Law as Geopolitical Instrument
EU Conditionality, Chinese Contractual Power, and Philippine Strategic Autonomy in Foreign Direct Investment
Abstract
This paper investigates the relationship between foreign direct investment (FDI) and its impact on the strategic autonomy of the Philippines. The research advocates for FDI to be considered holistically rather than only as economic discourse. The legal mechanisms utilised in the FDI process act as a key consideration when considering the geopolitical influence of FDI. The research uses a New Legal Realist approach to analyse EU regulatory conditionalities in comparison to Chinese contractual structures to investigate the impact of these upon Philippines strategic autonomy without impacting sovereignty.
The research utilises primarily legal instruments, policy documentation and case studies such as the EU Global Gateway and Chinese led mining projects in the Philippines to show that both foreign investment approaches from the EU and China limit domestic policy formation in the Philippines. The EU investment primarily shapes governance through gradual regulatory alignment and ESG conditionalities, whilst the Chinese approach constrains the Philippine party contractually, creating operational dependence.
The research finds that strategic autonomy is not eroded by a direct loss of sovereignty, but rather through legal and institutional limitations which reconfigure domestic decision making. The research shows that FDI is an infrastructural form of geopolitical power, projected through law, rather than relying solely upon market exchange.
References
Acemoglu, D., & Robinson, J. A. (2012). Why nations fail: The origins of power, prosperity, and poverty. Crown Publishing.
Arceñas, A. (2017). Natural resource management and federalism in the Philippines. University of the Philippines Center for Integrative and Development Studies (UP CIDS) Policy Paper. https://cids.up.edu.ph/wp-content/uploads/2022/03/ppj-16-17-arcenas-2017.pdf
Asian Development Bank. (2023). Reinvigorating financing approaches for sustainable and resilient infrastructure in ASEAN+3. https://www.adb.org/sites/default/files/publication/879411/financing-sustainable-resilient-infrastructure-asean3.pdf
Bangko Sentral ng Pilipinas. (2026). Republic of the Philippines: Toward a More Inclusive, Resilient, and Sustainable Economy / investment relations report.
Becker, P. (2024). Conditionality as an instrument of European governance – Cases, characteristics and types. Journal of Common Market Studies, 63(2), 402–419. https://doi.org/10.1111/jcms.13580
Blauberger, M., & van Hüllen, V. (2020). Conditionality of EU funds: An instrument to enforce EU fundamental values? Journal of European Integration, 43(1), 1–16. https://doi.org/10.1080/07036337.2019.1708337
Bradford, A. (2019). The Brussels effect: How the European Union rules the world. Oxford University Press.
Brattberg, E. (2021, March 8). The EU’s strategic autonomy trap. Carnegie Endowment for International Peace. https://carnegieendowment.org/2021/03/08/eu-s-strategic-autonomy-trap-pub-83955
Brautigam, D. (2009). The dragon’s gift: The real story of China in Africa. Oxford University Press.
Broberg, M., & Holdgaard, R. (2015). Demarcating the Union’s development cooperation policy after Lisbon: Commission v. Council (Philippines PCFA). Common Market Law Review, 52(2), 547–567.
Bunnak, P., Song, N., Chen, X., & Thomson, R. (2024). A governance perspective on China’s Belt and Road Initiative: A case study of the Sino-Thai railway project. Journal of Asian Public Policy, 19(2), 547–566. https://doi.org/10.1080/17516234.2024.2386719
Camba, A. (2015). From colonialism to neoliberalism: Critical reflections on Philippine mining in the “long twentieth century”. The Extractive Industries and Society, 2(4), 551–563.
Camba, A. (2017b). Inter-state relations and state capacity: The rise and fall of Chinese foreign direct investment in the Philippines. Humanities and Social Sciences Communications, 3, Article 41. https://doi.org/10.1057/s41599-017-0033-0
Camba, A. A. (2015). Philippine mining capitalism: The changing terrains of struggle in the neoliberal mining regime. ASEAS – Austrian Journal of South-East Asian Studies, 8(1), 31–52.
Camba, A. A. (2017a). The Direction, Patterns, and Practices of Chinese Investments in Philippine Mining. In T. D. P. S. (Ed.), In China’s Backyard: Policies and Politics of Chinese Resource Investments in Southeast Asia (pp. 129–153). Singapore: ISEAS–Yusof Ishak Institute.
