In the face of the\nFilipino people\u2019s growing anxieties about COVID-19 and life after the lockdown,\npresident Duterte keeps heaping praises on China. <\/p>\n\n\n\n
The Duterte government\nwas reluctant at first to restrict travel and tourism from China and the\noperations of Chinese Philippine Offshore Gaming Operators (POGOs) because such\nmoves to contain the virus would allegedly hurt China\u2019s feelings. In the next\npresidential speeches, the government seemed to have flip-flopped from its\ncavalier attitude towards the pandemic, but it has not stopped uttering\nassurances to China.<\/p>\n\n\n\n
That the Philippines\nremains to be by China’s side as China battles COVID-19. Or that China will\nhelp the Philippines overcome the health crisis and that president Duterte can\ndirectly send a personal note to Chinese president Xi Jin Ping. A\nyou-and-me-against-the-world expression of devotion that is repeated ad\nnauseum. <\/p>\n\n\n\n
In the most recent\ndisplay, returning presidential spokesperson Harry Roque even got a little\nchummy \u2013 referring to the Philippines-China relationship as \u201cBFF\u201d (\u201cbest\nfriends forever\u201d), and that naturally China will prioritize the Philippines in\ngiving COVID aid and funds. <\/p>\n\n\n\n
It leaves a nasty taste\nin the mouth as the country continues to grapple with economic uncertainties\nand government\u2019s lack of direction six weeks into the lockdown.<\/p>\n\n\n\n
But is it even valid to\ncling on to China, or to any other country for that matter, for our survival as\na nation post-COVID? Even without COVID-19, it is already insane as it is for\nthe Philippine government to obsessively hold on to failed neoliberal policies\nand to rely on foreign capital for development. It would take some sobriety to\ntackle the question, but looking at the global economy and the seismic changes\nthat have been happening is the sensible way to begin.<\/p>\n\n\n\n
The world is coming down<\/em><\/strong><\/p>\n\n\n\n China indeed remains the\nworld\u2019s leading merchandise trader and second to the United States (US) in\ntrade of goods and services in the overall. But the slowdown in global trade\nthat has been quite evident since 2016 on the back of a protracted global\neconomic recession is weighing down on the world\u2019s economies and leading\ntraders. This has only been aggravated by the US-China trade war escalating at\nthe end of 2018, which is hurting aggregate import demand, as well as the\noutbreak of the COVID-19 pandemic emanating from Wuhan, China at the end of\n2019 whose impact on world trade is still unfolding.<\/p>\n\n\n\n World merchandise trade\nvolume had a significantly lower growth of 2.9% in 2018 than the 4.6% growth registered\nin 2017 that raised false hopes of a return to better days. The slowdown in\ntrade was accompanied by weaker output growth \u2013 the world gross domestic\nproduct (GDP) grew at exactly the same rate as trade (2.9%) compared to a\nminimally higher growth of 3.0% the year before. <\/p>\n\n\n\n The numbers turned uglier in\n2019 – with the combined effects of the trade tensions in the first half\nclearly felt and the jitters in the second half over the possible lethal spread\nof COVID-19 across geographic and economic regions. The slowing world\nmerchandise trade finally declined by 0.1% in volume in 2019. Likewise, in\ndollar values it fell by 3% to US$18.89 trillion, whereas it registered a 10%\nincrease due to higher energy prices just the year before. The global GDP got even\nweaker with a preliminary growth figure of only 2.6% for 2019. <\/p>\n\n\n\n Projecting the full impact of\nCOVID-19 on trade, the World Trade Organization (WTO) is looking at a further\ndecline in 2020 by 12.9% in an optimistic scenario or by 31.9% in a pessimistic\nscenario. The International Monetary Fund (IMF) projects the global GDP growth\nin 2020 to fall to -3%, which is a major revision over a very short period.