China Accused of Corruption in Philippine Rail Project

As part of ASEAN, the Southeast Asian regional bloc, China has invested some $2 billion in the Philippines. Markeplace’s Scott Tong reports on its latest project, Northrail, a half-billion dollar railway line connecting Manila to a U.S. military base. But legal advisors to the Philippines say the lenders broke the law when it sidestepped the country’s competitive bidding process and hand picked the contractor – a Chinese contractor. They say this is not an isolated instance of Chinese corruption.

Northrail isn’t the only Chinese-funded project facing corruption questions. There are at least four. Senator Alan Cayetano heads the investigations.

Alan Cayetano: This is the year of the rat, and here in the Senate we smell big rats.

But other international observers say China is simply making missteps, rather than calculated maneuvers.

Peking University international relations scholar Zhang Xizheng sees rookie mistakes.

Zhang Xizheng: China has been developing so fast. Its just got rich, and they think they have all this economic power. But they don’t understand market rules and laws, so it’s almost inevitable they broke them.

Political scientist Renato de Castro believes the Chinese were also unprepared for Manila’s mudslinging politicians and its nosy journalists.

Renato de Castro: It’s a learning process for them. They basically realized things will not work outside China the same way things work inside China.

Still, this is not the first Chinese scandal in the Philippines, and president Gloria Arroyo continues facing calls for her resignation.

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