Chinese ‘threat’ worrisome for business

A number of businessmen have expressed serious concern at the escalating word war between the Philippines and China, with Chinese media bristling at President Aquino’s New York Times interview “reminding” nations at the global consequences of Hitler’s annexation of Sudetenland.  While there are some who have criticized the President’s firm response with regard to our country’s maritime disputes with China, people with a strong sense of nationalism say they fully support President Aquino’s unrelenting stance to assert our territorial integrity and sovereignty.

Several observers pointed out that China is not above resorting to “economic” arm-twisting to show its displeasure, to put it mildly, recalling the time when Philippine banana exports meant for China worth $23 million were rejected supposedly because Chinese authorities found pests in the fruits. Norway also felt this kind of backlash when tons of Norwegian salmon were left rotting in Chinese warehouses and ports because of the sudden imposition of new import controls – perceived as punishment for awarding the 2010 Nobel Peace Prize to jailed Chinese dissident and pro-democracy activist Liu Xiaobao. In fact, while Guangzhou (in addition to Beijing and Shanghai) offered short-term visa-free transit to 45 countries last year, Norway was conspicuously excluded.

Many certainly see shades of China in Hong Kong’s decision to revoke visa-free privileges to Philippine officials and diplomats in retaliation to the Philippines’ continued refusal to issue an apology over the bus hostage-taking incident at the Quirino Grandstand in August 2010 that resulted in the death of eight Hong Kong tourists. In contrast, the Philippines issued an apology to Taiwan when a Taiwanese fisherman was shot by members of the Philippine Coast Guard during an encounter at Balintang Channel. Some businessmen though are wondering why the Philippines could issue an apology to Taiwan over the death of one individual but not to Hong Kong considering the number of casualties in the Luneta incident.  An observer remarked that the economic sanctions imposed by Taiwan must have pressured the government – especially when clamor began to mount from the thousands of overseas Filipino workers whose deployment to Taiwan was derailed.

Many countries including the United States are certainly concerned at the growing boldness of China in asserting control over disputed territories as its own by virtue of the so-called nine-dash line despite objections from other claimant countries and its lack of basis under international law regarding the scope of the claim itself. China also increased its defense spending to about $122 billion last year – driving concern over the security balance in the maritime region.

As noted by US Department of State Assistant Secretary for East Asian and Pacific Affairs Daniel Russel in his testimony last Feb. 5 before the House Committee on Foreign Affairs’ Subcommittee on Asia and the Pacific, what happens in APAC will be felt across the globe and will have direct implications on US interests, considering that half the world’s population, half the world’s GDP and almost half the world’s trade is in the region where some of the fastest growing economies are also located.

“Both the South China and East China Seas are vital thoroughfares for global commerce and energy. Well over half the world’s merchant tonnage flows through the South China Sea, and over 15 million barrels of oil per day transited the Strait of Malacca last year, with most of it continuing onward through the East China Sea to three of the world’s largest economies – Japan, the Republic of Korea, and China. A simple miscalculation or incident could touch off an escalatory cycle,” Russel said, expressing America’s commitment to the rule of law that guarantees freedom of navigation and overflight in reference to China’s declaration of an Air Defense Identification Zone and fishing restrictions in disputed territories. 

Paranaque Congressman Roilo Golez observed that “South China Sea is much worse than Sudetenland considering today’s general rules on how nations should behave in the international community compared to the ‘might is right’ atmosphere of the 1930s. In this age of supposed international civility, China instead growls and her behavior in the South China Sea is alarming, exasperating and dismaying to say the least. Indeed, ‘Enough is enough’ and it is incumbent upon us to support the national leadership as he performs his duty to tell the world what the bully is doing in our neighborhood, so the world is forewarned.”

Lunch with the VP

As usual, Vice President Jejomar Binay was gracious and genial when he hosted lunch with Philippine Star columnists at the Coconut Palace, making everybody feel at home with the informal atmosphere and simple Filipino food. VP Binay’s spokesperson Joey Salgado said the Vice President has been regularly meeting with newspaper columnists to touch base with them. According to the Vice President, the Philippine Star is the first paper he reads in the morning (we’re not sure if it’s the only one).

VP Binay told us he is amenable to amending the economic provisions in the Constitution, in particular the 60-40 equity provision on foreign ownership. This is certainly welcome news for the international business community who have been discouraged by the overly protectionist provisions in Articles 2, 12 and 16 that limit or totally ban foreign ownership in some industries. Foreign businessmen have decried the inability to own real estate unless they have a Filipino partner who owns 60 percent of the business – with some unfortunately resorting to duplicity to get around this Constitutional restriction. Another area of concern is media, with foreigners absolutely not allowed ownership of media companies which is a big setback for broadcast networks and media entities who want to increase their scope and reach in areas where large Filipino communities reside.

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