\nThis crisis is going to be far worse than the global financial crisis, the IMF\nhas said, and the worst since the Great Depression.<\/p>\n\n\n\n China is symptomatic <\/em><\/strong><\/p>\n\n\n\n The world is watching China\nwith apprehension. The country has high demand for raw materials and\nintermediate goods and serves as a final-stage export platform for global\nproduction chains. But even before the number of COVID cases started climbing\nat the start of 2020, China\u2019s GDP growth of 6.1% in 2019 was already slower\nthan the 6.7% rate in 2018. It was in fact the country\u2019s slowest growth in 29\nyears. <\/p>\n\n\n\n The National Bureau of\nStatistics of China reported a 6.8% year-on-year decline in the first quarter\nof 2020. It is the first contraction at least since 1992.<\/p>\n\n\n\n China experienced a\ndeceleration in merchandise trade volume, from 8.0% in 2017 to its moderate\ngrowth of 5.2% in 2018. The value of exports slowed sharply at 0.5% growth in\n2019 from a 10% rise in 2018, while the value of imports fell by 2.7%, the\nfirst decline in three years. In the first two months of 2020, exports plunged\nby 17.2% year-on-year, while imports shrank by 4%, amid factory shutdowns and\ntravel restrictions to contain the virus.<\/p>\n\n\n\n China\u2019s trade surplus and\ncapital formation are its sources of economic strength to rise as an outward\ninvestor. In 2018, China ranked 2nd<\/sup> globally, next to Japan, in\nterms of foreign direct investment (FDI) outflows, and 3rd,<\/sup> next to\nthe US and Netherlands in terms of FDI outward stock. But like global trade and\nthe global economy, global FDI flows were in three consecutive years of\ndecline, falling by another 13% in 2018. China\u2019s FDI outflows slid further by\n18%, the second year for China, based on UNCTAD data. <\/p>\n\n\n\n China\u2019s Ministry of Commerce\n(MOFCOM) reported a lower figure of 9.6% decline in 2018, pointing out that\nChina\u2019s FDI fall was still significantly lower than the world figure of 29%\naccording to MOFCOM. It does not change the general picture, however, no matter\nhow Beijing paints stability. Outward FDI is falling anywhere else in the\nworld, and it is 40% smaller today than its post-global financial crisis peak\nin 2015. <\/p>\n\n\n\n The China Global Investment\nTracker of the American Enterprise Institute, an alternative to MOFCOM data,\nwhich tracks Chinese investment and construction around the world with a\nthreshold of US$100 million, is seeing a dramatic fall in China\u2019s outbound FDI\nof about 40% for 2019 that will be similar to 2011, with Chinese investment returning\nto a domestic rather than global phenomenon.<\/p>\n\n\n\n The problem is China cannot\nsimply work from home. It has been infected with the unbounded, reckless desire\nof expansionism \u2013 it has to continue going global. <\/p>\n\n\n\n BFF?<\/em><\/strong><\/p>\n\n\n\n The Philippines is not even\namong the top 15 trading partners of China. It is also not a significant\ndestination of Chinese investment. <\/p>\n\n\n\n Hong Kong (PRC) receives\nabout 60% (US$86.9 billion) of China\u2019s net FDI, followed by the US (US$7.5\nbillion), Virgin Islands (US$7.1 billion), Singapore (US$6.4 billion), and\nCayman Islands (US$5.5 billion). It is obvious how China uses Hong Kong as an\nintermediary to take advantage of Hong Kong\u2019s liberalized agreements and\ncompetitive currency before investing somewhere else, or of \u201cdouble dipping\u201d\nwherein Chinese investors return to the mainland as \u201cforeign investors\u201d and\ntake advantage of additional fiscal incentives.<\/p>\n\n\n\n It also appears that Chinese\ninvestors, like many global investors, have sought safe havens such as the\nVirgin Islands and Cayman Islands as times get rough. Removing these and Hong\nKong for the meantime would show that the top 10 recipients of China FDI in\n2018 were the US, Singapore, Australia, Indonesia, Canada, Germany, Vietnam,\nSouth Korea, United Kingdom, and Thailand. The Philippines does not figure\nanywhere in the line-up.