In the most divisive, no-holds-barred election battle in recent US history, in incomparable Trump-style, wilder than a reality show or Netflix, we saw race, presidential families, media outfits themselves, US officials and countries, even viruses, being dragged through the mud-slinging of charges of illicit business, sex, personal agendas, conflicted decisions, mass production of fake news and unprecedented intepretations of the law all thrown in.
The whole world watched with bated breath the hourly count, for days, for the outcome that will affect the world’s trades and livelihoods, war and peace. Biden won in a down-to-the-wire victory. What does this mean for us?
Yukon Huang, US-China expert, of Carnegie Endowment for International Peace and former World Bank China director, shared his thoughts on the Biden victory for the world and for the Philippines (link to the interesting discussion: https://youtu.be/JMAfSqs0v4A ). The deep divisions in US society showed in the election voter data. Despite a close race, when seen by aggregate voting numbers, people were divided by geography, education, race, generation and work type. Voters with lower education, Midwest and whites went to the Republicans. The higher educated, the peoples of color and urban votes went to the Democrats. For example, Washington, D.C. votes were 92-percent Democrat vs 8-percent Republican; 90 percent of Black votes went to Biden. The Filipino votes though were divided. Trump’s votes were still a very significant 70 million against Biden’s 75 million, and this will affect how Biden and Democrats can move. Biden has shown a statesmanlike tone in his victory speeches, more unifying domestically as a president for all Americans, which will be a priority.
The United States. Yukon believes Biden will move toward a foreign policy more cooperative with allies, possibly reconsidering the economic, health and political arrangements that Trump abandoned. Biden is likely to be more pragmatic and less confrontational in dealing with China, though still viewing it not just as an economic competitor but as a potential existential threat to the American way of life and their view of themselves. But he will also have to consider the desire of the American business sectors to do business with and access the China market, and balance it against the government sector’s security and leadership concerns.
Biden wants to improve US competitiveness, but it will be difficult to return to manufacturing, as the US economy has already become mainly agriculture and services, its great strength that composes more than 80 percent of the economy. The policies of Trump were isolationist, “America first,” withdrawing from the Trans-Pacific Partnership, the World Health Organization, multilateral institutions, decoupling with China and combative even in local politics. These even as it failed to improve the overall deficit of the US or slow the overall growth of China exports to the world.
China’s strength currently is in manufacturing, according to Yukon, and as the biggest trading nation, relies on open markets and needs to address perceived security threats.
One avenue is to enter into partnerships, e.g., Huawei with Ericsson and Chinese with different enterprises, rather than go on its own. No country can be self- sufficient, and isolation will slow down or make stagnant global and local industries in markets, investments and innovation. China’s assertiveness is partly in response to the US’ refusal to recognize its growth and position. On the other hand, it needs a good soft power, needs to make the world feel less threatened, and needs to foster goodwill not just with governments but with the people.
Inapplicable models of development, conundrums. We cannot apply conventional wisdoms to the development of China or to the whole world. Yukon explains that corruption hinders the growth of many economies in Asia. But in cases like China, South Korea and Japan in their early stages, they allowed state-controlled assets to be deployed by a far more productive private sector, bringing the whole country forward. These three countries also used “unbalanced growth” to grow faster than other countries, focusing efforts and resources, sacrificing in some rather than spreading resources and attentions equally, creating the fast national growth later shared with other industries.
Asean. A Democrat US government more willing to not play hardball with other countries will cause both the US and China to have to court the Asean more, being central to US-China competition because of geography and as a world center of growth, investments and markets, and, currently, now the No. 1 trading partner of China. Vietnam has currently reached full capacity in both infrastructure and people, and so much of the new investments being made in new centers outside of China can come to the Philippines.
The Philippines is well positioned to benefit in this situation — because of its geography, people, cultural affinity with both Asians and the West, and mastery of the English language. But it needs to address infrastructural, corruption, energy and other issues. Yukon points out that the Philippines is big in labor export growth and remittances, thus in the past may have been less incentivized to invest in manufacturing, but that we should lessen dependence on labor export.
Yukon advises that we should not be dictated to; we should choose our own projects, terms and financing sources independently based on our own comparative studies. There is much to learn from different models like Vietnam and South Korea, also China, which 30 years ago managed to build massive infrastructure without much foreign loans or investments by charging tolls, then once volume was built, used them for further credit. Access to land is a key bottleneck to developments especially for infrastructure, with rights-of-way issues that need solving.
Dioceldo Sy of Ever Bilena, the most successful cosmetics entrepreneur in the country, who invited Yukon, brought up that businessmen expect a resumption of more stable predictable relations and policies after the US election, a needed foundation for growth for all parties.
Anna Mae Lamentillo of the Department of Public Works ad Highways brought up that the Duterte government’s investment priorities plan is designed for competitiveness and to spread the benefits of economic growth to the countryside under the Build, Build, Build program. Owing to our independent foreign policy, the Philippines is working with China, Japan, South Korea, France and others in major infrastructure projects. In 2017 to 2019, we achieved unprecedented foreign direct investments of over $20 billion, more by multiples than the previous years since 2015. Since 2016, we have generated over 6 million jobs in infrastructure; built around 25,000 kilometers of roads, 5,000 bridges and flood-control projects; and started the construction of various rails.
Everyone, even foreign institutions, agrees that the Philippines is well positioned to benefit from world developments and has excellent credit standing today, but has blockages in infrastructure, law, government and private sectors that are frequently pointed out but are in our control.
No one wants to bring up culture — the easiest and hardest to change, the most powerful. No facilities, hardware, access, finance, technology or backing can help us catch up if we learn and work fewer hours and less smartly than our neighbors, and have more complainers and distractions in our people, schools and think tanks than practical doers.
We lost several waves of industrialization — as factories moved out of Taiwan and Japan in the 1980s, Hong Kong in the 1990s, and now China. We missed out for various reasons, including our irrational labor policies, nonviable borrowings (from private Western banks and institutions, not China), our political and contractual uncertainties.
We are at the cusp of another wave of investments and technologies, we need to organize together, benchmark for best practice, and actually perform instead of making more impractical opinion-making. Just do it! Follow the successful!
George Siy is a Wharton-educated industrialist, international trade practitioner and negotiator, director of the Integrated Development Studies Institute (IDSI). He has advised the Philippines and various organizations in trade negotiations with the Association of Southeast Asian Nations, Japan and the United States.
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