By: Jens Kastner

There is an increasing concern in Taiwan that Philippine President Rodrigo Duterte will allow China’s military to turn Fuga, a 70 sq. km island just across from Taiwan into the “One Belt One Road Fuga Island New Smart City,” a US$2 billion development by the Xiamen-based Fong-Zhi Enterprise Co. Ltd. to include a high-technology industrial park and other facilities with military implications

Duterte sealed the project in April of 2019 on a visit to Beijing in which he met with Chinese President Xi Jinping, who has continued to raise pressure on Taiwan virtually since he became China’s leader. In recent months, China has sent fighter jets and bombers close to Taiwan and run naval maneuvers closer and closer to the island, which lies 160 km. from the Chinese coast.

Fuga, privately owned by Fuga Island Holdings, is 430 km. from Taiwan’s Kaohsiung City and adjacent to a hub for the Philippines' underwater communications cables, which has unsettled the Philippine military. It is part of the Babuyan Archipelago, the Philippines’ northernmost island group, which falls under the jurisdiction of the Cagayan Economic Zone Authority (CEZA).

The authority earlier this month denied that Chinese investors were planning to take over the island. However, bitter economic realities, with the Philippine economy shrinking by 16.5 percent in the 2nd quarter and with record-high unemployment at17 percent, obviously make the deal increasingly tempting.

Both Taiwan and Philippine military sources have raised concerns about the project. In Taiwan, sources told Asia Sentinel that authorities are taking the risk of the Chinese military coming closer to its southern flank very seriously, given Duterte’s three-year record of giving the Chinese pretty much everything they want, including refusing to recognize the historic decision by a tribunal in the Hague invalidating China’s claim to virtually all the South China Sea, including islands claimed by the Philippines. Duterte’s embrace of the Belt and Road initiative has coincided with his stated desire to terminate the Visiting Forces Agreement which allows US military forces to remain in his country.

“The Chinese potential massive smart city buildup in Fuga Island concerns Taiwan as much as regional like-minded democracies, since the Luzon Strait is of critical importance for the first island chain surveillance on the ground of either anti-submarine warfare from undersea,” said Dr. Yisuo Tzeng, a research fellow at the Institute for National Defense and Security Research in Taipei.

It is within reach of the Philippines’ new helicopters from the air, or a land-based air defense radar system likely to be imported from Japan, Tzeng said. Additional security issues, he said, “stem from the planned Chinese smart-city development coming close to the many undersea cables that run through the Luzon Strait near Fuga Island and the likely-to-be established Huawei 5G apparatus there that would certainly run counter to the U.S.’s Clean Path Initiative”

Philippine sources say questions over Fuga are to be taken seriously. Retired Philippine Navy Vice Commander Rommel Jude Ong said the fact that Duterte signed the deal in China last year is to be seen as equaling the Philippines’ constructive approval of the project.

Ong pointed out that Fuga Island lies astride the Bashi Channel and adjacent to the Luzon Strait in a strait that provides an east-west passage to and from the South China Sea and the Pacific Ocean, and the Benham (Philippine) Rise, east of mainland Luzon. Fuga, he said, is relatively close to mainland Taiwan as well, and lies in a body of water hosting international maritime traffic as well as naval movement by all states.

“Security sensitivities are juxtaposed against China's presence in other investments abroad: Darwin, Australia; the island-states in the middle of the Pacific; Gwadar, Pakistan, etc.,” Ong said. “These investments are considered as dual-purpose transactions, which can serve commercial interests but potentially covert military or intelligence activities as well. A ‘Chinese smart city/resort’ can potentially monitor international maritime and naval traffic in the strait; be considered by our northern neighbor Taiwan as a threat; and could potentially be a staging point for additional ‘investments’ in the other locations within the Batanes Group of Islands.”

Ong, however, sees a scenario of Duterte granting the Chinese the nod to establish a formal military base on Fuga as unlikely, given that the Philippine Constitution does not allow for the establishment of foreign military bases in the country.

“I don't think the Filipinos will welcome Chinese troops in our soil given the existing dispute in the West Philippine Sea. The Chinese prefer to establish commercial investments, which can potentially be used as subterfuge for security or military activities,” Ong said.

Rick Fisher, Senior Fellow at the International Assessment and Strategy Center in the U.S., told Asia Sentinel that while Fuga Island is well within artillery range from Luzon, its location at the mouth of the Luzon/Bashi Strait and within an area of strategic concern for Taiwan, makes preventing this Chinese investment in the interest of Washington and its democratic allies. 

“Inasmuch as all Chinese ‘smart city’ providers are fully integrated into the Chinese intelligence-industrial-complex, any Chinese smart city complex on Fuga Island will automatically be open for exploitation by the Chinese government and People's Liberation Army controlled intelligence organs,” Fisher said.

“That China would seek to turn Fuga Island into an actual military base is not an unrealistic concern: China has proven its willingness to use ‘debt trap’ tactics to obtain control of facilities that could lead to military access and sadly the Philippines is very vulnerable to such pressures,” he added.

James Holmes, a professor at the US’s Naval War College, said that while Fuga Island doesn’t measure up well in defensibility or the availability of logistical support, it measures up much better than some of China's other South China Sea islands.

“Beijing has shown it is willing to invest heavily in these sites, and the location certainly looks great from China's standpoint,” Holmes said. “It helps China turn Taiwan's southern flank and would also give the PLA a base in the first island chain, which Chinese strategists refer to as a ‘metal chain’ binding China's access to the Western Pacific.”

This article is among the stories we choose to make widely available. If you wish to get the full Asia Sentinel experience and access more exclusive content, please do subscribe to us.