<\/p>\n\n\n\n On the other hand, some 56\ncountries along the Belt and Road Initiative (BRI), of which the Philippines is\npart, captured 12.5% of China\u2019s total outward FDI in 2018. BRI investment has\nbeen particularly pronounced in the Middle East and North Africa (MENA) region.\nMeanwhile in Southeast Asia where China\u2019s state-owned enterprises have\nparticular interest, Cambodia is the favorite.<\/p>\n\n\n\n Narrowing our map now to the Association\nof Southeast Asian Nations (ASEAN), the Philippines captured 11% of China\u2019s\ninvestment in the ASEAN in 2019, which is practically a fair share if China\u2019s\ninvestment would be divided equally among the 10 member-countries.<\/p>\n\n\n\n In short, we may be among\nChina\u2019s friends, but we are not the best, and forever has not even started.<\/p>\n\n\n\n On the other hand, among the\nPhilippines\u2019 trading partners, China ranks 4th<\/sup> in terms of\ncontribution to exports value, next only to US, Japan and Hong Kong (which is a\ntrading port of many other countries apart from the mainland). Indeed, China is\nthe country\u2019s biggest supplier of imported goods, accounting for about\none-fourth of Philippine import value, which shows a one-sided trading\nrelationship. Exports to China in the first month of 2020 had a tepid 7%\nincrease, while imports from China continued to increase at double-digit rate\n(16.4%), a trend that started in 2016. <\/p>\n\n\n\n Singapore, US, Japan and\nSouth Korea have remained the country\u2019s top investors, with their combined net\nFDI of US$963.49 million in 2019. Inflow from China was US$106.16 million. Even\nif we add US$28.69 million (assuming 60% of what is coming from Hong Kong,\nsince not all Hong Kong FDI is from the mainland), China would still come\nfifth. Surely there has been a dramatic rise in Chinese investments of 1,751%,\nfrom only about US$10.77 million in 2016 to its peak of US$199.38 billion in\n2018, but net FDI from China has started to taper off and declined by 47% in\n2019. <\/p>\n\n\n\n There has also been a\nphenomenal increase in Chinese official development assistance (ODA) loans from\nUS$1.5 million in 2016 to US$364.9 million as of 2018. But Chinese ODA still\npales in comparison with Japan ODA of US$6.2 billion or even USAID of US886.4\nmillion.<\/p>\n\n\n\n In other words, even in\nun-reciprocated relationships that our liberalized and subservient economy has\nbecome so dependent on, China is not even the best master.<\/p>\n\n\n\n What then is the fixation on China all\nabout?<\/em><\/strong><\/p>\n\n\n\n There can only be one reason\nfor China \u2013 it is unstoppable. Since building its internal strength and setting\nits sights on the endless possibilities in the global economy, China itself has\nbeen fixated on itself. <\/p>\n\n\n\n Its expansionist momentum has\nsurged in the last two decades, perfecting its \u201cgo global\u201d strategy and\nembarking on its biggest and most ambitious ever BRI as well as Made in China\n2025, moving away from being the world\u2019s factory to producing high-technology\nproducts and services. Beijing has been aggressive and at the same time\ncautious in its policy approach, which gives it confidence that it won\u2019t crash\nas hard as its economic rivals.<\/p>\n\n\n\n It may be recalled that China\nheld up well during the 2008 global financial crisis, compared to the slow\nrecovery of the European Union and the US. Although today is different \u2013 China\nbeing the epicenter of the pandemic \u2013 China does its best to sustain the image\nof stability. <\/p>\n\n\n\n International observers have\nalso pointed out that Westerners are finding it much more difficult than Asians\nto overcome the hardships arising from the health crisis. The observation could\njust be China\u2019s own messaging echoed through its own propaganda machinery. In\nany case, China is sustaining the narrative.