By Johnny C. Nuñez | Philippines News Agency
The Philippines’s current pivot to China concerns trade and not aids, with $18 billion in export deals, $6-billion foreign direct investments, some $10-billion official development assistance (ODA) loans for railways and the prospect of about 3 million tourists, and modern technology for renewable energy.
Albay Rep. Joey S. Salceda articulated this perspective, and said President Duterte’s visit to China, at the invitation by Chinese President Xi Jinping, is hailed by many as a game-changing pivot in trade and investment.
A noted economist, Salceda, in a recent TV interview, said China is officially listed as third-largest trading partner of the Philippines, with about $17-billion investment in the country, next to Asean, with $18 billion; and Japan as the largest, with $21 billion. Contrary to common perceptions, he said the United States comes only as the Philippines’s fourth-largest trading partner, with just $16-billion investments, despite long alliances.
If informal trading is considered, he pointed out, China emerges as the Philippines’s largest partner, with about $32 billion, and such massive trade relations do not benefit from protection nor promotion.
He added that trading between the Philippines and China concerns mostly undeclared and undervalued commodities, resulting to trade imbalance of $5 billion annually ($11- billion import and $6-billion export) that should be rectified, between the $17-billion official and the $12-billion informal trades.
Salceda said a stronger bilateral relations with China, more like the existing Japan-Philippines Economic Partnership Agreement, could easily yield additional P72 billion in import value-added tax (VAT) from “smuggled goods,” the undeclared and underdeclared commodities. The Philippines, the lawmaker added, can further benefit under stronger economic ties, since trade restructuring would require China investments in the Philippines, especially because the country has currently a resident investments amounting to $6 billion in China.
“The Philippines needs China’s capacity for infrastructure, especially in the transport and power sectors for railways development and renewable energy, respectively, and its advance technology for agriculture and manufacturing. The railways loan could be secured through the official development assistance,” Salceda said.
Tourism is another industry that the two countries can strike cooperation in, through bilateral agreements, with China’s 500 million tourists, only some 432,000 of who came to the Philippines in 2015, he said.
Citing experiences when he was Albay governor and had opened the Xiamen-Albay international flight, Chinese tourists trooped in droves to his province at a rate of some 30,000 a month, with so much purchasing power, buying local items by the dozens.
With strong trade ties to China, he said, the Philippines can also hop in on the upcoming “Belt and Road” plan, a multibillion-dollar initiative aimed at linking Asia with Europe and Africa, and the countries in between them.
The plan, formerly known as “One Belt, One Road,” brings together the landside Silk Road Economic Belt and Maritime Silk Road developments, with China as major player, with the Asian Infrastructure and Investment Bank.
The Silk Road Economic Belt connects China, Central Asia, Russia and Europe (the Baltic), linking China with the Persian Gulf and the Mediterranean through Central Asia and West Asia, and connecting China with Southeast Asia, South Asia and the Indian Ocean. Through China, he pointed out, these links will give the Philippines direct access to the “new bloc” known as the BRICS (Brazil, Russia, India, China, South Africa).
Salceda said Mr. Duterte’s current stance has awaken Filipinos from their “cognitive dissonance” with the US, and, on the whole, assumed a “more structural adjustments toward equidistant relations” with all economic powers, among them China and the US.