World Bank: Fix your China ties

19

Without categorically saying so, the World Bank’s most recent (August 2014) economic update on the Philippines pointed out that China has such a crucial role in Philippine economic development that we should develop a healthy relationship with that superpower.

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That can be the only explanation why the World Bank update, for the first time in all its many analysis of the country since the 1970s, devoted several pages to the role of another country in our development. This was in its section entitled, “Special Focus: China’s slowdown and rebalancing — How the Philippines can still benefit.”

Careful not to be seen meddling in our foreign affairs, the World Bank’s ostensible reason for discussing Philippine-China economic links was that after an unprecedented pace over the last three decades, “China’s economic growth has begun to slow down,” which would affect many countries including ours.

Only the obtuse or terribly uninformed, though, would not realize that the more important “slowdown” in the relations between China and the Philippines has been the result of our territorial dispute over the Spratly Islands and Scarborough Shoal, especially President Benigno Aquino’s move to file a case against China’s claims in an international court—the first such suit filed against it.

The World Bank’s analysis is the first I’ve read by an international agency on how important China’s economy is for the Philippines.

Two charts in the World Bank study emphasizing China-Philippine economic links

Two charts in the World Bank study emphasizing China-Philippine economic links

The study pointed out:

Accounting for just 1.3 percent of our exports between 1978 and 2000, China since 2002 has risen to become among our top five export markets, absorbing P6 billion or 12 percent of our total exports in 2013.

Our exports have shifted from low-value mineral fuels in 1995 to high-value electronic products, and now account for 50 percent of our total exports to China.

Our imports have similarly increased, by an average of 20 percent between 2001 and 2010, and in 2012 China became our second largest import market next to the US. The share of mineral fuels to total imports had reached a high of 91 percent between 1977 and 1978, but declined in recent years that last year, such imports accounted for just 10 percent. Our imports from China are mainly manufactured goods, machinery and transport equipment.

“China is fast becoming a major source of foreign tourists for the Philippines,” the World Bank study pointed out. “Tourist arrivals from China increased exponentially from 14,724 in 2000 to 243,137 in 2011. Beginning 2006, it has been one of the top tourism markets for the Philippines, along with Korea, the US, Japan and Australia.

The study’s only reference to our territorial dispute with China is in its discussion of the tourism industry:

“The latest data [May 2013] show that tourist arrivals from China accelerated by 108 percent, despite prevailing territorial disputes. This marked improvement was due to the expansion of flights between China and the Philippines, as well as increased cruise ship calls to the Philippines. The estimated amount of revenues from Chinese tourist arrivals is around $218 million in 2013.”

The only aspect of our relationship with China that is unimportant is its foreign direct investments (FDI), as well as OFW remittances from that country, which are both miniscule.

But we are missing out on the flow of Chinese capital abroad. The low level of Chinese FDI to the Philippines, the study emphasized, is “in contrast to other Asean countries, which have been receiving significant FDI from China.” The highest FDI from China was recorded at $216 million way back in 1998.

‘Between 2009 and 2012”, the study pointed out, “net FDI from China turned negative.” That is, Chinese capital left the country mostly under Aquino’s watch.

The study pointed out opportunities for the country in China in the coming years:

“As China rebalances toward consumption-led growth, the Philippines could expand its export portfolio to China from capital goods and parts to consumer goods. At present, Philippine exports to China are heavily concentrated on capital goods, and electronic parts and components. To take advantage of this opportunity, Philippine exports need to diversify into the production of final goods that will cater to China’s rising consumption requirements,” the World Bank study pointed out.

The World Bank, which seems to have typecast us as a labor-exporting country, even cited opportunities for Overseas Filipino Workers. “Likewise, in the medium term, China’s aging population could provide opportunities for professional and skilled Filipino workers,” it pointed out. “Both jobs in China and outsourced jobs in healthcare, education, information technology, financial services, can be highly demanded.”

What does the World Bank prescribe for us to take advantage of the Chinese market? “The Philippines needs to improve its competitiveness,” it says, and rattles off its usual prescription of lowering costs of business and power, lifting restrictions on foreign ownership etc, etc.

That is its diplomatic way of telling us: Guys, you better fix your ties with China. You just can’t ignore China, it’s a major trading partner.

I’m risking a cyber-mob going after me, since the current administration has successfully stoked the hate flames against China. The level of public discourse on the China issue has gone down to gutter language and racist taunting that modern societies do not undertake anymore. I was surprised that a well-educated classmate of mine from Ateneo has even started calling the Chinese the pejorative “intsik.” On the other side, in China’s much, much bigger social media, Filipinos are becoming hated villains.

