, meanwhile, said he hoped it would save the U.S. some money.

The big picture: Stylistic similarities between Trump and Duterte — a populist who once called Barack Obama a "son of a whore" — haven't stopped the Philippines from drifting closer to China during Trump's tenure.

  • While Duterte sang for Trump during a visit to Manila, he has yet to visit Washington — even rejecting Trump's invitation — despite four trips to Beijing.

Flashback: Clark Air Base northwest of Manila served as the U.S. logistical hub in the western Pacific during the Korean and Vietnam wars.

  • The U.S. is long gone from the base. Now the area, once home to 60,000 Americans, is being developed into a city with funding from Chinese investors.

What to watch: American influence remains so embedded in the Philippines that everything from pop culture to military training to the constitution was patterned after the U.S.

  • Polls show the Philippines as one of the most pro-U.S. countries on Earth, and local and international surveys indicate that Filipinos trust the U.S. more than China.
  • Duterte is pivoting, but it's unclear how far the country will follow.

Go deeper: Philippines' biggest TV network shut down amid feud with Duterte

Go deeper

Dion Rabouin, author of Markets
Aug 26, 2020 - Economy & Business

China is less than halfway to its "phase 1" trade deal targets

Reproduced from Peterson Institute for International Economics; Chart: Axios Visuals

To satisfy the conditions of the phase one U.S.-China trade deal, China is expected to purchase at least $200 billion more in U.S. exports combined in 2020 and 2021. Data shows that as of July they are more than 50% behind the pace of expected purchases.

By the numbers: So far, China's purchase of covered products was $39.3 billion, compared with a year-to-date target of $83.2 billion, Chad Bown, a fellow at the Peterson Institute for International Economics, notes.

D.C.-Beijing tensions are shifting markets

Illustration: Aïda Amer/Axios

U.S. markets stand to lose $2 trillion in value if D.C. and Beijing drift further apart.

Why it matters: Political chasms are showing up in new securities regulations that put companies and investors in a bind. The rules are also another reflection of how much relations between the world’s largest economies have cooled, even as they remain economically interdependent. 

55 mins ago - Health
Axios Investigates

Documents reveal the secrecy of America's drug pricing matrix

Illustration: Aïda Amer/Axios

American businesses spend hundreds of billions of dollars a year on prescription drugs, and the bills keep getting bigger. But some of the companies promising to help rein in those costs prevent employers from looking under the hood.

Why it matters: Documents provided to Axios reveal a new layer of secrecy within the maze of American drug pricing — one in which firms that manage drug coverage for hundreds of employers, representing millions of workers, obscure the details of their work and make it difficult to figure out whether they're actually providing a good deal.