A bad case of 'Sinositis'

China has been investing big bucks trying to win friends in the emerging world to the point that it now provides more development oriented foreign assistance than the World Bank. But China negates any goodwill it earns by using trade as a weapon in foreign relations. By picking on our bananas and our tourism sector, China only succeeded in giving us a bad case of “Sinositis”.

It is a term first used by the Financial Times to describe the situation faced by small cap Chinese companies that listed and languished in the New York stock market. In our context, “Sinositis” is an apt description of the malady China infected our relationship with.

In using its economic clout against us, China looks not just like a bully but also an ingrate. China forgets that its most successful and highly profitable foreign investment is here. China’s State Grid is a principal investor in NGCP, the privatized national power grid company in charge of delivering power to distributors like Meralco.

China forgets that because of the favorable experience of its State Grid here, it has earned the credentials to invest in the power grid in Portugal and from there to Brazil. In fact, Chinese expats who gained valuable experience here are the ones moving on to Portugal and elsewhere.

Of course our government will not be as petty as the Chinese have proven themselves to be and retaliate on their investments here. But China should take note that the substantial profits being repatriated to Beijing by the State Grid should be enough reason for them to nurture a good business relationship with us.

By inflicting significant damage to our banana and tourism industries, China is virtually declaring war on our people and not just on our government. It is not right to inflict collateral damage on the poor folks more than 700 miles from the disputed area. These are people whose livelihood depends on banana exports.

Stephen Antig, executive director of the Pilipino Banana Growers and Exporters Association, told the Washington Post as many as 200,000 people in Mindanao will lose their livelihood if China continues to curb the entry of our bananas. They are now looking for alternative markets but for the meantime, extensive damage had been done.

Antig told the Post that before the crisis, China took about a quarter of all bananas exported by the Philippines. Chinese imports of Philippine bananas rose by 27 percent last year. It had been expected to increase by up to 40 percent this year.

Because of the Chinese ban, Davao City has “been flooded with free bananas,” Mayor Sara Duterte told the Post. “Traders have donated “boxes and boxes of bananas,” she said, prompting city hall to set up a distribution network to deliver free fruit to schools, orphanages and government offices.

As the Post pointed out, “bananas are the mainstay of the economy in the region around Davao City, an area that in the 1980s slipped into chaos as Marxist rebels of the New People’s Army put down deep roots in impoverished villages and spread terror in the city with a campaign of assassinations.”

A banana grower told the Post that the NPA will be back if Chinese import restrictions remain in force and push banana growers into bankruptcy. Maybe China is hoping this will keep the AFP busy with counter insurgency.

Another victim of “Sinositis” is the tourism industry. Charter flights of local airlines and hotel bookings in resorts in Boracay, Palawan and Cebu have been hit by a rash of cancellations after Beijing issued a travel advisory about supposed anti-Chinese feelings here.

China is apparently only acting true to form. The Post noted that Beijing has a clear record of using trade to punish countries it quarrels with. Yet China denounces trade boycotts and denies it mixes trade with politics. In the case of our bananas, the problems erupted only when the Panatag Shoal stand-off happened.

The Chinese retaliation on our banana exports fits a pattern. The Post reported that they did something similar when the Oslo-based Nobel Peace Prize committee announced in late 2010 that it would honor jailed Chinese dissident Liu Xiaobo.

It so angered Beijing that “Norwegian exports of fresh and frozen salmon to China collapsed, falling by 59 percent last year. Imports of the fish from elsewhere soared. There has been no formal Chinese order restricting imports from Norway, only stringent new food-safety regulations that have mysteriously targeted Norwegian fish.”

The Post also cited a 2010 study by two scholars at Germany’s Gottingen University that found a direct correlation between China’s foreign policy agenda and trade flows. It noted that China’s authoritarian political system and the large role played by the state in its economy “gives leeway for the utilization of trade flows as a foreign policy tool.”

The German study also analyzed data between 1991 and 2008 from 159 trading partners of China and found that countries whose leaders met with the Dalai Lama, the exiled Tibetan leader, suffered a swift decline of 8.1 percent to 16.9 percent in exports to China.

So what the Davao banana planters suffered is par for the course for countries that have displeased China in some way. The Chinese must think we are all idiots not to see through their denials about their use of trade as a political weapon.

Displaying their small minds is obviously not how an aspiring world power is supposed to behave. Let the diplomats talk but in the meantime, let the normal course of business go on.

In a country where there is an undercurrent of anti-Chinese feelings at the grassroots, bullying the banana farmers just makes things worse. The bad case of “Sinositis” reconfirms negative sentiments the grassroots already feel about the Chinese. It would be that much more difficult for diplomats to smooth things out.

I wonder if this means DOTC Secretary Mar Roxas must now forget China with regards the fast train project from Clark. It is probably just as well. This will enable Mar to get going earlier and not have to wait for the new Chinese leaders to take over later this year.

 A very open public bidding that will include the Japanese, the Germans and the French will also give us a better assurance of competitiveness in price and quality. The Chinese should be allowed to bid if they want to but no special deals. At least we don’t have to accept the appointment of a Chinese company that had no track record in building railways, our sad experience with the overpriced Chinese backed NorthRail project.

The Chinese should start acting like an emerging world power that it aspires to be and show some goodwill and magnanimity. China must make sure this case of “Sinositis” doesn’t become chronic. At the very least, a testy relationship due to official pettiness does not make good neighbors of each other.

Garments

 It is curious that Malacanang is quiet about one other thing P-Noy asked President Obama about but didn’t get. Here is the account of Greg Rushford, a frequent visitor to Manila, in his op/ed piece for the Wall Street Journal.

“On Mr. Aquino’s other goal — dropping US tariffs on his country’s clothing exports — the Obama administration sent the president home empty-handed. The Philippine leader urged Barack Obama to support a bill introduced in both the Senate and House of Representatives to boost Philippine clothing exports to the US, which amounted to $1.7 billion last year. The SAVE Act — for Save Our Industries — would give Philippine garment manufacturers duty-free access to U.S. clothing markets as long as they buy US fabrics to make their jeans, shirts and dresses.

“Instead, Mr. Aquino got the brush off. All Mr. Obama offered regarding economic issues was a vague statement that he was working ‘on how we can make sure that we are structuring a relationship of expanding trade and commerce.’”

What’s strange is what follows next as Rushford reports:

“Mr. Obama has been fighting tooth and nail to make Vietnam buy American fabrics in return for tariff reductions. The Vietnamese, sensibly, have pointed out the economic absurdities of this policy.

“Undeterred, the Obama White House vows to keep up the pressure until Vietnamese negotiators give in. The hypocrisy is too hard to ignore: Washington wants from Hanoi what it won’t give to Manila.”

Maybe the former US military base the Americans want to use in Vietnam is more strategic than Subic or Clark. How else can anyone explain why the Yanks are forcing Vietnam to take a concession on textile trade they are denying us?

Friend and ally? Sure thing!

Same diff

What is the similarity between a politician and a laxative?

They both irritate the shit out of you!

Boo Chanco’s e-mail address is[email protected]. Follow him on Twitter @boochanco