Duterte and China
As the Philippines’ key geopolitical strategy, President Duterte has gravitated towards China’s sphere of influence.
There are three reasons for this shift, away from the United States.
One, China has plenty of money—for development assistance, for loans, for investments. The Philippines needs plenty of that money. Also, China provides the most tourists to the world. In 2016, China sent out 55-million tourists to Asia. Barely one million of that 55 million went to the Philippines. In the tourism game, the Philippines has been badly overtaken by Vietnam, and by this year, even by Cambodia.
The Philippines is embarking on its most ambitious growth program ever, backstopped by the largest infrastructure spending, P8.4 trillion, in the next six years, 2017 to 2022. It is the biggest six-year spending by any government in the country’s history. Infra spending will reach 8.4 percent of GDP (P1.898 trillion) of economic output by 2022, beginning with 5.3 percent (P847.2 billion) in the first year, 2017. The average infra spending of the past 50 years (six presidents): 2.6 percent of GDP.
Two, Duterte has realized there is no point arguing with or battling with China over claims in the South China Sea, claims validated by an Arbitral Court in favor of the Philippines, in July 2016. For three reasons: One, Manila cannot guard these reefs, islets, and islands 24/7. In Asean, the Philippines has the most primitive armed forces. Its naval boats are older than their captains. Two, Manila cannot develop these reefs, islets and islands. It cannot even develop the Kalayaan island, the biggest of the land claims, which it has occupied since 1978, nearly 40 years ago. Three, it is better to cut a deal with China and develop the islands and share jointly in the profits of that development. As long as it is not unfairly treated in this sharing, the Philippines will stop thinking, temporarily, it owns the islands as part of its Exclusive Economic Zone. Joe de Venecia has a term for that kind of deal—condominium-type development. The Philippines provides the land, China the buildings.
Three, Duterte seems to see in China a model of development that is hugely successful.
Aside from drugs and criminality, President Duterte is bothered, to the point of wanting to kill people, by two problems— massive poverty (25-million Filipinos are dirt poor) and massive corruption in government. The country’s oligarchy has in turn exploited these problems to further enrich itself and entrench itself. Duterte wants to grapple with this bullshit.
In 30 years, China transformed itself—from rural and agricultural to urban and industrial, from a command economy to market economy, from a closed economy to the biggest advocate and beneficiary of globalization. In the future, according to the World Bank, China will create an urban population equivalent to a Tokyo or Buenos Aires, every year.
In 2015, China surpassed the United States as the largest economy in terms of GDP, purchasing power parity. By 2030, if not earlier, China will be the world’s largest economy at current prices, displacing the US, recapturing its primacy as the No. 1 economy during the 1500s to the early 1800s. The most obvious symbolism of this is the One Belt, One Road project where China will spend up to $900 billion at the rate of $150 billion a year to benefit 65 percent of the world’s population, one-third of world GDP, and a third of all goods and services. The road is not a road but a sea route connecting southern China to East Africa and the Mediterranean. The belt is a series of highways, railways, and bridges connecting China with Europe, thru Central Asia, Southeast Asia, and the Middle East.
Since 2008, China has been the biggest contributor to the growth of the world economy. It is the world’s biggest manufacturer, exporter, creditor, and provider of capital (it has $3 trillion foreign reserves and its savings rate is more than 50 percent of GDP). Of course, it is also the world’s biggest polluter (No. 8 in per capita pollution).
Adds the World Bank: “Such rapid growth has been accompanied by many other achievements: for example, two of the world’s top 10 banks are now Chinese; 61 Chinese companies are on the Global Fortune 500 list and China is home to the world’s second-largest highway network, the world’s three longest sea bridges, and six of the world’s 10 largest container ports. In 2010, China became the world’s largest energy user. In 2015, China registered one million patents. (Only 400 for the Philippines). In 20 years, China will produce 200 million college graduates –more than the entire labor force of the US.
Throughout human history, China has been the world’s most successful in solving poverty. For 30 years, its economy grew consistently at 10 percent (9.9 to be exact), per year. Its poverty rate fell from more than 65 percent to less than 10 percent, lifting 600-million people out of poverty. This is the greatest social mobility revolution in the history of man—more than 600 million people crossing the poverty line.
I once visited a poor man’s village in China. The poor there had a two-story house, a car, appliances, and livelihood. There are 55 million such “poor” people in China. Still, China suffers from high income-inequality
China achieved all the Millennium Development Goals (MDG) by 2015. The Philippines failed in meeting all the MDG targets, except in one. Why? Incompetence and corruption of the Philippine presidents before Duterte.
Xi Jingpin has launched a vicious anti-corruption campaign. It has cracked down on gambling, golfing (China’s 88 million Communist Pary members are banned from playing golf), and commercial bribery (like sales incentives) in the private sector. It will set up in 2018 a state inspection commission to run after corrupt government men at all levels.
The anti-corruption campaigns have been undertaken mainly by the party’s Central Commission for Discipline Inspection, focusing on high-ranking party officials. The corruption campaign was so effective that tourism in Hong Kong and Macau went down and sales of Hermes bags in Paris slowed.