China and the Philippines only established diplomatic relations in 1975, but the trade ties between the two countries can be traced back to as early as the 10th century.
It is these centuries-old trade ties, forged through the ancient Maritime Silk Road, that will continue to strengthen China-Philippine relations in coming years, said analysts and senior officials at the China-Philippines Business Forum held in Manila on Monday.
The forum, which focused on the theme “Taking the China-Philippines Relations to New Heights”, was organized by China Daily and sponsored by Bank of China. Representatives from the Philippine and Chinese governments, business, academics and the media attended the event.
Participants at the forum discussed how Chinese investments and infrastructure financing in the Philippines and the 29 cooperation agreements signed during Chinese President Xi Jinping’s state visit to the Philippine capital on Nov 20-21 have deepened bilateral relations.
“Economic cooperation is a win-win choice for us and should be the bedrock of our relations,” said Tan Qingsheng, charge d’affaires at the Chinese embassy in the Philippines.
Tan said in his keynote speech that the Philippines and China have a “history of friendly exchanges for more than 1,000 years”. Such relations continue to this day, and China is extending financial and technical support to help the Philippines promote economic growth and social development, he noted.
Tan cited the China-funded projects under Philippine President Rodrigo Duterte’s flagship infrastructure development program.
The massive program, more popularly known as “Build, Build, Build”, aims to transform the Philippines into an upper-middle-income economy by 2022. It needs 3.6 trillion pesos (US$175.6 billion) to upgrade the country’s infrastructure over the next three years.
Tan said China-funded projects are part of the “Build, Build, Build” program. “They are proposed by the Philippine side and are economically viable and positive for the Philippine economy.”
Philippine Finance Undersecretary Mark Dennis Y.C. Joven said Philippine-China relations had “experienced a golden age” in recent years.
He said China is now the Philippines’ biggest trading partner and one of the biggest sources of investments and tourists. He noted that in the first quarter of this year, FDI from China surged over 500 percent compared with the previous year.
Official data also show China recently emerged as a key trading partner and tourism market for the Philippines.
According to the latest report issued by the Philippine Statistics Authority, China has surpassed Japan to become the Philippines’ biggest trading partner.
In the first half of this year, trade between the two countries reached US$14.08 billion. The Philippines exported US$4.09 billion worth of goods to China, while payment for imports was valued at US$9.99 billion.
Data from the Philippine Department of Tourism show that next only to South Korea, China is now the second-biggest source of tourists for the Philippines. From January to September, Chinese visitor arrivals surged by 34.9 percent year-on-year to more than 972,550.
John Gong Jiong, economics professor at the Beijing-based University of International Business and Economics, said increased Chinese investments in the Philippines “seek mutual benefits for mutual interests”.
“China-Philippine economic relations will present many opportunities, wealth, and will (create) a great future for our nations,” he said.
Zhou Li, editorial board member of China Daily Group and publisher and editor-in-chief of China Daily Asia Pacific, said there’s a need to “reaffirm economic commitments” between China and the Philippines, especially at a time when the “US-China trade war looms large”.
Deng Jun, country head for Bank of China’s branch in Manila, said the two countries have also deepened their financial cooperation in the past few years.
Deng said the bank has committed to extend a US$3-billion credit line from 2016 to 2022 to finance the Philippines’ infrastructure and trade.
Three of the 29 agreements signed during Xi’s state visit will enhance the financial cooperation between the two countries, he said.
These three documents are the Memorandum of Understanding on Renminbi Clearing Arrangement between the central banks of two countries, the MOU on Panda Bonds Issuance between the Philippine Department of Finance and Bank of China, and Letter of No Objection to the Organization of the Renminbi-Philippine Peso Foreign Exchange Trading Market granted by the Philippine central bank to the Philippine RMB Trading Community.
Deng said the renminbi-peso direct trading platform will benefit Chinese and Filipino investors, entrepreneurs and tourists. This will expand business opportunities in both countries as they no longer have to convert their respective currencies to US dollars to seal financial transactions.
“It will save friction costs, reduce the foreign exchange exposure risks, and promote the economic cooperation of both countries,” he said.
Deng added that BOC served as underwriter for Philippine bonds to help the Duterte administration raise funds for its infrastructure program.
“We were the lead underwriter of the successful issuance of the ‘Panda Bond’, and we received several international awards,” he said.
In March, the Philippines issued 1.46 billion yuan (US$230 million) in three-year “Panda Bonds”. And the country’s first “Panda Bond” issuance generated 9.22 billion yuan in bids — 6.32 times the approved issue size — according to National Treasurer Rosalia de Leon.
Participants in the China-Philippines Business Forum likewise stressed that the Philippines and other Southeast-Asian countries have a key role to play in the Belt and Road Initiative.
Federico Macaranas, adjunct professor at the Asian Institute of Management, cited Chinese Premier Li Keqiang’s view that the Maritime Silk Road — the sea-based trade component of the BRI — is primarily oriented toward the Southeast-Asian region.
In the case of the Philippines, Macaranas said the country’s interest in the BRI needs to be viewed from the perspective of “comprehensive and strategic cooperation” that was formed after Xi’s visit.
Macaranas said the dispute over the South China Sea had once strained China-Philippine relations, but “the economic and social underpinnings of China-Philippine relations must not be determined by a single, albeit very important, issue”.
“Other dimensions are needed to ensure 21st century peace, prosperity and sustainable development,” he said.
Tan said the Philippines “is a natural partner” in the BRI, and that one of the most important documents signed during Xi’s visit was the Memorandum of Understanding on Cooperation on the Belt and Road Initiative.
The MOU formalizes the Philippines’ participation in the BRI. The two countries also agreed to cooperate in developing the economies that are part of the initiative.
Tan said the MOU signing and Xi’s invitation to Duterte to attend the second Belt and Road Forum for International Cooperation in April next year will lift Philippine-China relations to a new level.
Deng said BOC has actively participated in the BRI and encouraged other banks to invest in the Maritime Silk Road.
He said funding infrastructure projects is just one way commercial banks can participate in the BRI. He noted that the BRI has several components, such as financial and trade connectivity. He said banks can also invest in, and benefit from the BRI by facilitating trade.
“There are tremendous opportunities for banks to develop their businesses to support the construction of the Maritime Silk Road. Consequently, benefits will arise from these opportunities,” he said.