MANILA, Philippines – Visiting US Undersecretary for Economic Affairs Jacob Helberg on Monday, May 18, defended the planned industrial hub in New Clark City under the US-led Pax Silica initiative, while sharply criticizing China’s dominance in critical technology supply chains, calling it a “hostage chain.”

Speaking at the site of the planned Economic Security Zone (ESZ) in New Clark City, Helberg said the United States and its partners were seeking to build an alternative supply chain network for artificial intelligence and semiconductor-related industries.

“When ninety percent of a critical input comes from one country, you do not have a supply chain. You have a hostage chain,” Helberg said in prepared remarks delivered in Luzon.

Helberg cited instances where “orders placed in good faith are cancelled,” and where “a single notice from an office in a far-away capital can shut down a metal the whole industry depends on,” referencing China’s controls on rare earth exports and critical minerals.

Helberg said the project seeks to combine “the predictability and certainty of American law to the speed and scale of Asia.”

However, details surrounding the “joint governance” structure of the zone remain unresolved. “The two governments intend to identify appropriate frameworks for the long-term development of the Zone that facilitate sovereign alignment and shared upside as it scales,” a US Embassy fact sheet wrote.

In a PTV report, Joshua Bingcang, CEO of the BCDA, said the Philippines rejected US proposals that would have placed the zone under US law or granted it special legal status such as diplomatic immunities.

“That’s [the US’] request but we did not agree to that. There are two laws that will govern the transaction here. The Investors’ Lease Act and then the BCDA (Bases Conversion and Development Authority) law which was confirmed by the Department of Justice. So it will be treated as a regular business development contract, no special arrangement to be accorded to the US government,” Bingcang said.

A The Straits Times report also quoted Helberg as saying negotiations were still ongoing and that he did not want “to get ahead of those conversations,” indicating that agreements on the zone’s final structure have yet to be completed. He also said that there is a two-year window for negotiations for the deal’s final terms.

The Philippines joined Pax Silica in April.

Philippine officials have framed the initiative as an opportunity to attract high-value technology industries, data centers, semiconductor-related manufacturing, and critical mineral investments into the country, and move up the value chain.

Department of Trade and Industry Undersecretary Perry Rodolfo said, “With Pax Silica, it opens another platform for us. It’s not just green minerals, green metals [used for sustainability technology]. Now we can aspire for tech minerals, green tech minerals… also useful for the AI ecosystem.”

He added that the initiative looks to boost the ability of the Philippines to process minerals, and not just export them: “If before we only exported minerals, unprocessed, now the opportunity is for us to be able to process the said minerals.”

Critics, however, have raised concerns about foreign control, environmental risks tied to mining, and the possible integration of industrial infrastructure into broader US strategic and military objectives.

Rodolfo rejected concerns that facilities under Pax Silica would be used for war production capabilities: “This is not for those materials such as the manufacture of bullets or missiles… This isn’t it. This is really to secure the supply chain for your AI ecosystem.”

Increasingly, however, AI systems and many technologies related to advanced computing have found military applications such as those used for military targeting or automated drones. – Rappler.com