MANILA. President Gloria Macapagal Arroyo informed Chinese President Hu Jintao that she has decided to cancel the Philippine government's $329.48-million National Broadband Network (NBN) project with Zhong Xing Telecommunications Equipment (ZTE) Corp.

A statement released by Malacañang last night, quoted Press Secretary Ignacio Bunye as saying that President Arroyo "clearly presented her decision to President Hu who understood and accepted the judgment of the Chief Executive."

"The President explained the difficult decision not to continue with the NBN contract and the President counted on the good relations between our two countries for understanding. We are gratified that President Hu offered understanding when he said that our relationship is in very good shape and the Philippines has been a great ally," Bunye said.

On September 22, Mrs Arroyo ordered the indefinite suspension of the NBN project with ZTE, along with the $460-million Cyber Education Project. Both projects were supposed to be funded by loans from the Chinese government.

President Arroyo made the order days after her husband, Jose Miguel "Mike" Arroyo, was accused of telling Speaker Jose De Venecia Jr's son to back off from the NBN project.

In China, Bunye said that before Mrs Arroyo told Hu of her decision, she first described to the Chinese president the good relationship between the Philippines and China "based on respect, consultation and mutual benefit." President Arroyo afterwards "ably presented the large picture of the NBN issue much to the satisfaction of President Hu."

"And the Chinese President offered understanding for the decision taken by President Arroyo," Bunye said.