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Aquino’s big boo-boo at APEC: Snubbing our biggest trading partner

President Benigno Aquino 3rd’s bungling in having the APEC event in Manila cost Filipinos horrendous traffic, P10 billion in taxpayers’ money, and tens of billions of pesos in foregone contract workers’ wages and business income.

That is just the short-term cost. The worse, longer-term damage could yet be realized from the repercussions of Aquino’s cold-shoulder treatment of Chinese President Xi Jinping as though he was the head of some junior member economy of the Asia Pacific grouping.

Aquino ignoring Chinese President XI
Aquino ignoring Chinese President XI

No doubt as a sovereign nation we have to use all peaceful means to recover Scarborough Shoal, which, because of Aquino’s inept handling

China has been able to wrest from us in 2012. We also need to prevent China from ever attempting to get our Kalayaan Islands chain (especially the biggest, Pag-Asa Island). We also have to stop China from claiming the 200-nautical mile of seas as its exclusive economic zone surrounding the artificial isles it built over submerged shoals, which overlap with our own.

But we have to separate this issue over territorial claims from our economic relationship with China.

Most people, obviously this Administration, haven’t really noticed that China has become our biggest trading partner in just a decade’s time.

Whether we like it or not, what the US was to us as our biggest trading partner from the 1950s to the 1970s and Japan from the 1980s to the 1990s, China has been in the last few years and will be in this century, our dominant trading partner. While Japan could not translate its economic power in the region to military strength because its Constitution bans it from having a real armed force, there are obviously no such restrictions for China, with its excursions into the South China Sea giving it justification for its build-up of a military force in the region.

As the accompanying table shows, our total trade (imports plus exports) with China last year accounted for about 20 percent of our total trade, followed by Japan, with the US now just our third trading partner, and fast receding actually as a major trading partner.


APEC BIG 6                       64.6
China                                   19.7
Japan                                   15.0
United States                      11.4
Singapore                             7.1
SKorea                                  6.0
Taiwan                                  5.4
APEC ASEAN                    12.3
Thailand                              4.6
Malaysia                              3.4
Indonesia                            3.0
Viet Nam                             1.3
Other APEC
members                            3.9
Other countries               19.2

Source: UNCTAD      

The APEC events would have been perfect for Aquino to focus on our economic relationship with China, to separate it from our territorial disputes. After all, it was an “economic cooperation” summit, not one like the ASEAN summit, which had a more open agenda.

Aquino, though, practically made it a party to show off his servility to the United States. President Barrack Obama even visited BRP Gregorio del Pilar, which the US Coast Guard handed down to our Navy and pledged two more similar hand-me-downs to the Philippines – vessels intended to put up a token fight with the Chinese in the West Philippine Sea. Obama’s actions were a clear message to China, delivered on what is supposed to be an economic cooperation meeting.

Other than a formal bilateral meeting with the US, the Philippines had such conferences with Korea, Australia, Canada, and even Chile, the latter three countries having insignificant economic relations with our country.

Aquino didn’t bother to ask for a bilateral meeting with China, which is not only our biggest trading partner but is now the biggest investment site for the country’s taipans, such as Henry Sy, who has set up several malls on the Chinese mainland, “Oishi” manufacturer Carlos Chan, who operates several noodles factories there, and tobacco magnate Lucio Tan.

There are, in fact, numerous issues that require negotiations with China, among them is one of our biggest problems: smuggling. The bulk of smuggled goods into the country, from agricultural products to appliances, to even coal, have been coming from China. I estimated these to amount to P1.3 trillion from 2010 to 2014, which means the equivalent of SM Stores’ sales for 10 years.  This also means foregone duties and value-added-taxes of P345 billion. (The “bulk of smuggled goods comes from China: P2 trillion from 2010 – 2014,” The Manila Times, Aug. 28, 2015).

China has not only become our dominant trading partner but one that practically monopolizes certain industries, as I will discuss soon in this space.

A sampler: more than 50 to 70 percent of our imports of garments and textiles, kitchen utensils, motorcyles, motor pumps, coal, vegetables, fruits and inputs for our semiconductor industry now come China.

Those advocating a “boycott-China-products” campaign should get a reality check, which is not too difficult, really. Just go to a big supermarket: half of its shelves would practically be empty if a boycott-China were in effect. Our biggest export – chip assembly – would trickle to a stop. More than half, or even more of household appliances, computers, laptops, smartphones and other infotech gadgets are shipped in from China.

It was a bad, bad idea for President Aquino to accord this Chinese guest such a shabby treatment. It’s a good thing he’s stepping down soon. But he will be leaving a legacy of such a herculean task for his successor to improve the country’s relations with our biggest trading partner.

Aquino’s lousy treatment of China’s leader could even be the worst thing he has done in office, if ever that superpower retaliates.