This spring, after 47 years as a local politician, Manuel Mamba for the first time found himself at the center of a national firestorm.

Mamba is governor of the Province of Cagayan, a sleepy corner of the Philippines’ remote northeast. He found his district the subject of heightened interest in April when President Ferdinand Marcos Jr. announced four new military sites would be expanded for use by the U.S.

Manila and Washington are allies, and the move to bolster the U.S. military’s presence in the Philippines came amid friction in the disputed South China Sea and escalating fear over the possibility that China could invade Taiwan.

Two of the chosen sites are in Cagayan. The Camilo Osias naval base, in Santa Ana, and the nearby Lallo International Airport are less than 500 km from the southern tip of Taiwan, giving the U.S. military a valuable staging ground in case of a conflict.

Mamba, however, made headlines by opposing the plans, which he described as “a magnet of attack.” The plans also clashed with efforts by the Cagayan Economic Zone Authority (CEZA) to bring economic development to Cagayan by courting investment from China, mostly in the form of casinos and resorts catering to Chinese.

He had long held a vision of turning Cagayan into a “gateway to Northeast Asia” but now fears he is watching those dreams evaporate as the Philippines is drawn into the competition between China and the U.S. for dominance in Asia.

The Philippines is among several Asian countries having to balance ties with the two great powers. And with China reacting angrily to countries that engage in security cooperation with the U.S., that choice is drawing apparent reprisals.

Over the weekend, the Philippine Coast Guard reported that China Coast Guard vessels used water cannons to blast three Philippine boats, one of several skirmishes this year.

Throughout his career, Mamba had grown accustomed to dealing with minor corruption scandals, family feuds and other kerfuffles, but this was something new. “I’m a local politician,” Mamba told Nikkei Asia at his residence just outside Tuguegarao, the provincial capital. “But the national interest [is] against the local interest of my province.”

The winds changed when Marcos took office in June 2022 and signaled a decisive diplomatic turn toward closer cooperation with the U.S. That was a departure from the approach of his predecessor, Rodrigo Duterte, who favored ties with China.

Cagayan featured prominently in Duterte’s vision of brisk commercial ties with Beijing. While Duterte was in office, CEZA announced more than $3 billion in planned Chinese investment through the Belt and Road Initiative, including a “smart city” on offshore Fuga Island. Charter operator Royal Air ran twice-weekly flights from Macau to Lallo, where buses whisked visitors to Santa Ana’s casino resorts.

The new defense agreement, however, has sapped Chinese enthusiasm to invest in the province, Mamba said, describing the plans for expanded U.S. military presence in the area as “a sword of Damocles.” He, however, has not indicated that he will take any specific actions against the bases.

“Some of the strategic minds in this government are saying that we can’t just ask for security assistance in the U.S. They need to provide economic assistance as well,” said Aries Arugay, a visiting senior fellow at the ISEAS-Yusof Ishak Institute.

Arugay argues that Manila cannot expect to stably rely on the U.S. for defense and China for the economy, saying, “In a heightened strategic competition, that divide is untenable.”

Commercial streets in Santa Ana bear the scars of the unrewarded bet on China. The number of tourists has still not recovered following the coronavirus pandemic, and the charter flights stopped due to low demand and concerns over illegal immigration, according to an airport staffer. Storefronts with Chinese signage appear drab and dilapidated.

The Belt and Road projects have not materialized, either. The Fuga project was quietly killed by the defense department due to security concerns raised by the Armed Forces of the Philippines. Many of CEZA’s other China-funded endeavors, such as a satellite city, 36-hole golf course and $500 million textile hub, have also stalled.

The Chinese-owned Cagayan Holiday and Leisure Resort, a major employer in Santa Ana, laid off more than half its staff during the pandemic, said Jaypee Tapaoan, a receptionist at the resort.

While the U.S. military might buttress the Philippines’ national security, Cagayan is searching for an economic alternative to Chinese investment. “The people of Cagayan will have no more jobs,” Tapaoan said. “I won’t have a job.”

The tourists that do come are drawn in part to the area’s languid atmosphere. Children and teens gather around the main pier at sunset, drinking coconut juice from street stalls as gusts of salty air blow in off the coast.

But the agreement with the U.S. is changing the tenor of life. In April, residents of Palaui Island, just off the coast of Santa Ana, woke up to the sound of gunfire and ran to the nearest shelter.

“We were not informed. We thought, ‘What is happening? Is there a war already here?'” said Minerva Caampued, a pastoral worker from the Saint Anthony Parish in Santa Ana.

The sounds turned out to be from a live-fire drill by the Philippine and U.S. militaries, more of which could be held as growing numbers of U.S. troops pass through Santa Ana.

Despite the changes on the ground, China has not given up on building ties with the area. It has courted Mamba, who visited China in May to give a keynote speech at an ASEAN conference and sign a sister city agreement between Huzhou and Tuguegarao.

The Philippines continues to count the number of forgotten projects. The Philippines recently withdrew a request for Chinese development assistance for a railway, and a senator said at least six other China-funded projects have been delayed.

“Under six years of the Duterte administration, we bent over backward and carried out this defeatist approach to China,” said Arugay. “We have nothing to show for it.”

Nikkei Asia has contacted the Chinese government seeking comment.

CEZA, which operates separately from the provincial government, is going in a new direction. In May, Marcos Jr. appointed Katrina Ponce Enrile, the daughter of Marcos advisor Juan Ponce Enrile and a bitter political rival of Mamba, to its top position.

Enrile told Nikkei Asia the China-funded pledges of CEZA’s past are defunct. “The Chinese have promised,” she said, “but they have never delivered.”

Local politicians are therefore left seeking alternatives. Enrile said a larger U.S. military presence in Cagayan could create opportunities for industries related to military technology, such as drone, munition and medicine manufacturing.

Enrile wants to develop a port near Santa Ana, while Mamba is pushing to dredge and reopen a former port in nearby Aparri, at the mouth of the Cagayan River.

Chinese companies are excavating construction sand from the Aparri port and sending it to China, where there’s a shortage. Mamba says he wants the same companies to develop the port through a public-private partnership.

But fishermen in Aparri say the dredgers have eroded the banks of the Cagayan River and wiped out the once-thriving fisheries at its mouth. “We had a good life,” said fisherman Rashep Valencia. “We had something to eat every day.” Now, they’re lucky to make 700 pesos, about $13, per day.

Fishermen in Aparri are hopeful the presence of the U.S. military will spur Chinese vessels to leave. But the defense agreement brings new challenges, too.

In August, on the last weekend of the fishing season, the Philippine military abruptly told fishermen to stay home as there would be live-fire exercises. Desperate for their day’s catch, most fishermen went out anyway.

Manuel Catral, the priest at Aparri’s San Telmo Parish, said whatever changes come to the area, he is not confident that those in power are looking out for the area’s inhabitants.

“It’s not China, the U.S. or even the Philippines,” Catral said. “It’s the poor people who will suffer.”