Exporters look to benefit from US-China trade war

The umbrella organization of exporters in the country sees opportunity in the ongoing trade war between two of the world’s biggest economies, the US and China.

“Right now, we don’t see a major impact yet. We aren’t that big a player to be of consequence in the trade war. But we do see some benefits. As orders from

China to the US could be cut, the logical substitute will be the Philippines,” Philippine Exporters Confederation Inc. president Sergio Ortiz-Luis Jr. said.

The US and China are in the midst of a full-blown trade war with the imposition of tariffs on certain imports.

Last year, total bilateral trade between the Philippines and China was valued at $23.82 billion, up 8.8 percent from $21.9 billion in 2016.

The positive relationship between President Duterte and China’s President Xi Jinping is opening up opportunities for more Philippine products to enter the Chinese market.

Both countries are planning to balance bilateral trade in three to four years, and China also wants to surpass Japan as the top importer of Philippine products.

Last year, Japan, US and Hong Kong were the top export destinations of Philippine products.

Philippine exports to China, however, are slowly increasing, as it posted a 9.73 percent increase last year.

“In ASEAN (Association of Southeast Asian Nations), we have similar non-electronics products – agricultural, forest-based, and mines. These are things we should be pushing. And China will be the most logical market,” Ortiz-Luis said.

Top Philippine exports to China last year were electrical components and electronic equipment ($2.54 billion); machinery and parts ($1.98 billion); ores, slag, and ash ($522.19 million); and mineral fuels, oil, and distillation products ($329.74 million).

Apart from having a market for Philippine exports due to the trade war, the growing trade volume between China and the Philippines is also providing cost savings.

“If you look at the amount of trading being done, our importation is huge. And it’s dealing with an intermediate currency – the US dollar. Using renminbi (RMB) for countries trading with China would eliminate the volatility of having an intermediate currency that you play with,” Philippine Chamber of Commerce and Industry chairman George Barcelon said.

Ortiz-Luis said the industry that stands to benefit most from direct RMB settling is electronics.

The Philippines is both an importer and exporter of electronic parts from China and direct RMB transactions would bring down costs for both sides.

Barcelon said currency could also serve as a differentiator for Filipino businesses.

“Our currency mirrors closer to the RMB. Let’s say you were an exporting country, currency can become a factor. If you have a lower exchange rate compared to another peer, just on the currency alone can make you more competitive,” he said.