Rational voices that try to call for open communications and negotiations with China are shouted down as “traitors” or “anti-Filipino.” I have never seen our level of diplomacy sink so low as it has in the past four years.

Nearly a fourth, or 25 million of Filipinos are poor, and living the most miserable lives. Their number will be growing every year since we do not have a population-control program. We need all the help we can extract from such an economic superpower as China.

Can we just let, as Deng Xiao Ping suggested to Marcos in the 1970s, future generations settle our territorial dispute, maybe when our country has become rich so that we can really buy state-of-the-art naval power to defend our claims, instead of begging the US and even Korea for hand-me-downs?

I don’t know how in a few short years, China has suddenly emerged as our enemy in the East when it was one of our strongest partners since its emergence from its communist past. In the past, we have enjoyed a healthy relationship with China even as we asserted our rights over our land and territories.

The richest Filipino, Henry Sy, now has billions of pesos in investments in three malls in China, and will soon be in the housing market there. Twenty-fifth richest Filipino (going by the Forbes’ listing) Carlos Chan’s Oishi snack foods are becoming ubiquitous in China’s main cities.

A senator had told me, providing data to prove his point, that somebody very influential in Aquino’s Cabinet has been deliberately aggravating our dispute with China over the Spratly islands in order to favor, in a convoluted way, the interests of an Indonesian-controlled firm.

The senator was so certain over his allegation that he even said that this Cabinet official has committed treason. “He should be shot by a firing squad,” he said passionately.

I really don’t know what to make of that claim.

There’s also that other, broader conspiracy theory: the Cabinet official is deliberately driving China away from us and toward Indonesia, home country of a conglomerate he had shepherded into our country.

tiglao.manilatimes@gmail.com
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19 Comments

  1. I’d rather loss the trading business partner which is gradually taking away my property. Sa figure na nasa itaas mas favor pa sa China yong graph, more import from China means more business given by the Phils. Mr. Tiglao really show his same preference with his former boss (Gloria) in giving favor to China.

    I really hate what CHINA is doing in our territory, its a total disrespect of our sovereignty and this action truely unacceptable. Sec. Albert Del Rosario, Mabuhay Po Kayo and for the President for defending OURS.

  2. Mike Tomelden on

    Ignorance causes chaos. In the main, most Pinoys lack tact. They wear their emotions on their sleeves. Let me rephrase that. Pinoys are children, basically, in as much as children haven’t learned how to act in civilized society, but who act out all the naked and embarassing whims and desires of their ids without thought of either propriety or consequence.

  3. Roldan Guerrero on

    Of all times, past and present regimes, we have the worst government, The word GUMI in the Japanese language which means thrash or BASURA in tagalog is the most appropriate word to describe this administration. I dont see anyone who is trusted in the executive department now, from top to bottom, they are all equally incompetent and are all MAGNA…….With my 15 yrs. of stay in Japan now, I can say that my dreams are all now fulfilled, sad to say it happened here in Japan and not in my country, the Philippines. Almost all raw materials Japan uses in the manufacture of products are imported, and the Phils. is one of its sources, yet this country can still pay labor in one of the highest rate in the world. The minimum wage law of Japan is 850 yen per hour, about 360php/hour…skilled workers get atleast 1300 yen per hour, about 560php/hour. Can the Philippines do this? YES…probably if people in government dont steal the peoples money!

  4. D naman natin pwd bsta isuko n lng mga islands na kinakamkam ng china para lng gumanda business tie natin sa kanilait must be two ways,cguro dapat paghatian n lng para wala gulo or mag give way cla kc mas malapit sa economic zone ng phl mga kini claim nla,ung mas malapit sa economic zone nla un ang kanila,dapat sumunod cla sa international law of the sea at wag cla mang bully.be fair to pilipino people,kht c tiglao dapat parehas lng pagsusulatt mo wag bias

  5. trillanes and del rosario tandem?

    any clue how much fdi for shabu making ph gets from china?

  6. I agree, we have to have a better relationship with China since China is second most powerful in World. Every countries are begging for China and not considering China as a threat but a business partner. If you will go to European countries and you are with chinese guy in queu in Immigration, they will stamped the passport of that chinese guy without doubt compare to Filipino which are more often interviewed first and verified the sponsors before allowing to visit or to tour in European countries. What I’m trying to say is, it is obvious that European governments gave leeway to Chinese people as a token of their support in boosting their economy and this I think is their agreement with China Government.

