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TRADE AND COMMERCE
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Philippines-China Economic Relations
Source:
Philippine
Embassy, Beijing
Historical documents prove that the peoples
of the Philippines and China have enjoyed extensive economic ties as early
as the 7th century. Over the centuries, these socio-economic contacts helped
bind the Filipinos and Chinese in a strong spirit of kinship.
In the 21st century, mutual trade and
investments provide a solid pillar in the long-standing, friendly relations
between the two nations.
In 2005, bilateral trade volume reached
US$17.56 billion, representing a growth rate of 31.74 percent over the
figure of US$13.3 billion in 2004. Since 2000, bilateral trade volume grew
at an annual average of 41.77 per cent, with the Philippines gradually
selling more to China than it buys from China.
The trade structure is positive and
beneficial to both sides. Top Philippine exports to China include
semi-conductor devices, electronic data processing units, copper, petroleum
and other resource-based products, automotive parts and fresh fruits. On the
other hand, China's top exports to the Philippines include semi-conductors,
electronic data processing parts, textile yarns, petroleum products,
telecommunication equipment parts, and consumer electronics.
During the visit of Chinese President Hu
Jintao to the Philippines in April 2005, a trade volume of US$30 billion was
targeted by 2010.
Both the Philippines and China are members
of the World Trade Organization. Trade liberalization reforms in both sides
heighten the prospects for the expansion and diversification of trade
structure. Likewise, the neighbors share special associations in the ASEAN +
1, Asia Pacific Economic Cooperation (APEC) and the ASEAN + 3 --- groupings
which commit to deepen regional economic integration in many aspects. In
2002, ASEAN and China signed the Framework Agreement on Comprehensive
Economic Cooperation, a document that promises to create a free trade area
comprising the nations of ASEAN and China by 2010.
Investment exchange between the two
countries exhibits dynamism and promise. Filipino investors, in particular
the overseas Chinese, were among those who joined the massive influx of
investments from the region in the manufacturing, mostly export-oriented
industries in China from the late 1980s through the 1990s. The bulk of
Philippine investments are located in the provinces of Fujian and Guangdong,
and the city of Shanghai.
Most Philippine investments were initially in the area of manufacturing and
joint ventures in areas like brewery, food, manufacturing and light
industry. Now these investments include the areas of real estate/property
development, services and banking.
The Philippines welcomes the policy of the
Chinese government to encourage its competitive companies to invest overseas
and participate in exploring economic resources in the Philippines.
More on
Philippines business policies.
In the past half decade, investment
agencies in the Philippines recorded significant investments from Chinese
companies in the manufacturing sector including home appliances, vehicles
and vehicle parts and accessories, cellular phones and garments,
architectural hardware, the areas of construction and property development,
telecommunications networks, ICT services such as international call centers
and trade/representative offices.
Economic activities benefit from the
reciprocal opening of banks of the two countries in each other's
territories. The Metrobank of the Philippines opened its branch in Pudong
financial district in Shanghai in October 2001 and the Bank of China (BOC)
opened its services in Manila in January 2002. Both banks place key focus on
trade financing.
The areas of agricultural development,
infrastructure development (including tourism infrastructure development),
resource development, engineered products, power systems, information and
communications technology and ICT-related services are seen as the growth
areas in both trade and investments.
Chinese companies may find lucrative
opportunities to participate in Philippine projects under various
Build-Operate-Transfer (BOT) schemes. These projects include the
construction of highways, railroads, roads, seaports and airports,
waterworks and sewage treatment facilities, telecommunications and
information technology networks, government buildings, housing projects,
canals, dams, irrigation, industrial and tourism estates. For more
information on the BOT scheme and related incentives, see
Investment
Policies and Business Opportunities.
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