The Philippines under the Marcos Jr. administration strengthened its ties with the US amid heightened tensions with China over disputed South China Sea territories, according to the think tank Capital Economics.
In a Jan. 17 report, Capital Economics said it expects incoming US President Donald J. Trump to possibly widen the so-called “fracturing” of the global economy, which has divided countries into two camps, each led by the US and China.
In the case of the Philippines, which has been historically leaning towards the US rather than China, Capital Economics noted that relations with its former colonizer are expected to be stronger this year.
The country’s preference to align with the US was strongest—beyond the 80-percent level—during the Covid-19 pandemic (2021), which began in Wuhan, China. Last year, it remained strong at around the same degree.
Other ASEAN countries like Singapore and Vietnam also prefer to align with the US over China, a choice which, according to Capital Economics, has not shifted.
“The one country in Southeast Asia that we think has moved is the Philippines—closed to the US as a response to China’s efforts to extend its power in the South China Sea,” Capital Economics pointed out.
Capital Economics said China’s share of the fractured global economy shrank last year, widening the gap between its economic bloc or alliance and that of the United States and its allies.
At the beginning of 2025, China and its geopolitical allies accounted for less than one-third of the size of the US-led bloc.
According to the report, “this fall was in part the result of a loss of support for China” in some countries, following changes of government. It was also partly because the US experienced an economic boost in dollar terms.
However, despite a weaker footing in terms of economic influence, China continues to be the world’s manufacturing powerhouse, producing more than the US and its closest allies combined.
Trump 2.0-led US
The US President-elect Trump will be inaugurated on Monday, Jan. 20, which will officially mark his comeback to the White House and his reentry into the political playing field.
Unlike the current Marcos Jr. admin, its predecessor—the Duterte administration—had closer ties with China as the US was a critic of the bloody war on drugs.
While Trump’s return has not changed the bloc compositions, his re-election “may prove to be the most consequential development of the past year for the path of global fracturing.”
Trump’s return to office “raises questions about the chances of a significant realignment over the years ahead,” and there are also doubts about whether the economic divide between camps led by the strategic rivals will still make sense in the future.
By composition, the China bloc covers more land and has a slightly larger population than the US bloc, but reports showed that in 2024 it generated just 22 percent of global gross domestic product (GDP), compared to 71 percent from the US bloc.