PH-China bilateral trade grows 19% in 7 months

Bilateral trade between the Philippines and China has increased by 19 percent to $10 billion in the first seven months of 2014 from $ 8.6 billion in the same period last year despite the current dispute in the West Philippine Sea.

Socio-economic Planning Secretary Arsenio Balisacan told a recent business forum that bilateral trade between the two countries has risen tremendously in the past four years, making China the Philippines' second largest trading partner after Japan.

"Through the years, we have seen increased economic and socio-cultural cooperation, frequent high- level exchange of visits and conclusion of various bilateral agreements between the Philippines and China," said Balisacan.

China remains the top source of Philippine imports in 2014. As of July this year, the Philippines imported $5.5 billion worth of goods from China, up by 20 percent from $4.6 billion in the same period last year.

"The bulk of our exports to China is comprised of semiconductors, which holds 25 percent of total exports, followed by electronic data processing services, other mineral products, other manufactures, machinery and transport equipment, and copper meal," said Balisacan.

Telecommunication equipment and electrical machineries comprised the largest share of Philippine imports from China at 15.5 percent followed by other mineral fuels and lubricants, power generating and specialized machines, miscellaneous manufactures, iron and steel, and non-metallic mineral manufactures.

Balisacan noted that tariffs on 100 percent of total tariff lines (7,388 lines) in the normal tracks of ASEAN-6 and China have been eliminated since January 1, 2012.

"The applied most favored nation (MFN) tariffs on lines placed under the Sensitive Tracks of the ASEAN-6 and China have also been reduced to 20 percent by January 1, 2012. These rates would be subsequently reduced to 0 to 5 percent not later than January 1, 2018."

Balisacan also urged the business community to take full advantage of deeper trade relations supported by lower trade barriers and greater market access.

"Firms should maximize gains from trade and specialization by continually innovating and exploring possible export niches on the basis of growth and changes in the bilateral trade structure. Current data suggests a shift of Philippine exports to China from resourcebased products to industrial products," said Balisacan.

Philippine foreign direct investment (FDI) in China is relatively small compared to other Asian countries. In 2012, the value of Philippine FDI in China was $132.2 million, accounting for only 0.15 percent of Asia’s total value of FDI in China. However, this is 18.2 percent more than what was recorded in 2011, according to China’s National Bureau of Statistics.

Balisacan said China’s overall investment in the Philippines also remains comparatively small. In 2013, China’s net FDI amounted to $6 million.

The approved investments from China in the Philippines declined in 2013 by 37.6 percent to 1.24 billion from 1.99 billion in the previous year.

However, Balisacan noted that in the first semester of 2014, approved investments from China increased to

9.62 billion from 245.6 million in the same period last year. Manufacturing, administrative and support services, and information and communication activities were the main recipients of approved investments from China.

The latest figures from the Department of Tourism showed that Mainland China is the fourth largest tourist market in the country, accounting for 9.4 percent of total arrivals. In 2013, arrivals from Mainland China posted a 69.9 percent growth compared to the 2012 tally.

In terms of overseas employment, China accounted for 0.3 percent share of the total overseas Filipino deployment stock estimate in 2012. These include temporary, permanent, and irregular workers. China has been a major destination for teachers in the last five years.

Balisacan believes that economic opportunities and growth potentials are promising for the country. "We expect GDP to grow within our target of 6.5 to 7.5 percent, with the services and industry sectors as major drivers," Balisacan added.