Has NEDA become the mouthpiece of China?


By Rose de la Cruz


At the speech of Socioeconomic Planning Secretary Ernesto Pernia before the joint memberships of Makati Business Club and the Philippine Chamber of Commerce and Industry at Makati Shangrila, he devoted four pages, single-spaced, 11 points font and Calibri text to extolling the virtues of “clinging” to China for our socio-economic progress, virtually acting as the mouthpiece of the Chinese government.


He began by discussing the economic prominence of China in the world arena which would be further boosted by the Belt and Road Initiative that would bring faster growth to Eurasia through massive lending investments from China for interconnectivity via land, sea and air initiatives.


China’s role in the global economy has gained prominence as its economy has become the largest in PPP (purchasing power parity) terms. From 1990 to 2012, China’s economy has grown at an average of 10 percent, albeit slowed down to an average of 7.1 percent over the past 5 years as its economy transitioned to a more services and consumption-led economy, from traditionally being an industry and investment-led economy. The IMF expects China’s growth to slow further to 6.6% in 2018 and 6.4% in 2019, he authoritatively said.


China also ranked first in world merchandise trade, accounting for 13.2 percent of the trade value at US$2.1 trillion, followed by the U.S. and Germany. [Note that the EU accounts for 18.6%].


Chinese outward FDI surged in 2016, rising 44 percent to $183 billion, propelling the country to become the second largest source country for FDI (with a share of 12.6%, next only to US’ 20.6%) for the first time. This coincided with the country becoming a net outward direct investor during the year. Chinese MNEs invested abroad to gain access to new markets and to acquire assets that generated revenue streams in foreign currencies.


Trade between Phl and China


The Philippines’ total merchandise trade with China continues to rise, and it has now become our top bilateral trading partner surpassing Japan in 2016. This was brought about by imports growth averaging 20.7 percent from 2010-2017. Meanwhile, exports growth leaves much to be desired as it has not kept pace with imports growth.


For 2017, exports to China grew by 8.4 percent, with top exports mostly being electronic products, close to 50 percent.


Nevertheless, as China rebalances to a more consumption-driven economy, this will provide opportunities for more exports of consumer goods and agri-products.


On the other hand, imports from China increased by 8.1 percent comprised mostly of capital goods and raw materials & intermediate goods.


For 2017, other exports to China that appear to show promising growth were coconut oil, communication radar equipment, abaca fibers, copra meal/cake, and mangoes.  Meanwhile, hefty gains from imports such as professional and scientific instrument; fish products; coal, coke; dairy products; pulp & waste paper were also observed.

Tourist arrivals from mainland China have been increasing considerably during the last five years, with the 2016 level more than doubling that of 2012.


As of end of 2017, China has already overtaken the United States as the country’s second largest tourist source market behind only South Korea.  Average daily expenditure of Chinese tourists is at $US63.37 (2016) spent mostly on food and beverage, shopping, as well as on entertainment and recreation.

PH’s new partnership with China has resulted in direct investments into the country. In the first eleven months of 2017, FDI booked was at US$27.6 million, already a 200 percent increase from the preceding year.




China committed P2.1 billion investments in the first three quarters of 2017, already more than its commitments in 2015 and 2016. Prospective investment ventures from China focused mainly on real estate activities and manufacturing.

The China-led Belt and Road Initiative (BRI) aims to connect major continents, involving countries in Asia, Europe and Africa through land and sea routes


This grand strategy consists of two components: a land-based “road” linking China, Central Asia, Middle East, Europe, and Russia; and a maritime-based “road” which begins at China’s coast and goes through the South China Sea, Indian Ocean, Red Sea, and the Mediterranean Sea.


BRI focuses on five key areas: policy coordination, facilities connectivity, unimpeded trade, financial integration and people-to-people bonds.


Since several of the Belt and Road countries are developing countries, the BRI aims to help in poverty reduction, improve infrastructure, industrialize, or balance their economies.


The administration’s “Build, Build, Build” campaign funded by BRI will be mostly through loans than grants or foreign direct investments. This in the long run will make China more economically and politically powerful (to a point where it would unilaterally take over shoals, islands and other bodies within the Philippines’ EEZ).


Infra spending


As regards the Administration’s infrastructure program, we aim to raise infrastructure spending from about 5.4% of GDP in 2017 to over 7% in 2022, or an investment of P8.13 trillion for the 6-year period, making this Administration’s term the “golden age of infrastructure” in the Philippines.


So far, three projects have been prioritized by the Chinese Embassy and the concerned Philippine government agencies for loan financing from China: (i) Chico River Pump Irrigation Project of the National Irrigation Administration (NIA); (ii) New Centennial Water Source – Kaliwa Dam Project of the Metropolitan Waterworks and Sewerage System (MWSS); and (iii) North-South Railway Project (NSRP) – South Line of the Department of Transportation.  


Meanwhile, the Chinese Government is also expected to support the DPWH’s Binondo-Intramuros and Estrella-Pantaleon Bridges Construction Projects and the Department of Agriculture’sPhilippine-Sino Center for Agricultural Technology-Technical Cooperation Program (PhilSCAT) Phase III through grant assistance schemes. Among the proposals for Feasibility Study assistance, the Chinese Embassy indicated support, as an initial batch, for the conduct of F/S for the DPWH’s Panay-Guimaras-Negros Island Bridges and the Davao City Expressway Projects.


The Philippines and Chinese Governments continue to conduct consultations on the implementation status of the first batch of projects proposed for PH-China development cooperation, the indicative list of the second basket of projects, and other development and economic cooperation activities.


NEDA is currently updating the indicative list of priority projects for possible development cooperation with the Chinese Government, in coordination with the DOF and the concerned government agencies. NEDA conducts regular programming consultations with development partners and concerned government agencies, wherein the priority areas of the government are discussed to come up with a listing of programs and projects planned to be undertaken and/or for possible cooperation within a given time frame. As a programming document, the Public Investment Program (PIP) is important in realizing the development goals and strategies set out in the PDP.



Memorandum of Understanding with China on infrastructure development include the following: a) the conduct of Feasibility Studies for Major Projects (DOF and Ministry of Commerce), to provide the arrangements for bilateral extension of preferential and/or concessional loan financing (e.g., financing facilities, procurement guidelines and selection of projects); b) financing Cooperation (DOF and Export-Import Bank of China), to provide the arrangements in financing the conduct of feasibility studies (e.g., dispatch of Chinese experts and consultants)l c) transportation Infrastructure Cooperation Project List (DPWH and DOTr and the National Development and Reform Commission), to explore and discuss cooperation efforts concerning transportation infrastructure projects Jointly Promoting the Second Basket of Key Infrastructure Projects Cooperation Exchange of Letters on Project of Two Bridges across Pasig River Jointly Promoting the Philippine National Railways South Long Haul Project Cooperation Financing Cooperation Agreement on Chico River Pump Irrigation Project and New Centennial Water Source-Kaliwa Dam Project.



He said infrastructure development is key to reducing the cost of doing business and encouraging both foreign and local investments in the country. “We need adequate infrastructure to connect the country’s outlying regions to the mainstream economy. As well, we need infrastructure to raise productivity in the agriculture, industry, and services sectors.”


“Lastly, we need to nurture entrepreneurship and attract investments that produce higher-paying and higher quality jobs.  If executed properly, we will be on the right track towards making the Ambisyon Natin 2040 into a reality,” he said.



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Thursday, 13 December 2018
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