China, Philippines cautiously flip trade dip as ‘hot economics, cold politics’ define relations
- Recent high-profile trade deals signed between Beijing and Manila show how economically reliant the two sides have become on each other despite diplomatic rows
- Beijing’s tense ties with Manila come as its relations with Washington remain strong, and the Philippines is wary of China wielding trade restrictions as a weapon
For years, China has been the Philippines’ top trade partner and top import supplier. And in the first half of 2023, China surpassed the United States and Japan to become the Philippines’ biggest export market, data from the Philippine Statistics Authority shows.
“The phrase ‘hot economics, cold politics’ accurately defines the relations between the Philippines and China, as both countries have strong economic ties despite having political problems or differences,” said Severo C. Madrona Jnr, a professorial lecturer with the Department of History of Ateneo de Manila University.
“Even when political ties are difficult, collaboration can occasionally result from pragmatic business goals, because the dynamics of the two fields are not necessarily directly related,” he said.
Electronic parts and components, industrial products such as iron and steel, machinery and minerals are the biggest areas of bilateral trade, China’s customs data shows.
But in the first seven months of 2023, China’s total trade value with the Philippines still shrank by 14 per cent compared with a year earlier, as Chinese exports dropped by 11.2 per cent and imports fell by 21.3 per cent – along with falling commodity prices and weak global demand for electronic products, the official data indicates.
As a result, the share of trade with the Philippines in the overall value between China and the Association of Southeast Asian Nations fell to 13.96 per cent in the same period, down from 15.85 per cent a year earlier.