Relations

I was just reading an interview with Korn Chatikavanij, Thailand’s far-sighted finance minister. Despite all the political troubles in that country, Thailand is projected to grow its economy by at least 8% this year.

Korn is a policy wonk. He was principally responsible for the highly effective fiscal stimulus package that kept the Thai economy going at full steam despite the broad recession that gripped the global economy. That package, by his description, involved literally writing out nine million checks for the country’s poorest households on the theory that the poor had the greatest elastic demand. No leakage there and no lag time.

I was particularly attracted by Korn’s ideas of a “post-China” growth scenario. “Post-China” refers to the slowing down of that country’s manufacturing juggernaut due to rising production costs.

Rising manufacturing costs in China will likely benefit countries like Vietnam and Indonesia, where production costs remain low. But other large trends could play to Thailand’s strengths.

He notes two major trends involving not just China but India as well: accelerated urbanization and an increasingly aging demographic profile. Urbanization in China implies increased food consumption. The maturing demographic profile means a large surge in tourism.

Thailand is obviously positioning well for this “post-China” scenario. The country’s highly productive agricultural sector is positioning to supply China’s teeming cities. As one of the world’s most popular tourism destinations, Thailand is well positioned to tap the immense China tourism market.

Korn articulates the far-sighted policy-making that enabled Thailand to consistently outperform us these last few decades. Very clearly, the Chinese economy, because of its size and dynamism, plays a major role in the growth horizons of the smaller economies of Southeast Asia. This is especially true in the face of long-term low-growth prospects in the mature economies of North America and Europe.

There is nothing stupendously new about Korn’s insights. We know that, too. But somehow, Thailand had shown itself to be more adept at laying down the policies induced by those insights. For instance, apart from just selling the sun and the sand, Thailand has now become the mecca for medical tourism. Its processed food sector is the most advanced in the region.

We knew that the Chinese tourism market is so large it will outstrip our existing facilities. A few months ago, Chinese tourist arrivals quickly and significantly outstripped arrivals from Korea. That is to be expected: South Korea has only a fraction of China’s population. One estimate I saw put the size of the Chinese middle class (capable to taking vacations in Southeast Asia) at 80 million (!). That is nearly the size of our entire population.

The wealthiest of the Chinese tourists are, to be sure, the people of Hong Kong. The territory has a per capital income comparable to the European economies. They crave for the open spaces and warm sun that Southeast Asian tourist destinations offer.

The China market overshadows all other possible markets we could tap for our exports and our tourism sector. That is how important China is to us, economically (just in case the born-again China-bashers have forgotten).

China is the biggest factor on our economic horizon. It is the source of huge investments, a large market for our exports, an unparalleled source of visitors and a partner in many regional initiatives.

China is likewise the biggest factor on our security and diplomatic horizon. Continuing reassurance is indispensable to that an agreement for common benefit from whatever resources the area around the contested islets in the South China Sea. Multilateral cooperation among the countries around the South China is essential to ensure the security of the busy trade routes and the protection of the rich biodiversity in this area.

China is an indispensable partner in our war against illegal drug trafficking where we figure as an emerging transit point. Many of our large conglomerates have large investment outlays in China. Well over a hundred thousand Filipinos earn their wages in Hong Kong and Macau.

The notion of a Greater China, which includes Taiwan and Singapore in addition to the territories of Hong Kong and Macau (and to which we might add the rising influence of ethnic Chinese taipans in Indonesia, Malaysia, Thailand and the Philippines) is quickly gaining influence as the driving force for economic prosperity in our region.

Somehow, that notion magnifies the possible adverse repercussions of the tragedy that happened in Manila last week. So much goodwill was lost, not just because of the botched hostage rescue operation itself, but also because of the incompetent response of our government in the aftermath of the bloodbath. The tens of thousands who marched in Hong Kong last Sunday criticized not just the bungling of our police but also what they perceive to be the indifference exhibited by our leaders.

The jingoism of some of the most ardent supporters of this administration will only serve to exacerbate the loss of goodwill. While we ought not to lose our sense of dignity and self-respect as we plod through the aftermath of this tragedy, we must not want for showing sympathy and sincerity. Every step of the way, we must be as correct as we can possibly be in our dealings with out aggrieved neighbor.

There is no loss of honor in admitting our failings. It is us that must work harder to rebuild the robust relationship that was once there. We carry the greater burden in restoring the friendship. Beyond the profuse apologies, we must also prove that we can be a reliable regional partner.

In the near term, the maturity of our diplomacy, the effectiveness of our policies and the strength of our institutions of governance will be scrutinized very closely not just by China but by all our partners. Our margin for error will be very slim indeed.