(Article published in the Jun 2,2003 issue of TODAY, Business Section)
everything I had memorized - the dates, the names, the places- was
forgotten as soon as I finished my final exams in Oriental History, but,
today, almost 45 years later, I still remember what my second year high
school teacher at the Ateneo told us: “Watch out for China. Even
now, Russia is beginning to be afraid of it and has began to closely watch
the border they share. When that sleeping giant awakes, we, her tiny
neighbors, will have something big to worry about”. Across my
sophomore mind then zipped, “What? Me worry?”
has been more than stirring during the decades since my high school days
and in December of 2001, it joined the World Trade Organization (WTO).
China’s accession is, according to Stephen W. Bosworth who is known to
most of us as the Ambassador of the United States to the Philippines in
those turbulent years, 1984-1987, “the most important thing by far that
has happened to the global system since, at least since, the formation of
the WTO, maybe including the formation of the WTO”. It looks like
my teacher’s “sleeping giant” has sat up and its neighbors have
become genuinely worried.
year, on October 7, 2002, the Carlos P. Romulo Foundation for Peace and
Development, founded in January 1996, as a private, non-profit, and
non-partisan think tank seeking to propagate a critical understanding of
public policy and its impact on peace and development, held a round table
discussion on the implications of China’s being in the WTO on the ASEAN
and, particularly, with respect to the Philippines.
experts, -- in alphabetical order, Romeo L Bernardo, Philippine
undersecretary for international finance, privatization and treasury
operations at the Department of Finance from 1990 to 1996; Stephen W.
Bosworth also dean of the Fletcher School of Law and Diplomacy at Tufts
University; Florentino P. Feliciano, senior associate justice of the
Philippine Supreme Court; Christopher Findlay, professor of Economics at
the Asia Pacific School of Economics and Management at the Australian
National University; Cayetano W. Paderanga, Jr. acting as moderator was
previously the Philippine secretary for socioeconomic planning and
director general of the NEDA from 1990 to 1992; Mari Pangestu, lecturer in
international economics at the University of Indonesia; Julius Caesar
Parreña, senior advisor of the Taiwan Institute of Economic Research;
Timothy Ong, who was appointed in 2002 as deputy chairman of the Brunei
Economic Development Board, and Zhang Yunling, professor of international
economics, director of the Institute of Asia-Pacific Studies, and director
of APEC & East Asian Cooperation at the Chinese Academy of Social
Science -- spent the whole day understanding the opportunities and
challenges posed by China in the WTO and then presented their findings and
recommendations to Gloria Macapagal Arroyo at Malacañang in the afternoon
of the following day.
text of the proceedings of the round table conference showed surprisingly,
at least to me, that statistics-laden and prone to projections (which are
quickly distanced from foretelling) as their science is, economists can in
fact engage in an interesting exchange of views, if not in vigorous
debate. I used to dismiss, flippantly, economics as the
documentation of the obvious and described economists as those who, when
asked about their office telephone numbers, would respond with an
estimate. Surely, I had thought, nothing arresting one’s attention
could come out of their discussions. But I was wrong.
Zhang Yunling began the one-day dialogue with a presentation of his views
on the impact of membership in the WTO on China itself and in the ASEAN.
He admits that China in the WTO will present the ASEAN with serious
challenges because “China becomes more competitive and attractive”.
Transparent, he also mentioned. But that was before SARS. Then, as if to
assuage hidden fears, he lost no time in trying to assure his audience
that it will create for the ASEAN “more opportunities”.
for instance, says the good professor, the trend in trade. He points
out that China’s imports from the ASEAN surged by 21 percent during the
first seven months of 2002. It was the fourth largest exporter to
China, after Japan, Taiwan and the European Union. He further
stressed: 80 percent of China’s trade with ASEAN is in manufactured
goods. The thesis therefore is that China has become and will become
a significant market for ASEAN’s manufactured goods. He admitted
that China was a strong competitor of the ASEAN for direct foreign
investments, but he maintains, “China’s competition is there, but not
the major cause of ASEAN’s problems.”
after the Chinese professor finished his presentation, strong reaction was
immediately recorded from Mari Pangestu, the Indonesian professor.
