Vulnerable

In the remote possibility that China tightens the screw because of President Ferdinand Romualdez Marcos Jr.’s suddenly becoming pro-American, the Philippines is remarkably vulnerable.

The realities of geopolitical economics come into the picture.

Based on 2022 data, the Philippines does 44 percent more trade with China ($38.35 billion) than with the US ($21.38 billion). The Philippines imports three times more from China ($26.8 billion) than from the US ($8.92 billion). Imports from the US mainly are soy bean oil and pellets, wheat, ICs, milk and cream and materials for making dice.

In 2022, total trade with the US amounted to $21.38 billion. The Philippines exported $12.47 billion to the US and imported $8.92 billion for a trade balance in Manila’s favor of $3.55 billion.

A saving grace are the earnings of Filipino expats in America.

Per Statistica, the US is the biggest source of OFW remittances to the Philippines, $13.4 billion, or 42 percent of the estimated $32-billion total annual OFW remittances to the Philippines.  The $32 billion is three times the biggest FDI the Philippines has secured in recent years, $10.23 billion in 2021.  And the $13.2-billion OFW remittances from the US easily exceed the best yearly FDI (the $10.23 billion) ever by 31 percent.

In terms of overall financial inflows, thus, the Philippines still gets the most money from the US as a single source.

As of June 2020, the US was the top destination for overseas Filipinos. About 4.21 million Filipinos live in the US, making them the biggest source of OFW remittances.

Of the 4.21 million Filipino-Americans, 1,695,715 (40 percent) are in California; 371,528 (9 percent) are in Hawaii; 201,971 (5 percent) are in Texas; 188,890 (4.5 percent) are in Washington and 173,592 (4 percent) are in Nevada.

“Filipinos are much admired in America for the excellence and quality of their work,” Marcos told the Filipino community in Washington DC on April 30, 2023. “Every one of you is an ambassador of the Philippines.”

In 2022, net FDI from the US amounted to $250.39 million. For January 2023, net FDI from the US was $10.18 million.

However, the US remains an important source of ODA, mostly in health, peace and humanitarian assistance. In 2021, US ODA was $629.69 million, 1.95 percent of total US ODA to the world.

As a source of ODA (loans and grants) for the Philippines, the US is seventh in ODA sources and No. 1 in ODA as pure grants.

Aside from giving $500 million yearly for the use of Clark and Subic, the US used to be the Philippines’ No. 1 trade partner, No. 1 investor and No. 1 source of tourists. Not anymore. The US is now only the No. 3 trading partner. China is No. 1 with total Philippine trade of $38.35 billion – $11.55 billion in exports and $26.8 billion imports by the Philippines.

From a peak of P35.37-billion approved US investments in the Philippines (No. 1) in 2020, American investments have fallen to P3.8 billion in 2021 and to P5.0 billion in 2022 (No. 5).

In case of conflict therefore, Manila is very vulnerable to trade and economic sanctions by Beijing. But will China impose such sanctions? Nobody can tell.

In any case, it is useful to recall that after his election in May last year, president-elect Bongbong Marcos attended a June 10, 2022 party honoring pro-China Filipinos. The Chinese ambassador to the Philippines was present.

BBM told his pro-China audience that an independent foreign policy for the Philippines “is (the) best in the national interest and I think it is to be advantageous not only to our friends in China but to all our friends around the world.”

“I encourage you all to continue to work to strengthen these relationships. I add my congratulations to the awardees, I thank you all for putting in the Hall of Fame, my mother (Imelda Marcos). And I think I may be biased, I think it is just right because China cannot find a greater champion than my mother in the Philippines,” Marcos said.

“Make it (the relationship) stronger and deeper,” he urged.

The late President Ferdinand Edralin Marcos was among the first Asian leaders to recognize on June 9, 1975 the People’s Republic of China as the sole legal government of China, four years ahead of the US.

On June 9, 1975 President Marcos Sr. and Chou En Lai signed a 576-word joint communiqué, which says in part:

“The Philippine Government recognizes the Government of the People’s Republic of China as the sole legal government of China, fully understands and respects the position of the Chinese Government that there is but one China and that Taiwan is an integral part of Chinese territory, and decides to remove all its official representations from Taiwan within one month from the date of signature of this communique.

“The Government of the People’s Republic of China recognizes the Government of the Republic of the Philippines and agrees to respect the independence and sovereignty of the Republic of the Philippines.

“The two Governments recognize and agree to respect each other’s territorial integrity.”

Marcos made a five-day state visit to China in June 1975. He was met by Chairman Mao Tse-tung.

I remember interviewing Marcos Sr. in his study room in Malacañang, the presidential palace, after he met Chairman Mao Tse-tung. The President told me: “I asked Chairman Mao to promise not to help the Communist Party of the Philippines and the New People’s Army (NPA) in their war against the Philippine government.”

“Mao kept his promise,” Marcos confided to me.

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