By Erika Mae P. Sinaking, Reporter and Francessca S. Abalos
THE Philippines risks manufacturing and export disruptions if trade ties with China deteriorate amid maritime disputes in the South China Sea, since local industries depend on Chinese raw materials and components that may be difficult to replace, the Philippine Exporters Confederation, Inc. (Philexport) said.
“It’s not easy to replace the imports from China,” Philexport President Sergio R. Ortiz-Luis, Jr. told BusinessWorld by telephone, noting that local manufacturers rely on Chinese parts and raw materials to produce finished goods for export.
He also disputed the assumption that the US is the Philippines’ biggest export market, saying Mainland China and Hong Kong combined buy more Philippine goods.
“For exports, we say that the US is our biggest export market… That is not true,” he said. “The biggest export market is greater than China, which means China and Hong Kong.”
Philippine Statistics Authority data showed China was the Philippines’ largest source of imports in August, accounting for $2.94 billion, or 22.7% of the $12.96-billion import bill.
The US was the biggest single-country export destination that month, with $2.17 billion, or 23.8% of total shipments. Exports to Hong Kong and mainland China reached a combined $2.62 billion, accounting for 28.8% of the Philippines’ $9.11-billion total exports.
Electronic products dominated trade flows. Electronic exports reached $6.2 billion, or 68.1% of export sales in August, while electronic imports totaled $4.51 billion, or 34.8% of imports. Raw materials and intermediate goods accounted for $5.14 billion, or 39.7% of total imports.
Mr. Ortiz-Luis warned that Philippine exporters could suffer substantial losses if Beijing restricted purchases of local products, including electronic components and agricultural goods.
“We will have more difficulty with sourcing,” he said. “If our ties, if our imports from China are affected, they will be hard to replace.”
“We cannot afford to have this deteriorate,” he added, urging the government to manage commercial ties pragmatically, as other Southeast Asian countries do.
“Many of our neighbors in ASEAN (Association of Southeast Asian Nations) have maritime disputes with them. But they have no problem, we are the only ones having a problem,” Mr. Ortiz-Luis said.
He urged Manila to rely on specialized diplomats rather than public political campaigns to manage disputes with Beijing.
“Let’s appoint qualified people who specialize in this matter,” he said.
Philexport’s concerns follow Malacañang’s statements supporting continued trade and investment ties with China. Palace Press Officer Clarissa A. Castro last week said President Ferdinand R. Marcos, Jr. wanted bilateral discussions handled diplomatically.
“Our relationship with China is different when it comes to trade and investment,” Ms. Castro told a news briefing in Filipino. “But protecting our territory is a separate matter.”
Tensions rose after Chinese Ambassador to the Philippines Jing Quan said Beijing “may easily win” a military confrontation but preferred peace.
“If we want to use force, we may easily win,” he told reporters on the sidelines of an event at Diliman College. “But no, we will not use force. You know, we love peace.”
Mr. Marcos pushed back on Friday, calling the remark “not a very diplomatic statement” that “sounds very much to me like a threat.”
He added that the remarks “deserve a discussion between the ambassador and myself” to clarify Beijing’s intentions.
Declaring the Chinese envoy persona non grata is understandable but unproductive, Senator Jose “Jinggoy” P. Ejercito Estrada, Jr. said on Sunday, warning that the move could undermine diplomatic dialogue.
Several lawmakers called for the ambassador’s removal following the remarks. Senators Ana Theresia N. Hontiveros-Baraquel, Francis Pancratius N. Pangilinan and Joseph Victor G. Ejercito separately said Mr. Jing should be replaced and declared persona non grata.
Mr. Estrada cautioned against responses that could “close doors of dialogue,” urging all parties to exercise restraint.
He also reaffirmed the 2016 South China Sea arbitral ruling, which found that China’s claims to historic rights and resources within the nine-dash line had no legal basis under the United Nations Convention on the Law of the Sea.
The law, not military strength, should determine rights in the West Philippine Sea, he said.
The Senate is planning to file a resolution on the Chinese envoy’s remarks, Mr. Ejercito told Super Radyo DZBB.
Chinese Foreign Ministry Spokesperson Mao Ning said Beijing remained committed to improving relations with the Philippines.