The Philippines’ current pivot to China concerns trade and not aids, with $18 billion in export deals, $6 billion in foreign direct investments, some $10 billion in ODA loans for railways and the prospect of about 3 million tourists, and modern technology for renewable energy.
Albay Rep. Joey Sarte Salceda aired this perspective, saying President Rodrigo Duterte’s visit to China, at the invitation by Chinese President Xi Jinping, was hailed by many as a game changing pivot in trade and investment.
A noted economist, Salceda said in a recent TV interview China was 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 US came only as the Philippines’ fourth largest trading partner, with $16 billion in investments despite long alliances.
If informal trading is considered, China emerges as the Philippine’s largest partner, with about $32 billion, and such massive trade relations do not benefit from protection nor promotion, Salceda said.
He added that trading between the Philippines and China concerned mostly undeclared and under-valued commodities, resulting in 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 an additional P72 billion in import VAT from “smuggled goods,” the undeclared and under declared commodities.
The Philippines, he added, could further benefit under stronger economic ties, since trade restructuring would require China investments in the Philippines, amid 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,” he Salceda said.
Tourism is another industry that the two countries could exploit, 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 when he 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.