Chen, M. (2021). Infrastructure finance, late development, and China’s reshaping of international credit governance. European Journal of International Relations, 27(3), 830–857.
Crawford, J. (2012). Brownlie’s principles of public international law. Oxford, United Kingdom: Oxford University Press.
Cust, J., & Harding, T. (2020). Institutions and the location of oil exploration. Journal of Development Economics, 146, 102506.
Custer, S., Burgess, B., Solis, J. A., Sritharan, N., & Mathew, D. (2024). Beijing’s big bet on the Philippines: Decoding two decades of China’s financing for development. AidData at William & Mary. https://docs.aiddata.org/reports/beijings-big-bet-on-the-philippines/Beijings_Big_Bet_on_the_Philippines.pdf
Custer, S., Dreher, A., Elston, T. B., Fuchs, A., Ghose, S., Lin, J., Malik, A., Parks, B. C., Russell, B., Solomon, K., Strange, A., Tierney, M. J., Walsh, K., Zaleski, L., & Zhang, S. (2021).
Damro, C. (2012). Market power Europe. Journal of European Public Policy, 19(5), 682–699. https://doi.org/10.1080/13501763.2011.646779
Dioniso, G. A., & Katigbak, J. J. P. (2025). The successes and setbacks of BRI in Southeast Asia: A focus on the Philippines [Policy brief]. Australian National University Philippines Institute. https://philippinesinstitute.anu.edu.au/research/successes-and-setbacks-bri-southeast-asia-focus-philippines
DOF Philippines. (2023). *PHL-China bilateral financing agreements*. https://www.dof.gov.ph/phl-china-ink-bilateral-financing-agreements-and-documents-during-marcos-jr-state-visit/
Dolzer, R., & Schreuer, C. (2012). Principles of international investment law (2nd ed.). Oxford University Press.
Dreher, A. (2006). IMF and economic growth: The effects of programs, loans, and compliance with conditionality. World Development, 34(5), 769–788.
European Commission. (2019). *General Conditions Applicable to European Union-Financed Grant Contracts*. Annex II, Article 1.5. https://www.eeas.europa.eu/sites/default/files/e3h2_gencond_en_0.pdf
European Commission. (2023). Proposal for a regulation of the European Parliament and of the Council establishing a framework for ensuring a secure and sustainable supply of critical raw materials (Critical Raw Materials Act). https://commission.europa.eu/strategy-and-policy/priorities-2019-2024/european-green-deal/critical-raw-materials_enn
European Commission. (n.d.). Philippines. Directorate-General for International Partnerships. https://international-partnerships.ec.europa.eu/countries/philippines_en
European External Action Service. (2018). The European Union and the Philippines. https://www.eeas.europa.eu/node/40495_en
European External Action Service. (2025). EU–Philippines reaffirm partnership on good governance, green transition, digital economy and Mindanao. https://www.eeas.europa.eu/delegations/philippines/eu-%E2%80%93-philippines-reaffirm-partnership-good-governance-green-transition-digital-economy-and-mindanao_en
European External Action Service. (2025, May 15). EU–Philippines partnership: Call for proposals for grant facilities extended until 19 May. https://www.eeas.europa.eu/delegations/philippines/eu-philippines-partnership-call-proposals-grant-facilities-extended-until-19-may_en
European Investment Bank. (2021). EIB climate bank roadmap 2021–2025. https://www.eib.org/en/publications/the-eib-group-climate-bank-roadmap
European Parliament. (2022). Future of EU international investment policy (P9_TA(2022)0268). https://www.europarl.europa.eu/doceo/document/TA-9-2022-0268_EN.html
European Union. (2018). Regulation (EU, Euratom) 2018/1046 of the European Parliament and of the Council of 18 July 2018 on the financial rules applicable to the general budget of the Union. https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32018R1046
European Union. (2024). Regulation (EU) 2024/1252 of the European Parliament and of the Council of 11 April 2024 establishing a framework for ensuring a secure and sustainable supply of critical raw materials. https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32024R1252
Extractive Industries Transparency Initiative. (2024). Using transparency to benefit from the EU'smineral partnerships. https://eiti.org/blog-post/using-transparency-benefit-eus-mineral-partnerships
Forough, M., & Fünfgeld, A. (2025). The empty signifier of “connectivity”: How infrastructure reorders the world. Review of International Political Economy, 32(5), 1593–1617. https://doi.org/10.1080/09692290.2025.2504457
Gao, Henry S., The EU-China Comprehensive Agreement on Investment: Strategic Opportunity Meets Strategic Autonomy (May 1, 2021). Singapore Management University School of Law Research Paper Forthcoming, ASIAN YEARBOOK OF INTERNATIONAL ECONOMIC LAW (2022) 2022: 47–70, Available at SSRN: http://dx.doi.org/10.2139/ssrn.3843434
Garriga, M. N. U. (2020). The Philippines in China’s BRI: The road so far (UP CIDS Policy Brief 2020–12). University of the Philippines Center for Integrative and Development Studies. https://cids.up.edu.ph/wp-content/uploads/2022/02/UP-CIDS-Policy-brief-2020-12.pdf
Gelpern, A., Horn, S., Morris, S., Parks, B., & Trebesch, C. (2021). How China Lends: A Rare Look into 100 Debt Contracts with Foreign Governments. Peterson Institute for International Economics, Kiel Institute for the World Economy, Center for Global Development, and AidData at William & Mary.
