China now second-largest trade partner of RP

Despite the global economic crisis, trade between China and the Philippines would take off again and China was even expected to overtake Japan as Manila’s second-largest trading partner soon, officials said. After growing more than 30 percent annually for seven years since 2000, bilateral trade dropped by 6.7 percent in 2008 to $28.28 billion, Chinese Customs statistics showed.

The decline widened in 2009 as in the first seven months’ trade income dived 43.6 percent year-on-year to $10.4 billion, the steepest decline among Southeast Asian countries trading with China.

“The growth of China-Philippines trade was robust in the past. I think as the global recovery takes hold, our bilateral trade will regain its vigor,” Chinese Ambassador to the Philippines Liu Jianchao told Xinhua news agency on the eve of the establishment of the China-Asean (Association of Southeast Asian Nations) free trade area.

“Complimentarity” exists in the two countries’ economies, and there was room for growth, Liu said. He cited an example: China expects more imports of agricultural, mining and aquatic products from the Philippines.

Data from the Chinese Embassy show that around 80 percent of Philippine merchandise exports to China today are electronic parts. Officials expect a more diversified product mix for trade as the China-Asean Free Trade Agreement (FTA) takes effect. Under the agreement, duties of more than 7,000 trading items will be reduced to zero by January 1, 2010.

Trade to grow faster

“In the next five years, the growth rate of bilateral trade will double or triple at the trend we are engaging with China,” said Amador Pablo, senior trade specialist of the Department of Trade and Industry of the Philippines.

He told Xinhua over phone that China has been the country’s third-largest trading partner since 2005 and was expected to become the No. 2 as the Philippines has yet fully developed the Chinese market.

Separately, Governor Amando Tetangco of the Philippine central bank, a key economic manager of the Arroyo administration, said that the government fully supports efforts to increase trade and investment with China, especially now when Asia is leading the world out of recession.

Since the outbreak of the economic meltdown late last year, Asian officials have pledged to expand cooperation to reduce the region’s export-dependence on Western consumers.

According to the official data, China is now the largest trading partner of Vietnam and the second-largest partner of Thailand, Singapore and Myanmar.

“So you will see in the near future, China will become a bigger trading partner not only of the Philippines but also of other Asean countries,” Tetangco said.

Made in China

The popularity of Chinese products is ever more visible during the Christmas season here in the Philippines. Holiday shoppers stream in and out of Manila’s Chinatown malls and crowd the narrow streets over the past two weeks.

In the 168 Shopping Mall, a popular destination for shoppers hunting bargain Chinese goods, the number of visitors topped 120,000 daily in good days and averaged 100,000 during the Christmas season, the mall operator told Xinhua.

“The quality is ok, but what is important is things are definitely cheaper here. See, so many people are shopping here,” a Filipino shopper said.

Zhou Zongyi, a Chinese immigrant who sells toys, light bulbs and crystal displays, said that low-income Filipino families depend on Chinese imports for daily necessities, from things as simple as a broom.

Zhou added that over a decade the influx of Chinese goods, helped by gradual reduction in tariffs, kept the prices of basic commodities low and made life easier for poor families.

“They are able to spend less for quality products. Booming trade does have a positive impact on the low-income families here,” he said, adding that because of the booming business opportunities, Chinese retailers now can be found everywhere in the Philippines, from the far north mountainous region to the restive southern Sulu archipelago.

Zhou is a beneficiary himself. When he immigrated to the Philippines in 1987 as a college graduate, Zhou said he was all alone and brought with him only 4 Hong Kong dollars and a watch. Over the past 20 years, by trading goods first from Taiwan, then from the Chinese mainland, he has become rich, and his business expanded from Manila to provinces.

Now at 46, Zhou is a father of four and among the richest Chinese commodities retailers in town.

But he thinks that there is still huge room for growth of retailing business. “As long as the big environment remains good and pro-trade, we traders can always find a way to survive and make money,” he said.

Tourism, English education

Besides merchandise goods trade, the Chinese ambassador said he also expected an increase of Chinese tourists to the Philippines as the Chinese-Asean free trade area frees up service trade and investment.

Despite its pristine beaches and geological vicinity to China, the Philippines attracted only 160,000 Chinese visitors last year, out of 50 million out-bound Chinese tourists.

In a previous interview, Liu said that security volatility, higher costs and insufficient promotion are holding back Chinese tourists. Bolts of violence in the restive Mindanao region have been detrimental to tourism of the country as a whole, the envoy said.

Chinese holidaymakers opted for South Korea, Japan, Singapore, Malaysia or Thailand—if they planned to travel in the region, Liu said. And for example, more than four times of Chinese tourists went to South Korea than to the Philippines in 2008, he added.

On the other hand, Pablo said that the Philippines was also marketing itself as an attractive English language and nursing study destination to Chinese students thanks to the country’s lower-cost but quality education for non-English speaking Asians.

Chinese Embassy statistics show that there are roughly 3,000 Chinese studying in the Philippines, only a tip of averagely 20,000 South Korean students in the country every year from 2004 to 2008.

Bai Jinlong, a 22-year-old Chinese studying international auditing in the Far East University, said that most of his fellow Chinese students graduated with influent English and a brighter future.

“Many of them went to the US for further study or for work. Things would not be as easy if they had not studied here,” Bai added. –XINHUA