Center of gravity

China may not be the center of the world. Its emperors, centuries ago, thought that to be the case.

But by its sheer mass and the swiftness of its recent economic expansion, China has become the economic center of gravity for East Asia.

This new century might well be The Chinese Century.

China has sucked into its economy the major part of all foreign investments in East Asia ever since, following Deng Xiao Ping’s wisdom, the country opened up to capitalism. It has maintained stupendous growth rates, guided by shrewd economic leadership.

Had China remained in the grip of Maoism, this very large country would have remained very poor – and very xenophobic. It would have continued covering up the failures of central planning with great purges and absorbed the unemployment by maintaining a very large standing army that threatened its smaller neighbors needlessly.

The rest of the region was saved from the specter of a large neighborhood bully, spewing archaic slogans and rattling its saver every so often, by the triumph of pragmatism since Deng bounced back from political purgatory to take the reins of this nation’s destiny.

When Maoism was ascendant in China, this very large nation was a threat to everybody. It picked wars with India, the former Soviet Union and Vietnam. It threatened Japan with missiles and seemed constantly on the brink of invading Taiwan.

During the Cold War, the rest of the region aligned closely with the US to offset the Chinese threat. From Japan to Thailand and Malaysia, the East Asian countries maintained a policy of containment against consistent with America’s general strategy towards the two communist giants.

For its part, China maintained a policy of economic autarky: exporting ideology rather than goods; attempting to lift itself by its bootstraps through several industrialization programs that failed miserably and wiped out tens of millions of its own people in great famines. The greatest failure was The Great Leap Forward industrialization program whose failure resulted in the death due to famine of an estimated 20 million Chinese.

To avert adverse political fallout from the drastic failure of The Great Leap Forward, then Chairman Mao Zedong unleashed the Red Guards on Chinese society, wreaking havoc, destroying the great monuments of culture and persecuting millions in the most horrible fashion. That reign of terror was called The Great Proletarian Cultural Revolution – an episode the Chinese would rather forget but which Maoist flunkeys like the aging cadre of the CPP would wish to re-create in our own society.

The paradigm has shifted years ago.

As China moved more definitely to the center stage of global capitalism (a strategic shift never officially admitted and kept under the label of "socialism with Chinese characteristics), the other nations of East Asia moved quickly to engage the process. Singapore, the most far-sighted of the ASEAN countries, recognized the drift of things early on and positioned itself firmly a the nexus of economic change in China.

Other countries like Malaysia, South Korea and Thailand soon followed suit, establishing investments outposts in the new Chinese economy. Soon enough, analysts began speaking of a Greater China: the combined economic power of China and Hong Kong along with Singapore, possibly Taiwan in the future, and the network of immigrant Chinese businesses throughout the region.

Given our usual short-sightedness and the heavy weight of parochialism, we fretted about the Spratlys dispute while the other claimant countries were quickly taking positions in the economic miracle that was happening in China. Before we could completely pull out all the pegs of our Cold War-vintage policy towards China, the smartest of our own businessmen had moved ahead to lay down stakes in the Chinese market.

Before most of us fully realized the importance the Chinese market has acquired, Filipino snack food manufacturer Oishi had an operation in China many times larger than its domestic operation. Mall magnate Henry Sy moved in, buying properties in the prosperous seaboard cities of China.

Last week, our foreign policy finally caught up with the advantage guard of Filipino businessmen who had put down stakes in the Chinese market. In her very successful visit to China, President Gloria Macapagal-Arroyo sealed several investment agreements with Beijing. Those agreements will bring in official development assistance from China, expand opportunities for Filipino exporters and encourage the flow of tourism to our country.

Although we may be one of the last ASEAN countries to begin recognizing China as the center of economic gravity in the region, we stand to benefit the most.

The most visible economic benefit on the horizon is massive wave of tourism coming from the prosperous cities of China. The Philippines is the closest tropical destination to this massive source of tourists, although we need to quickly prepare our facilities and alter our marketing strategy dramatically.

It is time to give up on attracting European and North American tourists. We have lost that tourism potential to Thailand and Indonesia long ago.

We need to quickly adjust our facilities to attract Chinese tourists, who are now beginning to come in on the heels of South Korean tourists coming to Cebu and Taiwanese tourists flocking to the Ilocos region.

China represents a large and still growing market for other things we could produce: tropical fruit juices; processed food; and our well-developed services sector, including legal and accounting services as well as advertising talent.

The agreements signed last week signal the beginning of a mutually beneficial engagement between our two countries covering joint ventures in oil exploration and transport, exchanges of technology in agriculture and joint tourism programs. This is a new partnership that will likely develop very fast, considering the rapidness of Chinese economic growth.

The challenge now is to move as fast as the Chinese are moving and understand future potential with the same pragmatism that guides China’s new generation of leaders.

This is the partnership on which any dramatic economic growth in the Philippines could be anchored long into the future.