Gereffi, G., Humphrey, J., & Sturgeon, T. (2006). The governance of global value chains. Review of International Political Economy, 12(1), 78–104.
Government of the People’s Republic of China & Government of the Republic of the Philippines. (2018). Memorandum of understanding on jointly promoting trade cooperation. https://elibrary.judiciary.gov.ph/thebookshelf/showdocs/35/91785
Government of the People’s Republic of China. (2023, January 5). Joint statement between the People’s Republic of China and the Republic of the Philippines. https://www.mfa.gov.cn/eng/zy/gb/202405/t20240531_11367479.html
Halliday, T. C., & Carruthers, B. G. (2007). The recursivity of law: Global norm making and national lawmaking in the globalization of corporate insolvency regimes. American Journal of Sociology, 112(4), 1135–1202.
Heldt, E. C. (2023). Europe’s Global Gateway: A New Instrument of Geopolitics. Politics and Governance, 11(4), 223–234.
Hira, A. (2025). The geopolitics of the green transition and critical strategic minerals. International Journal, 80(2). https://doi.org/10.1177/00207020251332595
Hodge, G. A., Greve, C., & Boardman, A. E. (2017). Public–private partnerships: The way they were and what they can become. Australian Journal of Public Administration, 76(3), 273–282. https://doi.org/10.1111/1467-8500.12260
Horn, S., Reinhart, C. M., & Trebesch, C. (2021). China’s overseas lending. Journal of International Economics, 133, 103539. https://doi.org/10.1016/j.jinteco.2021.103539
IE Center for the Governance of Change. (2025). Foreign direct investment and EU competitiveness. IE University. https://static.ie.edu/CGC/CGC_IE_FDI_and_EU_Competitiveness_policy_paper.pdf
Initiative for Responsible Mining Assurance. (2019). IRMA standard for responsible mining: Guidance document (Version 1.0). https://minsus.net/mineria-sustentable/IRMA/IRMA-Standard-Guidance.pdf
International Centre for Settlement of Investment Disputes. (1965). Convention on the settlement of investment disputes between states and nationals of other states (ICSID Convention). World Bank Group. https://icsid.worldbank.org/sites/default/files/ICSID_Convention_EN.pdf
Ionașcu, A. E., Hordofa, D. F., Dănilă, A., Spătariu, E. C., Burcă (Olteanu), A. L., & Horga, M. G. (2025). ESG Performance in the EU and ASEAN: The Roles of Institutional Governance, Economic Structure, and Global Integration. Sustainability, 17(17), 7997. https://doi.org/10.3390/su17177997
Jensen, N. M. (2003). Democratic governance and multinational corporations: Political regimes and inflows of foreign direct investment. International Organisation, 57(3), 587–616. https://doi.org/10.1017/S0020818303573040
Jensen, N. M. (2008). Political risk, democratic institutions, and foreign direct investment. Journal of Politics, 70(4), 1040–1052.
