The Philippines better with a "good neighbor"

The Philippines has benefited economically from improving its relations with China over the past two years, suggesting that the country has an interest in dealing with a "good neighbor" rather than a "good neighbor". "distant cousin".

This is what the think tank Global Source, based in New York, said, even though some critics might describe the progress as "too weak, too slow," progress has been made for the Philippines on the economic front since the rebirth of their diplomatic relations with China.

"For now, the high popularity of the President, which will not be contested in mid-term elections next year, means that he (Mr. Duterte) would probably get away with China. China, on the other hand, found in President Duterte an ally of the same opinion, to whom it could open its doors wider in the Philippines through more trade, investment and interpersonal relations. . Will this friendship between the two nations stand the test of time? That's certainly the hope, "said a research note dated Nov. 22 written by economists at Global Source, Romeo Bernardo and Marie Christine Tang.

Global Source noted that Chinese tourists were coming in droves, rising from 490,000 in 2015 to the height of the diplomatic climate to nearly 970,000 in 2017. This year, arrivals from the continent reached 870,000 from the continent. The first eight months, ranking second behind South Korea, are expected to break the million mark by the end of the year, the research said.

Bilateral trade between the Philippines and China has also increased by almost 45% between 2015 and 2017, from $ 17.6 to $ 25.5 billion, and an additional 16% in the first half, not counting trade within supply chain transiting through third countries. Global Source noted that this made China the country's largest trading partner, accounting for more than 15 percent of total trade.

"In this area, of course, China is just as successful as the Philippines, as evidenced by the annual growth of imports (more than 20%), far exceeding the growth of exports," said Global Source, highlighting annual growth. made up of 14% from 2015 to 2017 and the 8 percent growth in the first half of this year.

Virtually non-existent a few years ago, Global Source noted that foreign direct investment (FDI) flowed from 2016 to August this year, reaching a total of $ 220 million.

However, Global Source also raised concerns that some of the funds were invested in the gaming industry, whose sustainability was still not guaranteed. Another concern was that Chinese funds could "help fuel a housing bubble, especially with the growing number of Chinese nationals entering and working in the Philippines."

With respect to China's multi-billion dollar infrastructure commitments, the study found that only two subsidized bridges worth $ 112 million had been started, while a loan agreement for an $ 82 million irrigation project was signed.

"Here, the feelings are shared: a part criticizes the slowness of the implementation; The other party, relieved by the slow pace of the move, saw how other countries fell under the so-called "debt trap diplomacy," said Global Source.

When President Duterte went to Beijing for a state visit in 2016, he brought back $ 24 billion in loans and investment commitments from China. mainland.

However, Global Source noted that recent developments suggest that both countries are ready to strengthen their friendship. Shortly before President Xi Jinping's state visit to the Philippines, the government granted the rights to operate a third telecommunications company in the country to a consortium including China Telecom, a state-owned company. On his first day here, President Xi also witnessed the signing of 29 cooperation agreements, including the loan agreement of 18.7 billion Pakistani pesos for the construction of a dam designed to provide additional water to Metro Manila and a memorandum of understanding on oil and gas. development in the Western Philippines Sea.

"In the small business circle of Manila, you could easily hear grunts about the first two contracts. But the third (oil and gas exploration), although it provides only a framework, is perhaps the most controversial, especially since President Duterte is not perceived as strong enough on the rights of the country. in the disputed waters. With this, many fear that the Philippines will play the role of China and will not confirm its claims on the WPS / SCS (Sea of ​​the Western Philippines / South China Sea), "said Global Source.

Read more

For comments, complaints or inquiries, contact us.