Move over, America, the Chinese are coming INQ7.net
November 02, 2006
AND it is coming in a big way, quite unprecedented by any measure.
a. From 2001 to 2005, Philippine trade with China grew at an annual rate of 41.9 percent. In 2005, it amounted to almost $17 billion. Our top exports to China are semiconductor devices, machinery parts and accessories, electrical and electronic machinery, and electronic micro-assemblies. Now, roughly one-third of our total electronics exports are skewed toward the Chinese market.
b. Imports to the Philippines from China in the first seven months of 2006 totaled $2.103 billion, while exports to China reached $2.352 billion.
c. While the Philippines had foreign exchange reserves of $21.56 billion as of end-September, China ha $$987.9 billion -- the world's largest. The mighty United States had only $65.9 billions in official reserve assets as of Oct. 20, 2006, a pitiful half of what tiny Hong Kong had as its own reserves -- $130 billion as of end-September.
d. After pledging (in July 2006) $6 billion in soft loans (20 years at 3.0 percent annual interest) to finance Gloria Macapagal-Arroyo's mega-infrastructure projects for her "super regions," China's Jinchuan Non-Ferrous Materials Corp. and China Development Bank have given $1 billion in technical and financial assistance to Philnico Industrial Corp.'s nickel project on Nonoc Island in the southern province of Surigao del Norte and Pacific Nickel Philippines Inc. This will be the biggest single Chinese investment in the country.
e. And after providing $400 million to finance the construction of the NorthRail Project, Phase 1, Section 1, China will provide an additional $500 million in funding for the North and South rail projects in the Philippines.
f. Three ethanol fuel plants will be set up by China in the Philippines, involving development of thousands of hectares of land for sugar cane, the main ingredient in ethanol production.
Two ethanol plants in Negros island will be developed by BSBM Biofuels Corp. and Southern Negros Development Corp: one for 120,000 liters a day in Murcia town in Negros Occidental province, and another with a capacity of 150,000 liters a day in Camugao and Camansi in Kabankalan City, using sugarcane molasses as feedstock. About 10,000-12,000 hectares of land will be developed for these projects.
A third ethanol plant will be built in Zamboanga del Norte province by a joint venture with state-owned China Machineries Engineering, with a production capacity of 150,000 liters of ethanol daily, in line with the administration's goal of achieving at least 60 percent energy self-sufficiency by 2010.
g. $10 million has been committed in a mineral production agreement signed by Adnama Resources Inc., Fulim Global Mining & Export Corp., and Fujian Wahang Stainless Steel Co Ltd. for exploration, development and utilization of 4,568 hectares of mineral property in the Philippines.
h. The railway system in the island of Panay (comprising the provinces of Iloilo, Capiz, Aklan and Antique) will be rehabilitated and developed by the China Shenyang International Economic and Technical Cooperation Corp in partnership with Panay Railways Inc.
i. Century Properties Inc. and the LEE World Group have formed a joint venture firm to produce and market construction materials.
j. First Metro Investment Corp. and Donghai Securities Co. have signed an agreement of cooperation in the field of securities, trading and investment banking services.
k. A joint venture company for real estate development in the Philippines and China has been set up by Haisheng Real Estate Co., Century Properties Inc and Federal Land Inc.
l. An agreement has been signed between the Federation of Filipino-Chinese Chambers of Commerce Inc. (FFCCCI) and the All China Federation of Industry and Commerce to increase business facilitation between the two countries.
m. An agreement has been signed between the FFCCCII and the Fujian Normal University to establish a Filipino-Chinese language institute for professionals and overseas Filipino workers who want to learn the Chinese language.
n. Starting next year, the Philippines will be sending the first batch of 1,000 senior nursing students to China for a one-year tour of duty to share their knowledge in nursing care and expertise in hospital work with their Chinese counterparts. Already, two big nursing schools in China have expressed interest in hiring Filipino nurses to teach there.
o. Before yearend, China will set up a consular post in Laoag City in the northern province of Ilocos Norte (the second outside Manila after the one in Cebu), in anticipation of increased trade, tourism, cultural affairs and business transactions within the so-called "Golden Triangle," linking the Philippines, Taiwan and China, as proposed by the FFCCCII headed by Francis Chua. The Laoag International Airport has been bustling with nearly daily flights to Manila and Basco in the northernmost province of Batanes (construction of the P10-million Basco airport terminal building has been completed) plus thrice-weekly flights to Kaohsiung, Taiwan and Guangzhou, China, and six weekly flights to Hong Kong.
Something is definitely cooking. Remember that the North Luzon Agribusiness Quadrangle is being eyed as a food exporter to North Asia, with Cagayan province focusing on agriculture production.
p. The Philippines and China (joined in by Vietnam) have just finished joint seismic research in the disputed Spratly Islands in the South China Sea. Soon, joint exploration will be conducted, to turn an area of possible conflict into an area of cooperation. Funding should not be a problem, should a major discovery be made.
q. China's biggest power distributor, State Grid Xiamen Electric, which supplies 88 percent of China's total electricity load and which posted $89 billion in 2005 net profit, will be bidding for the Philippines' National Transmission Corp. (Transco), which will be privatized this December to bring down power rates. Should the Chinese company, in partnership with Monte Oro Resources and Energy Inc. (an affiliate of publicly listed A. Brown Co. Inc.), win the bid, it should put an additional check on the transfer pricing between Manila Electric Co. and its independent power producers.
My advice to my friends: Get out of the US dollar while you can, and get into the Chinese yuan when you can.
VICTOR N. ARCHES II, 179 Pilar Street, Addition Hills, San Juan, Metro Manila (via e-mail)