Kentikelenis, A. E., Stubbs, T. H., & King, L. P. (2016). IMF conditionality and development policy space, 1985–2014. Review of International Political Economy, 23(4), 543–582. https://doi.org/10.1080/09692290.2016.1174953
Lavenex, S., & Schimmelfennig, F. (2009). EU rules beyond EU borders: Theorizing external governance in European politics. Journal of European Public Policy, 16(6), 791-812. https://doi.org/10.1080/13501760903087696
Li, J. (2022). Comparison of foreign investment reviews: China vs EU. Atlantis Press. https://doi.org/10.2991/aebmr.k.220307.435
Luigi Lannutti, 2024. "The role of Environmental, Social and Governance (ESG) regulations in attracting Foreign Direct Investment (FDI)," Proceedings of International Academic Conferences 14216212, International Institute of Social and Economic Sciences.
Maiti, D., & Mukherjee, A. (2013). "Governance, foreign direct investment and domestic welfare." *International Review of Economics & Finance*, 27, 406-415. https://www.sciencedirect.com/science/article/abs/pii/S1059056012001335
Månberger, A., & Stenqvist, B. (2018). Global metal flows in the renewable energy transition: Exploring the effects of substitutes, technological mix and development. Energy Policy, 119, 226–241. https://doi.org/10.1016/j.enpol.2018.04.056
Manhit, V. A. C. (2025).Driving critical mineral momentum for the green pivot. BusinessWorld. https://www.bworldonline.com/opinion/2025/06/25/681082/driving-critical-mineral-momentum-for-the-green-pivot/
Maybee, B., Lilford, E., & Hitch, M. (2023). Environmental, social and governance (ESG) risk, uncertainty, and the mining life cycle. The Extractive Industries and Society, 16, 101244. https://doi.org/10.1016/j.exis.2023.101244
Mudd, G. M., & Jowitt, S. M. (2018). Global resource assessments of primary metals: An optimistic reality check. Natural Resources Research, 27(2), 1–12.
Namahoro, J. P., Qiaosheng, W., Wang, D., & Na, Z. (2025). Foreign direct investment can enhance the development of clean energy in countries with critical materials. Communications Earth & Environment, 6, 348. https://doi.org/10.1038/s43247-025-02319-9
Narayan, P. K., Rath, B. N., & Syarifuddin, F. (2022). Understanding the role of trade agreements in Indonesia’s FDI. Journal of Asian Economics, 82, Article 101532. https://doi.org/10.1016/j.asieco.2022.101532
Observatory of Economic Complexity. (2024). *Nickel Ore in Philippines*. https://oec.world/en/profile/bilateral-product/nickel-ore/reporter/phl
OECD. (2018). Getting infrastructure right: A framework for better governance. OECD Publishing. https://doi.org/10.1787/9789264272453-en
Ogsimer, L. T. (2021). International construction arbitration in the Philippines: The curious case of China Chang. University of the Philippines College of Law Journal. https://law.upd.edu.ph/wp-content/uploads/2023/04/02-Case-of-China-Chang-LT-Ogsimer-1.pdf
Palmer, E. (2023). Roads and rules: What does infrastructure reveal about international law? Asian Journal of International Law, 14(1), 180–207. https://doi.org/10.1017/S2044251323000413
Philippine Institute for Development Studies. (2026). Institutional weaknesses, governance risks could weigh on PH economic momentum—PIDS study warns (Development Research News, Vol. 44, No. 1). https://www.pids.gov.ph/publication/development-research-news/institutional-weaknesses-governance-risks-could-weigh-on-ph-economic-momentum-pids-study-warns
Philippine Nickel Industry Association (2025). Nickel miners see ore export ban hurting PHL standing as supplier - Philippine Nickel Industry Association. Retrieved April 24, 2026, from Philippine Nickel Industry Association website: https://www.philippinenickel.org/news-and-updates/nickel-miners-see-ore-export-ban-hurting-phl-standing-as-supplier/
Philippine Senate. (2025). *Committee hearings on Senate Bill No. 2520: Mineral Resources Development Act of 2025* [Legislative transcripts]. 19th Congress, 1st Regular Session. Senate Committee on Energy and Natural Resources.