<\/p>\n\n\n\n This narrative has been\ncopy-pasted in the language of lauding China\u2019s ability to deal with the crisis,\nofficial restraint on China bashing and discrimination especially on social\nmedia (even setting up laws to penalize \u201cfake news and rumors\u201d about China and\nCOVID-19), and loyalty to China to the point of endangering lives, as The Diplomat<\/em> has observed across\nSoutheast Asian governments. The Duterte administration has submitted to this\npropaganda line and has been most explicit about the fear of retaliation from\nChina as expressed by none other than the health secretary.<\/p>\n\n\n\n For the Duterte government,\nthere are two apparent reasons. One could simply be self-serving \u2013 that the\nDuterte administration, the most traveled to China, be able to maintain the\nbusiness deals and transactions with Chinese firms. No matter how loose and\nsmall, these are big enough gains for its entourage of businessmen and cronies.<\/p>\n\n\n\n But the second reason is more on economic survival. The Duterte administration has yet to really jump-start its Build, Build, Build (BBB) infrastructure program and to capture the promise of China\u2019s overflowing construction capital. Of the 100 flagship projects worth Php4.3 trillion, China accounts for only 17% of the number of projects and 16.3% of the cost, while only one of these projects is in the implementation stage. The economic managers are torn between revamping BBB and reallocating its budget for COVID-19 and leaving BBB unscathed. The fact remains, BBB is untenable now more than ever. <\/p>\n\n\n\n On endlessly praising China, the Duterte administration may not have really internalized China\u2019s rhetoric, but it is clearly desperate. The Philippine economy is on its fourth year of slowdown, and the economic managers are still relying on foreign capital for pump-priming instead of building our industrial and agricultural core. The Philippine economy is down with the lingering illness of backwardness that has only been aggravated by neoliberal policies, yet government cannot think of a cure other than to be on its knees. <\/p>","protected":false},"excerpt":{"rendered":" BY ROSARIO GUZMAN<\/p>\n In the face of the Filipino people\u2019s growing anxieties about COVID-19 and life after the lockdown, president Duterte keeps heaping praises on China.<\/p>","protected":false},"author":10,"featured_media":9431,"comment_status":"open","ping_status":"open","sticky":false,"template":"single-withbanner.php","format":"standard","meta":{"_acf_changed":false,"_exactmetrics_skip_tracking":false,"_exactmetrics_sitenote_active":false,"_exactmetrics_sitenote_note":"","_exactmetrics_sitenote_category":0,"footnotes":"","_expiration-date-status":"saved","_expiration-date":0,"_expiration-date-type":"","_expiration-date-categories":[],"_expiration-date-options":[]},"categories":[2048,3],"tags":[432,2199,347,484,96,2173,116,2233,2232],"acf":[],"_links":{"self":[{"href":"https:\/\/www.ibon.org\/tl\/wp-json\/wp\/v2\/posts\/9428"}],"collection":[{"href":"https:\/\/www.ibon.org\/tl\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.ibon.org\/tl\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.ibon.org\/tl\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/www.ibon.org\/tl\/wp-json\/wp\/v2\/comments?post=9428"}],"version-history":[{"count":3,"href":"https:\/\/www.ibon.org\/tl\/wp-json\/wp\/v2\/posts\/9428\/revisions"}],"predecessor-version":[{"id":9442,"href":"https:\/\/www.ibon.org\/tl\/wp-json\/wp\/v2\/posts\/9428\/revisions\/9442"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.ibon.org\/tl\/wp-json\/wp\/v2\/media\/9431"}],"wp:attachment":[{"href":"https:\/\/www.ibon.org\/tl\/wp-json\/wp\/v2\/media?parent=9428"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.ibon.org\/tl\/wp-json\/wp\/v2\/categories?post=9428"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.ibon.org\/tl\/wp-json\/wp\/v2\/tags?post=9428"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}