"Sta. Romana spent more than four decades in China. "
How are we dealing with our next-door neighbor China at present?
This question can best be answered by no less than our current ambassador to Beijing, Jose Santiago “Chito” Sta. Romana, who spent more than four decades in China after he and several members of a delegation of student activists on a visit to the mainland had no choice but to stay on as they risked arrest by the Marcos regime if they returned to the Philippines.
Last week, we managed to make our way through moderate midday traffic to reach the Cosmopolitan Church along Taft Avenue in Manila to listen to Sta. Romana discuss Philippines-China relations in a forum organized by the United Council of Churches of the Philippines.
At the outset, Sta. Romana laid down what he described as the strategic framework of our bilateral relations.
The starting point of current ties with our next-door neighbor, he pointed out, is the independent foreign policy laid down in the 1987 Constitution. Is it possible to have an independent foreign policy in an interdependent world? Yes, he said. This means being friends to all, enemies to none; seeking unity with all countries, including the big powers; giving priority to national interest; and upholding ASEAN unity and neutrality.
The Philippine government has actually made a big shift in its foreign policy. From the traditional close ties with the U.S., we now seek stronger ties with China focusing on economic cooperation, but not forging a military alliance.
Basically our ties with China run along two tracks. There are contentious issues, and non-contentious issues. The contentious issues involve the sovereignty issue, or ownership of disputed territory or land in the West Philippine Sea, such as Scarborough Shoal, which we consider part of our Exclusive Economic Zone (EEZ). The envoy emphasized that it is not only the Philippines that claims ownership of Scarborough Shoal but also Vietnam and Taiwan. The overlapping claims are what complicate matters in the South China Sea.
We have chosen to shift from an adversarial approach to a non-adversarial one, and to focus on diplomacy to settle non-contentious issues, such as economic cooperation, cultural and educational exchanges, people-to-people contacts, as well as joint efforts at countering terrorism and criminality.
Contentious issues, Sta. Romana explained, should not be an obstacle to stronger bilateral relations.
On the part of the Philippines, we have made a shift in perspective: from viewing China as a national security threat, we now view it as a development partner.
There’s also a change in the Chinese perspective. Before, Beijing considered the country a geopolitical pawn of the US. Now, the Chinese consider the Philippines as a friendly neighbor whose national interests are separate from those of its military allies.
“We use diplomacy as a first line of defense, to create a good political atmosphere through high-level meetings and bilateral talks to resolve disputes,” he said. “When you’re on friendly terms, it’s easier to talk.”
Here, the envoy cited lessons from history. China had border disputes with Vietnam and Russia, but these were ultimately settled through negotiations and bilateral talks even after armed skirmishes along their borders.
The Philippines has already won gains from bilateral talks, Sta. Romana stressed. We now have access to fishing areas in Scarborough Shoal, thus reducing the level of tension in the SCS/WPS.
China is now our leading trade partner. Our fruit exports, mainly banana and pineapple, can now be found in market stalls in Beijing and elsewhere, even as we still maintain sizable trade with the US and Japan. The Chinese government has also extended grants to build two bridges across the Pasig River, and feasibility studies for infrastructure projects.
The Official Development Assistance (ODA) from China actually comes in two packages. The first package includes the Chico River Irrigation Project which will benefit farmers in Cagayan and Kalinga; the Kaliwa Dam in Quezon province will be an alternative source of water for Metro Manila and benefit residents of Metro Manila, and the South Railway from Tutuban in Manila to Matnog-Sorsogon covering more than 600 kilometers that will facilitate travel to southern Luzon and the Bicol Region.
Then there’s the big increase in the number of Chinese visitors to the country. They are now the second biggest tourist arrivals after the South Koreans. The Department of Tourism projects a 40 percent growth in the number of Chinese tourists next year.
Foreign direct investments (FDI) from China is already 7th largest as of 2017, according to our Board of Investments (BOI).
If we now see more Chinese nationals in Metro Manila, Sta. Romana pointed out, they are working for Philippine Offshore Gaming Operators (POGOs) that are doing business here since gambling is prohibited in the mainland. A number of Chinese nationals have been given special working permits and now work in POGOs, but not in ordinary construction projects, unless they are in supervisory or management positions.
The envoy clarified that China charges only two percent interest rates for ODA loans, not 6 percent or even 12 percent as claimed by some quarters. In fact, he said, interest on Chinese loans are lower than those extended by the World Bank and the Asian Development Bank. We have actually fallen into a debt trap with World Bank and IMF loans in the past, he said.
For the ambassador, fears that we would fall into a debt trap with Chinese loans are unfounded since approved infrastructure projects would have to be economically viable, meaning, they would have to pay for themselves. NEDA has rigorous standards in approving projects with 10 percent rate of return to offset the cost of borrowings. Besides, we can pay our loans as the domestic economy has already reached investment grade according to international credit rating agencies.
The Philippine economy is growing. Part of this growth would be fueled by the demographic sweet spot where our young labor force can sustain our economic gains. But our Achilles heel is poor infrastructure, and this is where we have to diversify our sources of loans to finance our accelerated infrastructure development program, Sta. Romana concluded, adding that “what is important is that we retain our sovereignty and sovereign rights.”