Recent trade issue between China-Philippines
On 25 March, China customers destroyed 34.78 ton of substandard bananas from Philippines because the carbendazim in sample is almost one time higher than China food requirement. The total value of the destroyed bananas is $33,000. China urged Philippine to take measures to improve the quality of bananas and at the same time, China stopped importing bananas from certain Philippine exporters. These actions were taken after Philippines raised issue against China over South China Sea in the international Court of Arbitration. This is not the first time for China to take actions against Philippine in trade. The first time could be dated back to 2010. Will such actions help to deal with South China Sea issue or just hurt both side instead?
The bilateral relationship
The bilateral relationship between China and Philippines is most complicated and grim. The dispute over sovereignty and territory of China South Sea has been ongoing for years, with claims of various countries. It is important in territorial integrity, natural resource especially in oil, fishing resource and freedom of navigation. Among these factors, fishing opportunity and oil exploration are most valued by both China and Philippines. The tension has increased recently mainly because China naval patrols in Xisha islands. Philippines, on the other side, asserted that China’s behavior is against international law and expelled Filipinos from fishing.
The Philippines is the 47th largest export economy. China, Japan and the United States are three largest exporter destination and also importer countries of the Philippines. In 2013, Integrated Circuits takes the largest share in Philippine export, followed by computers. Banana is the fifth largest export product and the strongest food product globally, bringing 1.36 billion US dollars for export revenue. More than half of the exported bananas, about 75 million packs, are sold to China every year. In 2011, Philippines bananas took up 84.75% of total China imported bananas. Philippines is the second largest banana producing nation in the world, only followed by India.
Personally, I don’t believe it is proper for China to hurt the trade between the Philippines and China just for political reasons. China has kept taking measures against Philippines banana exports in the decade. However, Philippines didn’t make any compromise on the China South Sea issue. There is a trend for Philippines politicians to talk tough with China regarding the maritime issue to win support from citizens. Even though Philippine politicians pretend to be tough with China, they actually didn’t do anything meaningful. Most things they did were seeking the help of Court of International Arbitration and strengthen alliance with the United States. Clearly, the Court doesn’t want to get involved in this dispute and also, China refused to taking this issue to court. For me, it is more like a show among politicians. Also, a large number of Philippines banana planters are Chinese and thus, these measures are hurting Chinese most. Last but not least, China has already become a member of WTO and should obey WTO rules. Even though China has found excuses to reject Philippines bananas, the world know what China is really trying to do. This will undermine the reputation of China as a reliable trade partner. If China would like to conduct economic sanction on Philippines, it should do it openly, which will have more influence on Philippines’s attitude on China South Sea issue.