Philippine-China tensions likely to have modest effects on economy

MANILA, Philippines—Tension between the Philippines and China over Scarborough Shoal might have “modest effects” only on the Philippine economy, new Socioeconomic Planning Secretary Arsenio M. Balisacan said in a briefing on Thursday.

The Philippines has been diversifying its exports, tourism and other sectors, which would somewhat “insulate” the economy, said Balisacan, also the new director-general of the National Economic and Development Authority.

“There is an urgent need for various sectors, whether tourism, agriculture, or industry, to diversify markets and sources of inputs to make them less vulnerable to shocks,” Balisacan said.

He said recent news of China’s travel advisory against the Philippines, which resulted in the suspension of tour packages, would “not likely” cripple our tourism industry at this point. At the same time, efforts to diversify exports had begun even before the issue over the Scarborough Shoal.

“It (exports) used to be highly concentrated with the US but now it’s diversifying to neighbors. This should be able to insulate us,” Balisacan said. “Whether or not this event with China occurred we should have been diversifying anyway. There are many potential (markets) out there. There are many opportunities other than China.  That can be learned from this event.”

Balisacan also noted that China would not be the only market to watch. There can be shocks such as the triple tragedy that happened to Japan last year, or the floods in Thailand.

“The effects on our economy are almost similar,” Balisacan said. “The only way a country can defend itself from this kind of shock is really to diversify.”

The Department of Agriculture is coordinating with Chinese counterparts to discuss measures to ensure that exports of fruits comply with phytosanitary protocols amid China’s tighter restrictions on Philippine fruit exports. China tightened requirements for the entry of fruits after it claimed that it found pests in bananas from the Philippines.

Meanwhile, Bureau of Plant Industry Director Clarito Barron said they received information that Chinese quarantine officials reported having received 43 crates of papaya and pineapples with mealybugs from the Philippines earlier this month.

A phytosanitary clearance is issued by the country of origin of the commodity to indicate that such commodity meets import requirements.

China is a major market of banana exports. It also purchases pineapples and papaya from the Philippines.

Philippine banana growers and exporters have said they have lost at least P1.44 billion since China imposed tighter restrictions more than two months ago.

The standoff in Scarborough Shoal between the Philippines and China started in early April. Chinese fishing vessels were spotted in the area on April 8 but Chinese surveillance ships prevented the Philippine Navy from arresting Chinese fishermen caught poaching off the shoal.