She started by advising “caution” in the interpretation of data.
The so-called “manufactured goods” imported from the ASEAN probably
came from Singapore and Malaysia. But for the rest of the ASEAN
countries, she says, heir exports to China are “resource-based
products”, meaning, I suppose, still raw materials.
Zhang Yunling, Ms. Pangestu, proceeded, in her own words, to
“challenge your foreign investment story on China.” It was the
contention of Zhang Yunling that the diversion of direct foreign
investment flow from the ASEAN to China was benefiting ASEAN also because
the foreign investments set up in China causes China to import and export,
“as it is exporting, it is importing”. Ms. Pangestu quickly
pointed out that multinational companies in China have began sourcing
their needs locally and therefore will import less from ASEAN. This
is a “hallowing” out of the regional group.
vigorous debate is just an illustration of how the ideas were tossed
around during the one-day round table conference. To appreciate the
full length discussion, there is no better way than to get a printed copy
of the proceedings from the Carlos P. Romulo Foundation for Peace and
Development. It holds offices at the 43rd
Floor, Philamlife Tower (where the famous Tower Club is housed), 8767
Paseo De Roxas, Makati City 1226. The most interesting portion
of the book, to me at least, is the discussion of the impact on China’s
accession on the Philippines.
expert presentor from the Philippines, Romeo L. Bernardo, quickly rattled
off the “challenges”, which is economist-speak for “threats”:
Labor is cheaper and less militant. Infrastructure is better. Power
cost is also cheaper. New areas are opened, offering “fantastic”
incentives. Finally, a huge domestic market, another
economist-speak, for billions of potential buyers.
he did what was not characteristic of economists. He spoke from the
ground of reality, not from stratosphere of statistics. He talked of
his experience as director of PSI Technologies Holdings, Inc., a
NASDAQ-listed company engaged in the manufacture of a component in many
electronic equipment, including computers. The judgment of
management: “in the short term, at the rate China is growing, it will
not be possible to overcome all of these obstacles (our counterpart to
China’s “challenges”) even if government did everything that was
necessary”. The action point? The company is relocating
expansion to China in the next three years.
chorus of the experts, who jumped in the discussion, is that many of the
problems of the ASEAN, including the Philippines, are not because of China
per se, but are instead self-inflicted. And these problems center
not in trade, but, in the more basic areas of financial discipline and
corporate governance. Homework, the economists are fond of
also joins the other experts in pointing out, however, that there may
indeed be “opportunities”, again economist-speak for activities where
money can be made. He cites the experience of Lapanday Group which
was successful in marketing bananas to China under its own brand. It
used to sell under Del Monte 100percent of its pineapples and
bananas. It now sells 40percent of its produce, a large part of it
to China, under its own name.
like a true economist, the good expert settled in the comfortable niche of
the indefinite. Bernado says, together with his colleagues, that the
increased and enhanced trade resulting from the WTO between China and the
ASEAN, including the Philippines, will undoubtedly produce winners, but it
is difficult for government to predict who those will be. What
government has to do, obviously, is to do its homework in the macro and
refrain from intervening “too much” so that the price signals
correctly tell how the trade winds blow.
Zhang, in response to Bernardo and the rest, mightily tried to
demonstrate, under the cover of statistics, that, in his view, the
Philippines is not the loser in the trade with China. To quote: “I
think generally Philippine companies are winners, they benefit from
China’s economic boom.” His opinion is that not necessarily all
multinationals will be moving to China since, according to him, “the
real cost in the Philippines…[is] probably lower than in China”.
which, Roberto R. Romulo, chairman of the CPR Foundation and twice
referred to, in wry humor no doubt, by two experts as “the person who
really knows the things before they happen”, replied: “Professor, I
wish that were true”.