image image

The Philippines

Sea change: Philippines drops tough talk against China to hail new era of economic ties

After Manila drops its belligerent stance on maritime disputes, trade minister predicts even faster growth in economic ties between nations

PUBLISHED : Wednesday, 12 July, 2017, 8:32am
UPDATED : Wednesday, 12 July, 2017, 2:45pm

The Philippines’ trade minister is predicting economic ties with China will grow faster than ever as the island nation sets aside their maritime border disputes, signalling a sea change from Manila’s confrontational approach to diplomacy initially under a tough-talking new president.

A year after an international tribunal dealt a blow to Beijing’s assertiveness in the South China Sea, Philippine Secretary of Trade and Industry Ramon Lopez told the Post in an exclusive interview on Tuesday that his country was taking a “realistic and practical” approach to their territorial disputes.

As the Philippines’ target for GDP growth was an ambitious 7 to 8 per cent in the coming five years, Lopez said, China would be the key force to help his country achieve that. He pointed to the 34 per cent year-on-year growth of exports from the Philippines to the mainland and Hong Kong from January to May.

“I credit it to the wisdom of our president [Rodrigo Duterte] to really be more realistic and practical, to consider the positive points of having a relationship with China renewed,” Lopez said.

“He has mentioned in many of his statements that why fight China when we can set aside the differences and focus on areas of cooperation, focus on how China and the Philippines can help in mutual growth?”

Wednesday marks the one-year anniversary of when the Permanent Court of Arbitration at The Hague rejected Beijing’s territorial claims in the South China Sea, saying they lacked legal basis.

No Chinese boycott of Philippine products over tribunal’s South China Sea ruling: Beijing official

The legal challenge was initiated by Manila in 2013 under then-president Benigno Aquino.

When Duterte ran for president last year, he was belligerent about taking on Beijing, even declaring he would take a jet ski to the disputed Spratly Islands and plant his country’s flag there. He did not carry out the threat.

Relations between Beijing and Manila have improved significantly after Duterte’s initial blunt talk, and both sides have agreed to enhance communication and establish a mechanism for cooperation between their coastguards.

Lopez also noted China’s lifting of a ban on the import of bananas and mangos from the Philippines had boosted his country’s exports. While total global exports in the first five months of this year grew 14 per cent year on year, the figure hit 34 per cent for the mainland and Hong Kong.

Most Asean countries ‘want to stay out of Beijing’s South China Sea dispute with the Philippines’

“It will only grow faster because it is only now we are getting to see a fuller impact of this relationship, the fuller impacts of the benefits of having a revived and renewed relationship,” he said.

“It is only now that Chinese investors are taking a second look at the Philippines, when we have improved the relationship. In the past five years, nothing much was really happening.”

Chinese investors are taking a second look at the Philippines
Ramon Lopez, Philippine trade minister

To make it easier for Chinese citizens to do business in the Philippines, Lopez said, he was open to the idea of waiving their required visas for up to a week. He said he could raise the suggestion to the relevant department “if there is a likelihood of that being raised by Chinese investors”.

“If you want to explore business opportunities and therefore you want to visit the Philippines and meet the people, that is something we can look at,” he said.

The trade minister reassured investors that it was now “much safer” to do business in his country since Duterte launched his controversial war on drugs. The Philippines’ crime rate had dropped 53 per cent since Duterte took office, he noted.

Xu Liping, a professor at the Chinese Academy of Social Sciences’ Institute of Asia-Pacific Studies, said Duterte made the “right decision” to seek closer ties with China for economic benefit.

China and the Philippines must find common ground on the South China Sea

“If the Philippines does not make friends with China, its GDP will not be growing this fast. China plays an important role,” he said. “The Aquino administration really hurt trade relations between the countries.”

The Philippines’ ties with Hong Kong also hit rock bottom with Aquino as president in 2010 when a disgruntled policeman in Manila took a bus full of tourists hostage. Eight Hongkongers were killed in a bungled rescue.