By ROLAND G. SIMBULAN
THE magnitude of the economic ties between China and Philippines is now so strong that this cannot be disturbed by the fallout from the recent hostage crisis.
In fact, the Philippines has far more total investments in China in the form of direct foreign investments compared to direct Chinese capital invested in the Philippines.
Wu Zhengping, commercial and economic attaché of the People’s Republic of China embassy in Manila, surprised the audience during a forum titled, “Exploring New Directions of Philippines-China Relations” held at the Federation Center of the Federation of Filipino-Chinese Chambers of Commerce and Industry Inc. in Ongpin, Manila, on Oct. 9, when he reported that the Philippines as of August 2010 has aggregate investments in China amounting to US$2.742 billion. In contrast, China has only about $202 million in direct investments in the Philippines.
This is why, Wu said, despite the hostage crisis in Manila, China-Philippine relations will remain strong. The Philippines, he said, is very important to China as a foreign investor and a significant trading partner in Southeast Asia.
Although these Filipino investments in China are mostly from Chinoy taipans like Henry Sy and Lucia Tan, they are nevertheless classified as foreign capital earned in the Philippines, and profits made in China will be repatriated to their mother companies in the Philippines.
The Chinese commercial attaché also reported that the People’s Republic of China now has $2.5 trillion in foreign exchange reserves. An estimated 47 million Chinese tourists travel overseas every year. In 2009, about 220,000 Chinese tourists visited the Philippines, according to Wu.
In the same forum, economist Ellen Palanca who heads Ateneo’s Confucius Institute added that China is now the Philippines’ third largest trading partner, third largest donor partner and fourth largest source of foreign tourists. These economic ties are growing stronger as China emerges as a global economic powerhouse.
Relations between the Philippines and China have been strained as a result of the bungled hostage crisis in Manila that resulted in the death of eight Chinese tourists. But according to Teresita Ang See, president of the Philippine Association for Chinese Studies and lone representative of the Chinese-Filipino community in the Incident Investigation and Review Committee that investigated the crisis, the economic as well as historical and cultural ties are helping mend the rift in the ties between the two governments.
Ang See said these strong bonds, especially the presence of a large overseas Chinese community in the Philippines and the large overseas Filipino workers’ population in Hong Kong and their OFW organizations, are helping in the return to normalcy of the close ties between the two peoples.
Ang See also said the hostage crisis brought to light the different sensibilities of the Chinese and Filipinos. Filipinos, she observed, have become so used to many natural and political calamities, disasters and tragedies that they can even smile or humor themselves after these occurrences as a form of psychological defense mechanism. She cited as example typhoon Ondoy that hit the Philippines last year.
She indicated that this explains the images of some Filipinos, including President Aquino, who were seen smiling at the scene of the hostage taking in its aftermath.
Dr. Joseph Lim, who spoke about what the Philippines can learn from China’s development, mentioned the pivotal conditions that led to the economic take-off of China after its 1949 Revolution. These are the implementation of a genuine agrarian reform program and collectivization of agriculture, local governance capacity building, and the development of a strong local industrial base.
China’s economy was developed and modernized through, first, a concrete plan for industrial policy and local technical upgrading and, initially, state control of the economy. Liberalized market policies were introduced only after China had already developed a strong industrial and agricultural base through agrarian reform.
When China finally opened up its economy to the world, its enterprises—which were mostly state owned—were ready for global competition. Lim said the Philippines as a developing nation “can learn much from the programs on social protection and social insurance that were implemented by China to boost consumption as permanent features for social expenditures.”
Meanwhile, a Filipino journalist based in Beijing, Jaime Florcruz, in his discussion on China’s foreign relations, mentioned the great potential of the Chinese market for the Philippine economy, especially exports and investments.
The Philippines, he said, can take advantage of China’s open-door policy and market reforms. Having the world’s largest domestic market and double-digit economic growth rate despite the global financial crisis, China may soon become the top global powerhouse in economic development.
No wonder, Florcruz said, Filipino taipans like Henry Sy and Lucio Tan are investing more and more in China. As the world’s second largest economy, China has become an exciting market for foreign investors, including those from the Philippines. It has dislodged Germany and Japan, previously the second and third largest economies globally, respectively. China is also now the world’s consumer of steel and copper, the second largest oil consumer, and the biggest vehicle market in the world.
The speakers all concluded that there is much to look forward to in RP-China relations and that incidents like the Manila hostage crisis will not remain an obstacle. They said that with a better understanding of each country’s varied sensibilities, China and the Philippines should be able to overcome the recent strain in their relations.