Despite territorial dispute, China-Phl trade ties stay strong

CEBU, Philippines - China and the Philippines have been in conflict for years over maritime territorial rights since the tension between the two countries soared in April 2012 during a naval standoff in the Scarborough shoal.

Both consider the disputed areas off the west coast of the Philippines as vital interests and have maintained opposing resolutions in claiming sovereignty of the reef, which is believed to have significant reserves of oil and gas.

Until now, the upsurge of the tension has created geopolitical (politico/security) conflicts among the two Asian nations.

At the same time, it has also raised the question whether the old-age territorial dispute, in a way, would affect the bilateral trade ties of both countries.

For the moment, the tension over the disputed territory is not affecting the export and import industry, said Asteria C. Caberte, the regional director of Department of Trade and Industry region 7.

China remains as one of the biggest trading partners of the Philippines and, on the other hand, the latter continues to be a major exporter of agricultural (especially bananas) products to the former.

This is mainly the reason why both countries consider the bilateral trade relations as an important factor in maintaining their good and high-speed economic growth, Caberte explained.

“Logic would tell us that if China stop buying from us, it’s a loss because China is a huge market,” the DTI official told The FREEMAN. “Both countries will loss --it will be a mutual loss.”

But if the conflict continues to worsen to the point that it will impact the trading activities, Caberte said, the effects will not be felt “automatically.”

“But again, the two countries know how important the trade relation is,” she said. 

Data from the National Statistics Office showed the Philippine product imports from China totaled more than US$8.1 billion for fiscal year 2013.

On the other hand, the NSO data further showed, the total Philippine exports to China amounted to more than US$6.5 billion for FY 2013.

From January to December 2013, the Philippine-China total export and import trading amounted to US$14.7 billion, having a 12.62% share in the toal trade with other countries worldwide.

The DTI said China was last year’s top 3 market for Philippine export products; Japan was first and United States is second. 

China was also 2013’s second major supplier of import products into the Philippines, with the U.S. being the first and Japan as third.

‘Only political relations is affected’

An International Studies professor at a Cebu university echoed the same view with DTI’s Caberte, saying countries having geopolitical issues does not necessarily affect their economic activities.

Allan Quiñanola, who specializes on international relations, said the conflict--particularly on territory--does not only happen between China and Philippines: “China also has other conflict with other countries. Taiwan and China have issues. But in terms of trading, they have better relations with each other.”

Quiñanola though stressed that the ongoing row on maritime rights has greatly affected the political relationship of the two.

“China in fact is expressing bitterness somehow,” he added.

The Cebuano professor also believed China would disallow any negative effects on trading with the Philippines, saying “I would think trade is more important on the part of China because of its emerging economy.”

The country actually needs a lot of resources to maintain its growing economy, he added.

He further said the sovereign country highly depends on banana exports from the Philippines because it is not good at producing bananas.

“We, too, don’t produce all the goods and services,” he noted. “There are also imported goods produced by China that we’re not good at producing.”

Win-win situation

This is what a Cebu business leader describes as a “win-win situation” wherein the two countries benefit from export and import activities.

Ma. Teresa B. Chan, the president of the Cebu Chamber of Commerce and Industry, said the ideal situation is that the Philippines is not in conflict with any country for smoother flow of trade and industry.

And fortunately, she added, both countries are very much aware of the fact that trading plays a very essential role in economic growth.

She believed the government is handling the conflict situation right but said, “We should not just give up any sovereign right just to keep peace. Possible repercussion or consequence of just giving up can also be just as bad.”

In fact, Chan also revealed the relationship between Chinese and Filipino businessmen in Cebu is far more good.

A report from the Philippine Embassy in China said that in October 2009, the two countries signed the five-year agreement Joint Action Plan for Strategic Cooperation to intensify relationship in the fields of politics, economy and trade, cultural and people-to-people relations.

The plan, it said, would remind all agencies of both countries on the execution of policies and programs that would improve the bilateral cooperative.

In fact, in August 2011 another five-year development program for Trade and Economic Cooperation was signed between the Republic of the Philippines and the People’s Republic of China, it added.

Meanwhile, Quiñanola shared that the reason why China is very aggressive and contentious in owning disputed territory in the West Philippine Sea is that it wants to have more resources.

“Because China is on the rise,” he noted. “It is searching for more resources to fuel and move its economy.”

While the Philippines is seeking for a multi-latteral approach to resolve the issue, Quiñanola said, China wants it to be discussed through a bilateral means.

“What they want is that we sit in a negotiation table and discuss--between China and Philippines only,” he cited.

However, the Philippines has already insisted to resolve the matter at the International Tribunal on the Law of the Sea   for a third party participation, hoping for mediation and resolution from the arbitral body.

And that the South China Sea territorial dispute still poses threat to the bilateral relations between China and the Philippines as both continue to press their claims on the territory, he concluded. (FREEMAN)