President Duterte shakes hands with a Chinese military official: President Rodrigo R. Duterte shakes hands with a Chinese military official upon his arrival at the Beijing Capital International Airport on Monday (Oct. 17, 2016). (PNA photo by Toto Lozano/PPD/PNA)
MANILA, Oct. 19 (PNA) — The Philippines’ current pivot to China concerns trade and not aids, with USD18 billion in export deals, USD6 billion foreign direct investments (FDI), some USD10 billion ODA loans for railways and the prospect of about 3 million tourists, and modern technology for renewable energy.
Albay Rep. Joey Sarte Salceda articulated this perspective and said President Rodrigo 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 USD17 billion investment in the country, next to ASEAN with USD18 billion and Japan as the largest with USD21 billion.
Contrary to common perceptions, he said the US comes only as the Philippines’ fourth largest trading partner, with USD16 billion investments.
If informal trading is considered, he pointed out, China emerges as the Philippine’s largest partner, with about USD32 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 USD5 billion annually (USD11 billion import and USD6 billion export) that should be rectified, between the USD17 billion official and the USD12 billion informal trades.
Salceda said a stronger bilateral relations with China, more like the existing Japan-Philippines Economic Partnership Agreement, could easily yield additional PHP72 billion in import VAT from “smuggled goods,” the undeclared and underdeclared commodities.
The Philippines, he added, can further benefit under stronger economic ties, since trade restructuring would require China investments in the Philippines, especially because our country has currently a resident investments amounting to USD6 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 (ODA),” he explained.
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 which came to the Philippines in 2015, he said.
Citing experiences when he was Albay governor and had opened the Xiamen—Albay international flight, Salceda said Chinese tourists trooped in droves to his province at a rate of some 30,000 persons a month, with so much purchasing power, buying local items by the dozen.
With strong trade ties to China, he said the Philippines can also hop in on the upcoming “Belt and Road” plan, a multi-billion 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 land-side 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 Duterte’s current stance has awaken Filipinos from their “cognitive dissonance” with the US, and which on the whole, assumes a “more structural adjustments towards equidistant relations” with all economic powers, among them China and the US.