China remains ready to help finance Philippine infrastructure projects with a $1.8-billion fund despite the cancellation of one major telecommunications deal two years ago due to a bribery scandal, the Chinese ambassador said yesterday.

The Chinese development fund could be used by the Philippines to finance mutually agreed infrastructure projects to bolster its economy amid economic hard times, Ambassador Liu Jianchao told reporters.

“This is one of the assistance that China is willing to provide” to help the Philippines “weather the financial crisis,” Liu said.

Any loan from the fund must be repaid within 15 years with an annual interest of 3 percent, but no repayments have to be made in the first five years.

The fund would have been used to finance a $330-million Philippine government deal with China’s ZTE Corp. to set up a nationwide broadband network, but President Arroyo canceled the deal in 2007 after allegations that she, her husband and a former elections chief benefited from huge kickbacks.

Mrs. Arroyo, her husband and the former elections chief have strongly denied any wrongdoing. Mrs. Arroyo’s spokesmen said then that opposition politicians raised the allegations to undermine her rule. ZTE has denied bribing anyone in the deal.

“I’m sure China and the Philippines will have projects in the future after this incident,” Liu said.

The scandal “really upset Chinese companies,” he said, but added his government had explained that the Philippines remained an attractive country for telecommunications, infrastructure and construction investments.

The Chinese fund has also been used to finance the rehabilitation of a railway connecting Manila to the Clark industrial zone to the north. The project began in 2004, Chinese Embassy officials said.

China has become a major trading partner and provider of development assistance to the Philippines since diplomatic ties were established in 1975.

In 2007, two-way trade reached a record high of nearly $31 billion, but it slowed last year and in the first four months of 2009 due to the global economic crisis, Liu said.

A free-trade deal between China and the 10-member Association of Southeast Asian Nations, which includes the Philippines, would slash tariffs on more than 7,000 products and was expected to bolster trade, he said.

China is a major trading partner of Asean, along with Japan and South Korea. AP