A successful China trip
September 15, 2011 at 10:52
This is a re-posted opinion piece.
China is the world’s second-biggest economy today. It overtook Japan last year.
It is, of course, the dominant player in Asia accounting for almost a third of the continent’s total economy. India comes in next. Both countries have over one billion people (1.3 billion in China, 1.2 billion in India). Sheer population size itself drives the countries to the top of the economic heap.
China’s dominance will only grow, so being a partner with it is crucial for any government. Hence, that President Aquino was invited on a State Visit to China by President Hu Jintao was an unparalleled opportunity. It was a singular honor for Aquino to be invited early in his term. Both nations agreed that the five-day trip, which was intended to strengthen the bilateral ties between the two countries, was a milestone in the development of Philippines-China bilateral relations. And from the crowds of Chinese businessmen I saw at every function, I’d have to agree. The interest was certainly there.
From a political point of view, it was necessary at this time to defuse the growing confrontation over the Spratlys and surrounding areas. This the visit did—at least for now. It’s an issue that is far from being finally agreed (I see that as a decade, or more, away), but at least the tensions have been much reduced by what was a very successful visit.
But equally important was the building of business relations. China is the Philippines’ fourth biggest trading partner as well as the fourth largest source of official development assistance after Japan, the Asian Development Bank and the World Bank. The economic giant could also become a major source of foreign direct investments, so it’s clearly an important country to woo. So some 270 Filipinos went there to do just that. They (plus one foreigner—an Aussie at that) accompanied the president to Beijing, Shanghai and Xiamen over five days to meet with their Chinese counterparts to explore how to do more business together.
I’m just glad no one thought to blow up the presidential plane, we’d have lost half the economy of the Philippines.
Sometimes we tend to forget the long involvement of Chinese in the Philippines (trade with the Chinese dates back to the seventh century). Many of the Filipinos who were on this trip had Chinese ancestry, including the President whose ancestors from the Cojuangco side came from Fujian province, as did some 80 percent of the Chinoys on this trip. So it was a homecoming of sorts for many.
I was last in China 40 years ago. Then, it was a $ 91.5-billion economy of 830 million people and a GDP-per-capita of $110. The Philippines was a $6.7 billion economy, a population of 36.5 million and a higher GDP-per-capita of $183. Today China has exploded (the only word) into an economy worth $5.9 trillion, growing 65 times (10 percent annual growth), while population grew a modest 56 percent (an average of around 1.2 percent per annum), giving the Chinese a $4,400 GDP-per-capita. The Philippines, on the other hand, trickled along at the Asian bottom so its economy was up only a factor of 28 at $188 billion, but a population that had exploded (again, the only word) by 158 percent to 94 million with a GDP-per-capita of only US$2,007—less than half China’s.
Something went dreadfully wrong over the past 40 years in the Philippines. And quite simply, it was the leadership. It has not risen to the challenge as other Asian countries have.
Maybe that’s now changing. There’s no question that President Aquino’s recent trip was a success. What was achieved was a rapport between two governments, a defusing of some tensions and, on our side, some real business interest. Below all the hype there were some genuine deals struck, and some positive contacts made into the future. The Philippines is back into contention in the Chinese business community.
The last thing we need with so many problems to solve here is a globe-trotting president, but a few more trips like this certainly won’t hurt. The trip to the US from September 19 to 23 and then to Japan at the end of the month can only do the country good. It’s time foreign investment was brought up from its miserably low $1.7 billion last year to the $7 billion to $15 billion that the country’s neighbors are attracting. Trips to the top three partners of the Philippines make great sense.
Both countries signed a Philippines-China 5-Year Development Program for Trade and Economic Cooperation (2011-2016) to serve as the blueprint for future efforts in agriculture, infrastructure, mining, energy, information and communication technology, processing and manufacturing, tourism, engineering services, and forestry. China affirmed its support for the public-private partnership program of the government and committed to encourage its qualified companies to participate in the competitive bidding process. But there’s a sad history to overcome. The few major projects that involved Chinese participation have been plagued with controversy: The scandalous NBN-ZTE scuttled deal, the derailed Northrail and the cyber-education project. P-Noy’s determination to ensure only clean deals from now on should change this, but it won’t be easy. He’ll need to force that all deals are transparent. That media is invited into the negotiations, as corruption is just too institutionalized, will be received well. Positive action is needed.
Both sides agreed to expand the volume of total two-way trade up to $60 billion by 2016. But with trade (in 2010) at only $10.4 billion, that would be a 15.4-percent annual growth. Possible, but not without some serious attention to achieving it. I also see mining, agriculture and infrastructure as the principal areas the two countries should concentrate on. This is where the mutual benefit is strongest, and, concentrating on just a few, not spreading yourself too widely is always the way to go.
Tourism also has potential—50 million Chinese travel each year, and the number is growing rapidly. But I’ve seen no promotional materials in Chinese (and which dialect?) to attract some of that. Mind you I’ve not seen anything much in English either. You don’t get tourists if you don’t spend to attract them. The DOT needs a vastly expanded budget. You need to spend money to make money.
As to investment, the failures of the past have to be overcome. With a more transparent government (when does the president push the Freedom of Information Act to confirm this, I wonder), that’s now possible. On this trip, six Chinese companies confirmed they’d be investing—for a total of US$1.3 billion. A rubber tire plant was the biggest at $500 million, then there were a couple of power plants, a garments factory and investment into tourism by a hotel chain. Overall, 23 groups indicated they would probably invest in the Philippines, but these are promises that need to be confirmed. Whatever it is, it’s an improvement from the negligible levels recently.
As for the issue of the Spratlys, both sides agreed not to let the maritime disputes affect the broader picture of cooperation and reiterated commitment to address the disputes through peaceful dialogue. Both committed to continue to abide by the Declaration on the Conduct of Parties in the South China Sea signed between the Asean and China in 2002. Let’s hope they do.
May the trips to Japan and America be as equally successful.
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By: Peter Wallace – Like It Is
Source: Manila Standard Today, Sept. 9, 2011
To view the original article, click here.