  7. Actually Aquino could have been more subtle and should not have resorted to sabre-rattling. The Chinese are pratical people but they also value more “face” just like we do too.
    There were already studies made that we should take advantage of the relocation of Chinese, Western and Asian companies out of China into our country because that country is becoming more expensive. Vietnam & Indonesia are at present the darling of these investors.
    We can take advatage of that by decentralizing and opening up the provinces for direct investment.
    Samar-Leyte could be ideal for low-tech factories as well as heavy industry. That place has excess geothermal energy for electricity. It also has the mines to support a metals industry.
    At the same time we can develop our own heavy industry in manufacturing in Mindanao. Relocating the squatters in Maria Cristina ang dredging that lake to provide more power for the hydro dam. In vest in coal fired planst in Northern Mindanao. etc.
    All these can be done by barring “Fixers” from spoiling the grand plan.

  8. China benefit much more with its trade with the Philippines than the latter does. Why? This because the vast majority of goods smuggled into the Philippines comes from China (via Hong Kong and Sabah). This is the kind of trade figures that will not appear in Philippine government statistics. All the goods you see in Binondo and the all the goods in malls in the Philippines are are 90% likely to be smuggled goods. About 10 years ago (during Gloria arroyo’s Presidency) the World Bank stated that the total amount of goods exported to the Philippines by other countries was about 45 Billion dollars (in one year). The Philippine government at the time denied this and stated that only 33 Billion dollars worth entered the Philippines. That means that the difference (i.e., 12 Billion dollars) was smuggled into the Philippines. And most of these goods comes from China. And that was more than 10 years ago. Can you just imagine how much is being smuggled into the Philippines today?

    • Why not condemn the Filipino smugglers and Benigno Aquino III’s Administration for not doing anything about it, instead of China. China will sell to anyone who can pay their products. Have we ever heard of any Chinese mainland firm or government of China smuggling anything into the country officially? If indeed some unofficial have done so, in case there is any, It is the responsibility of the GRP to stop these. In the same manner that China does not condemn the entire Filipino nation and government when Filipinos are caught smuggling illegal drugs to China. They arrest them as any upright government would do and bring them to prison.

  9. Meaning RP should “APPEASE” China (same thing as between GRP & MILF just to silent the guns so to speak). So after this what’s next? ah “The WORLD BANK” again ….. nothing more to say …..

  10. Our claims on the disputed territories should be settled between us and china. Even the north oil was settled between Norway and England only and not thru the international court of justice. England and USA has until now does not want to give up Falkland and Guantanamo to Argentina and Cuba.

    • Papano ka makikipag-usap sa isang party na sarado ang isip. Remember China says their position with regards to their 9-dash line is non-negotiable, so either your negotiation would be like the one made by Gloria Macapagal Arroyo which is highly disadvantageous to our country.

  11. Rogelio C. Lim on

    Ang sinasabi mo ay si Foreign Secretary Del Rosario. Napakadaling hulaan kung sino ang cabinet secretary na ito.

  12. Briefly said, Pinoy has not only burned the bridge behind us with respect to China but has totally demolished it.

  13. Who is that Cabinet Official?
    Who is that Senator?

    Anybody home?

    Please give me a clue.

  14. Unless our country is ready to drop the Spratley island claim then yes we can engage China on trade. But look at the countries that were under the influence of China such as Myammar, Laos, Cambodia,etc. Where are their economies now? Are they any better than PH? There is fundamental wrong with the China policy and has shown this to its arrogance and military control over people in Tibet, Xingjiang, Vietnam, etc. Do you really want China to increase its investment in the PH. They are already in the PH doing illegal businesses, drugs, prostitutions, gambling, etc. How many Chinese Products are in the market. Just go to SM Malls. How many of our politicians are controlled by the Chinese? Can you name those people Mr. Tiglao? Who controls the National Grid Corporation? Why are these Chinese investors allowed to do business? What’s their aim or objectives? Why did we allow the Chinese to invest in a vital industry that involve our security?

    • Well, Myanmar, Laos and Cambodia started opening up and are enjoying more direct foreign investment than we do. Give them a couple of years more and these countries would overtake us if our people and leaders don’t shape up.

      Let us maintain our claims on he Spratlys but we don’t need to act like we are the one sporting for a fight, because we can’t afford it-financially and physically against China. Whilst heated sound bites against the chinese government permeates us, there is still bountiful goodwill between Filipinos and Chinese. During Typhoon Yolanda, it sent its big hospital ship to Leyte and our government did not even say “Thanks”. We can’t ignore China because it is the emerging superpower, even the US owes them 1.5 Trillion US dollars.