Commercial or political?

The billions of dollars in investments and financial assistance hyped by the government as forthcoming after President Duterte’s visit to China last year may be real after all. The Philippines secured an unprecedented $24 billion in investment and credit line pledges from China last October, but critics doubted whether such a huge amount would ever materialize. Others demanded to know what quid pro quo was tied to the pledges.

Developments last week indicated that the numerous agreements signed in Beijing in 2016 were not all for show. For instance, Chinese Vice Premier Wang Yang visited the Philippines last week, bringing with him a package of deals and loans worth billions of dollars. Wang witnessed the signing of a number of agreements during his 4-day visit, including a $1-billion deal for farm exports and financing for two rail projects, a hydroelectric dam and an irrigation system.

Also last week, 18 Chinese firms signed in Manila a purchase order for $1.7 billion worth of Philippine products. Chinese Ambassador to the Philippines Zhao Jianhua said his government was encouraging Chinese firms to buy Philippine products, the first time among Asean members that the Chinese government had encouraged its businessmen to place a purchasing order for various agricultural, mineral and chemical products ranging from coconut oil, banana, pineapple and mango to nickel and copper.

The Chinese government likewise signed last week an agreement to extend nearly P4 billion in grants for the construction of two bridges over the Pasig River. While there was still no timetable for the projects, Ambassador Zhao said China would want to make them “iconic symbols of Chinese and Philippine friendship.”

China will also draft a 6-year program to develop economic ties with the Philippines following the 3-day visit of Chinese Commerce Minister Zhong Shan earlier this month to restart the Philippines-China Joint Commission on Economic and Trade Cooperation, which had been dormant for five years.

In other sectors, Hainan Island in southern China is planning to open direct flights to Manila and Cebu this year to help boost tourism. The Chinese government is encouraging its people to visit the Philippines, and officials estimated that as many as a million Chinese tourists can be expected this year.

Relations between the two countries started to warm in recent months after Mr. Duterte made a pivot to develop a better working relationship with Beijing, highlighted by his state visit to China in October. The change in foreign relations followed his word war with the United States, which criticized his administration’s human rights record in connection with the war on drugs, which has resulted in more than 7,000 killings.

Boosting economic relations with China, the world’s second-biggest economy, will truly be beneficial to the Philippines. China is the Philippines’ second major trading partner with $17 billion value in total trade. Exports to China amounted to $6 billion in 2015, very minuscule when considering China’s total imports of about $2 trillion in 2015. Another promising area is investment from China, which infused into the Philippines only $32 million in 2015. Again, this was so tiny considering China’s total outward investments of around $130 billion in 2015.

Enhancing Philippine exports will also help right the trade imbalance that has favored China. According to data from the Philippine Statistics Authority, the Philippines imported $14.99 billion worth of Chinese products last year compared to the $6.19 billion worth of Philippine goods shipped to the Chinese mainland.

Trade Secretary Ramon Lopez points out that the renewed friendship in this part of the world has opened huge opportunities for the Philippines’ trade with and investment from China. It is our fervent hope that these deals are purely commercial in nature, with no political strings attached. We’re thinking of, and are naturally alarmed by, China’s announced plan to build a permanent structure on the Philippines’ Panatag Shoal, not long after its survey ships were spotted on the Philippines’ Benham Rise.