Companies in China and the Philippines look ahead to boost economic growth
Visitors look to buy goods at the booth of the Philippines during the 2022 China International Fair for Trade in Services held in Beijing. (QI XIAOYI / XINHUA)
With the Regional Comprehensive Economic Partnership pact creating more favorable conditions for signatory countries, the business ties of China and the Philippines will be enhanced in multiple ways throughout 2023, as both sides optimize their trade structure and upgrade cross-border economic cooperation to maintain robust growth, said market observers and business leaders.
They said there are opportunities in China's demand for products such as timber, rice, vegetables, fruit and aquatic products which is boosted by the large number of middle-income earners, as well as the Southeast Asian country's fast growth in infrastructure and industrialization.
The RCEP has boosted regional trade and investment liberalization, lowered tariffs, removed intraregional trade barriers and boosted economic integration in the Asia-Pacific region.
Zhang Jianping, head of the center for regional economic cooperation at the Chinese Academy of International Trade and Economic Cooperation
Coming into force on Jan 1, 2022, the RCEP comprises 15 Asia-Pacific countries, namely 10 member economies of the Association of Southeast Asian Nations — Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam — and their five trading partners of China, Japan, South Korea, Australia and New Zealand.
Zhang Jianping, head of the center for regional economic cooperation at the Chinese Academy of International Trade and Economic Cooperation, said they will benefit from RCEP cooperation in the long run, as it assists the free flow of goods and attracts foreign direct investment.
The pact has a combined gross domestic product of $26.2 trillion, representing around 30 percent of global GDP, 28 percent of global trade, and 32.5 percent of global investment. More than 90 percent of trade in goods within the region will eventually be tariff-free.
"The RCEP has boosted regional trade and investment liberalization, lowered tariffs, removed intraregional trade barriers and boosted economic integration in the Asia-Pacific region," said Zhang. He added that the all-dimensional and multiform cooperation platforms will give impetus to the growth of Sino-Philippine trade ties in coming years.
China's trade with the other RCEP members expanded 7.9 percent year-on-year to 11.8 trillion yuan ($1.71 trillion) in the first 11 months of 2022, accounting for 30.7 percent of its total foreign trade value, data from China's Ministry of Commerce show.
More efforts will be made to promote the high-quality implementation of the RCEP and other free trade agreements, make full use of such agreements and improve their comprehensive utilization efficiency, said Shu Jueting, the ministry's spokeswoman.
China's opening-up will bring more investment and export revenue to the Philippines, strengthening bilateral relations between the two countries, said Huang Xilian, Chinese Ambassador to the Philippines.
"China's further opening-up to the outside world will open up fresh opportunities for neighboring countries, especially the Philippines," he said, adding that the country's exports to China have been growing rapidly over the past two years.
Similar views were expressed by Lucio Blanco Pitlo III, a research fellow at think tank Asia Pacific Pathways to Progress Foundation in Manila. "Greater market access to China for Philippine agricultural exports will help reduce rural poverty," he said. Sino-Philippine trade surged 8.3 percent year-on-year to $80.41 billion between January and November in 2022, statistics from China's General Administration of Customs show.
Representatives attend the groundbreaking ceremony for the Samal Island-Davao City bridge project, a key project between China and the Philippines. (WU MALI / XINHUA)
The Philippines mainly exports electronic products, machinery parts, organic coconut products, coco fiber, aquatic products, ethanol, dried sorghum, garments, textiles, fatty alcohol, fruit, copper cathodes and potassium sulfate to China.
Meanwhile, China ships construction machinery, motorcycles, trains, manufacturing equipment, steel, electronics, textiles, garments and household appliances to the Philippines. Chinese passenger vehicles and trucks have also become popular in the country.
Changan Ford Automobile, a joint venture between Chongqing-headquartered Changan Automobile and the United States-based automaker Ford Motor, exported more than 700 mini SUVs to the Philippines in June 2022.
The Philippines is now one of the biggest markets for Chinese-made vehicles in the world, according to a report released by the Beijing-based China Association of Automobile Manufacturers in 2022.
Eager to promote trade between Ningbo in East China's Zhejiang province and ASEAN member economies, the city started to operate its first air freight service to the Philippine capital, Manila, in December. The service runs three times a week, according to the operator Longhao Airlines, which is based in Zhengzhou, Henan province.
The service route mainly exports a variety of e-commerce products and general cargo to the Philippines, as well as imports of aquatic products, said Sun Xiangyang, deputy director-general of Ningbo Customs, a local unit of China's General Administration of Customs.
Thanks to the complementary trade structure and closer business ties between China and the Philippines, Filipino companies sealed $655.15 million worth of goods during the fifth China International Import Expo, which was held in Shanghai in early November, 2022, according to information released by the Philippines' department of foreign affairs.
The department said sales at the grand event trumped the $597 million sales achieved at the 2021 CIIE.
"The amount of products we export to China has vastly increased in the past five to six years, and sales were five times larger compared to the time the Philippines participated in the first edition of the CIIE in 2018," said Mario Tani, head of Shanghai branch of the Philippine Trade and Investment Center.
More Filipino businesses joined the fifth CIIE; there were 62 food and food-related exporting companies brought together in the Philippine pavilion, according to the PTIC.
With its abundant resources and market potential, the Philippines is perfectly matched with China's consumer base, technologies and financing. With this understanding, the Philippines is open to Chinese investment to take on today's global trends and issues, such as healthcare and digital and green development, said Zhao Ping, deputy head of the China Council for the Promotion of International Trade, based in Beijing.
The collaboration with China is also essential to boost the Philippines' efforts to strengthen its downstream industries, leading to value-added export commodities and making the country a key part of the global value chain in the light industry and electronic component manufacturing, she added.
Business ties aside, tourism experts predicted that more Chinese tourists will travel to the country this year, after China eased its COVID-19 control policies. Airlines, such as Air China and China Southern Airlines, have recently resumed more international passenger flights.
For instance, China Southern Airlines, one of the country's three major airlines, increased its international flights from Guangzhou to Manila, the Philippines; Dubai, the United Arab Emirates; Bangkok, Thailand; and Phnom Penh, Cambodia, back in October.
Jiang Yiyi, deputy head of the School of Leisure Sports and Tourism at Beijing Sport University, said China hopes to work with ASEAN countries to assist travel, strengthen the promotion of tourist resources and expand mutual investment in tourism.