Poutala-Sinkkonen, M., & Mattlin, M. (2022). EU strategic autonomy and the perceived challenge of China. Finnish Institute of International Affairs. https://www.fiia.fi/wp-content/uploads/2022/04/poutalasinkkonenmattlin-2022.pdf
Projekt-Consult GmbH. (2025). Critical Raw Materials Scoping Study and Programme for EU Action: Philippines. https://www.projekt-consult.de/projects/Projekt_Consult_Project_2018_4097819.html
Republic of the Philippines Department of Finance. (2023, October 25). Global Gateway Forum: EU and Philippines sign €60 million Green Economy Programme paving the way to a sustainable future. https://www.dof.gov.ph/global-gateway-forum-eu-and-philippines-sign-e60-million-green-economy-program-paving-the-way-to-a-sustainable-future/
Republic of the Philippines. (2023). Republic Act No. 11966: Public-Private Partnership (PPP) Code of the Philippines. https://lawphil.net/statutes/repacts/ra2023/ra_11966_2023.html
Reuters. (2011, September 6). *China Jinchuan to invest in two Philippine laterite mines*. https://www.reuters.com/article/markets/china-jinchuan-to-invest-in-two-philippine-laterite-mines-idUSL3E7K519S/
Rodrik, D. (2008). Second-best institutions. American Economic Review, 98(2), 100–104. https://doi.org/10.1257/aer.98.2.100
Ruggie, J. G. (2013). Just business: Multinational corporations and human rights. Harvard University Press.
Sampson, M., & Theuns, T. J. H. (2023). Comparing Chinese and EU trade agreement strategies: Lessons for normative power Europe? Journal of European Integration, 39(1). https://doi.org/10.1177/00471178231153554
Sauvant, K. P., & Sachs, L. E. (Eds.). (2009). The effect of treaties on foreign direct investment: Bilateral investment treaties, double taxation treaties, and investment flows. Oxford University Press.
Schill, S. W. (2017). Reforming Investor–State Dispute Settlement: A (Comparative and International) Constitutional Law Framework. Journal of International Economic Law, 20(3), 649-672. https://doi.org/10.1093/jiel/jgx023
Shaffer, Gregory, Legal Realism and International Law (August 13, 2018). IN: International Legal Theory: Foundations and Frontiers, Jeffrey L Dunoff and Mark A Pollack (eds), (Cambridge University Press, 2021, Forthcoming), UC Irvine School of Law Research Paper No. 2018-55, Available at SSRN: https://ssrn.com/abstract=3230401
Silga, J. (2025). From political to migration-based conditionality in EU development policy: “Plus ça change, plus c’est la même chose.” In H. Eklund (Ed.), Colonialism and the EU legal order. Cambridge University Press. https://www.cambridge.org/core/books/colonialism-and-the-eu-legal-order/89790751D3374B55BA5A414551115336
Simmons, B. A. (2009). Mobilising for human rights: International law in domestic politics. Cambridge University Press.
Skadden, Arps, Slate, Meagher & Flom LLP. (2019, July). European Union adopts regulation on foreign direct investment screening. https://www.skadden.com/-/media/files/publications/2019/07/europeanunionadoptsregulationonforeigndirectinvest.pdf
Tang, X. (2021). Coevolutionary pragmatism: Approaches and impacts of China-Africa economic cooperation. Cambridge University Press.
Tracking Chinese development finance: An application of AidData’s TUFF 2.0 methodology. AidData, William & Mary. https://docs.aiddata.org/ad4/pdfs/AidData_TUFF_methodology_2_0.pdf
Trubek, D. M., & Galanter, M. (1974). Scholars in self-estrangement: Some reflections on the crisis in law and development studies in the United States. Wisconsin Law Review, 1062–1102.
United Nations Commission on International Trade Law. (2021). UNCITRAL arbitration rules (as revised in 2021). United Nations. https://uncitral.un.org/en/texts/arbitration/contractualtexts/arbitration
Copyright (c) 2026 Journal Of Global Strategic Studies
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
Copyright Notice
The Authors submitting a manuscript do so on the understanding that if accepted for publication, copyright of the article shall be assigned to Journal of Global Strategic Studies, Department of Master of International Relations, Faculty of Social and Political Science, Universitas Jenderal Achmad Yani as publisher of the journal.
Copyright encompasses rights to reproduce and deliver the article in all form and media, including reprints, photographs, microfilms, and any other similar reproductions, as well as translations.
Journal of Global Strategic Studies, Department of Master of International Relations, Faculty of Social and Political Science, Universitas Jenderal Achmad Yani and the Editors make every effort to ensure that no wrong or misleading data, opinions or statements be published in the journal. In any way, the contents of the articles and advertisements published in Journal of Global Strategic Studies are the sole and exclusive responsibility of their respective authors
