The Chinese are coming, and in a big way, unprecedented by any measure.
1. From 2001 to 2005, world trade with China grew at an annual rate of 41.9%. In 2005, bilateral trade amounted to almost US$17 billion. Our top exports to China are semiconductor devices, machinery parts and accessories, electrical and electronic machinery, and electronic micro-assemblies. Roughly a third of our total electronics exports are now skewed towards the Chinese market.
2. Imports from China to the Philippines in the first seven months of 2006 totaled US$2.103 billion; exports to China hit US$2.352 billion.
3. As of end-Sept 2006, the Philippines had foreign exchange reserves of US$21.56 billions. China had US$$987.9 billions, the largest in the world. By contrast, the mighty United States only has US$65.9 billions in official reserve assets as of Oct 20, 2006, half of tiny Hong Kong’s US$130 billions.
4. After pledging (in July 2006) US$6 billion in soft loans (20 years at 3% p.a. interest) to finance Philippine mega-infrastructure projects for its "super regions," China's Jinchuan Non-Ferrous Materials Corp and China Development Bank extended a US$1 billion technical and financial assistance to Philnico Industrial Corp's Nonoc nickel project in Surigao del Norte and Pacific Nickel Philippines Inc. This will be the biggest single Chinese investment in the country.
5. After granting US$400 million to finance the construction of the North Rail Project, Phase 1, Section 1, an additional US$500 million will be extended by China for the North and South rail projects in the Philippines.
6. Three ethanol fuel plants will be set up by China in the Philippines, involving the development of thousands of hectares of land for sugar cane, the main ingredient in ethanol production.
Two ethanol plants will be developed in Negros by BSBM Biofuels Corp and the Southern Negros Development Corp – one, for 120,000 liters/day in Murcia, Negros Occidental; two, an ethanol distillery with 150,000 liters/day capacity in Camugao and Camansi in Kabankalan City, using sugarcane molasses as feedstock. Some 10,000 to 12,000 hectares of land will be developed for these projects.
A third ethanol plant will be built in Zamboanga del Norte 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% energy self-sufficiency by 2010.
7. US$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 the exploration, development, and utilization of 4,568 hectares of mineral property in the Philippines.
8. The railway system in the island of Panay (Iloilo, Capiz, Aklan and Antique) will be rehabilitated and developed by the China Shenyang International Economic & Technical Cooperation Corp in partnership with Panay Railways Inc.
9. Century Properties Inc and the LEE World Group formed a joint venture firm to engage in the production and marketing of construction materials.
10. First Metro Investment Corp and Donghai Securities Co signed an agreement of cooperation in the field of securities, trading and investment banking services.
11. Another joint venture company to pursue real estate development in the Philippines and China was set up among Haisheng Real Estate Co., Century Properties Inc and FederalLand Inc.
12. An agreement was signed between the FFCCCII and All China Federation of Industry and Commerce, to increase business facilitation between the 2 countries.
13. An agreement was also 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.
14. 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. Two big nursing schools in China have expressed interest in hiring Filipino nurses to teach there.
15. Before the end of 2006, China will be setting up a second Consular post in Laoag City, Ilocos Norte (next to Cebu, outside of Manila), 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, Batanes (construction of the P10 million Basco airport terminal building has been completed), and thrice weekly international flights to Kaohsiung, Taiwan and Guangzhou, China, and 6 times weekly flights to Hongkong.
Remember that the North Luzon Agribusiness Quadrangle is being eyed as a food exporter to North Asia, with Cagayan province focusing on agriculture production.
16. The Philippines and China (joined 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.
17. China's biggest power distributor, State Grid Xiamen Electric, which supplies 88% of China's total electricity load and posted an US$89 billion net profit in 2005, will be bidding for the Philippine National Transmission Corp (or Transco) which will be privatized this December 2006 to bring down power rates. Should the Chinese company, in partnership with Monte Oro Resources & 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 Meralco and its IPPs.
My advice: Get out of the U.S. dollar while you can, and get into the Chinese Yuan when you can.
