Guangzhou, China
(Pleasantries)
In the face of a broad slowdown of the global economy, the countries comprising the Association of Southeast Asian Nations or ASEAN and China continue to show resilience and dynamism.
Many factors explain this. Our economies have fostered strong domestic markets. We have expanded our trade linkages dramatically. We have been building the infrastructure for more efficient payments and settlements across borders both to sustain our domestic markets as well as make cross border trade more efficient. Currently, we are in the advanced stages of realizing the Regional Comprehensive Economic Partnership or RCEP that will be a game-changer for all our economies.
The rapid achievement of global prosperity is threatened principally by the rise of trade protectionism. This rise is expressed in policies that inhibit the free movement of goods across borders, including the imposition of tariffs to achieve political ends. Newly imposed hindrances to trade have resulted in an economic slowdown. Consumers are forced to pay more for the goods they need. Supply chains are disrupted.
Fortunately, in this part of the world, there is consensus that free trade and more efficient movement of capital is the correct way to go. While protectionism plagues other parts of the world, the economies of Southeast Asia have invested in the free flow of goods, capital and services. This is a major reason why the economies of this region continue to lead in growth.
We appreciate China’s support for building institutions for open trade and investments in the ASEAN region. The ASEAN-China Free Trade Area was the first among the free trade agreements signed by the ASEAN with its major trading partners, and we continue to celebrate its success. For ten consecutive years, China has emerged as the ASEAN’s biggest trading partner, with total trade growing at an average of 10 percent per year since 2009. In 2018, ASEAN’s total trade with China reached 483.14 billion US dollars, 10 percent higher than the 2017 level.
Under the leadership of President Rodrigo Duterte, the Philippines has adopted a more forward-looking policy towards China. We understand the great synergy that will be generated by the closer partnership between our two countries. The opportunities that unite us are far greater than the issues where we might have some differences.
With the onset of warmer relations between our two countries, China has become our biggest trading partner and largest tourism market. Since 2016, the Philippines’ total trade with China increased at an average of 15 percent annually. Last year, our total trade with China reached 52 billion US dollars, 15 percent higher than the 2017 level. Chinese tourist arrivals in the Philippines, meanwhile, grew at an average of 27 percent per year since the start of the Duterte administration. It has reached 1.63 million arrivals in 2018, 23 percent higher than the arrival flows recorded in 2017.
The Philippines also enjoyed the best terms in our Panda bonds floated in the Chinese market. For instance, the three-year 2.5 billion renminbi Panda bonds that we issued this year were priced at 3.58 percent and received a very tight spread of 32 basis points over the benchmark. China Lianhe Credit Rating has rated our panda bond issuances as Triple A, its highest rating.
The Philippines also fully supports the Belt and Road initiative of China. We fully appreciate the vast economic potential this holds for all nations of the region and beyond. Improved infrastructure will enhance trade among our economies. Enhanced trade will encourage more efficient investment flows. Improved connectivity will enhance the inclusiveness of our growth patterns. We have everything to gain from this.
The Philippines, too, has a Belt and Road initiative at the national level. Our economic strategy centers on a massive infrastructure modernization program that will provide the logistics backbone for a dynamic economy. This infrastructure program of President Duterte — known as Build, Build, Build— involves 100 highly strategic infrastructure projects as well as thousands of infrastructure and logistics improvements all over the country. It will lower the costs of moving people and goods across our archipelago. It will bring once remote communities closer to the economic mainstream. It will create numerous investment opportunities that will unleash the latent strengths of our economy.
We are relying on this program to induce internally generated growth that will enable us to expand despite a challenging global environment brought about by protectionist policies in the West.
Our forward-looking investments in infrastructure benefitted from strong support from both the multilateral development banks such as the Asian Development Bank, World Bank, and the Asian Infrastructure Investment Bank as well as our bilateral development partners. China, in particular, has committed 9 Billion US dollars as official development assistance to support our infrastructure modernization program.
Our two countries have so far signed three highly concessional loan agreements amounting to 493.08 million US dollars to fund the construction of a dam, irrigation system, and railway. Since 2016, the Philippines has secured a total of 430.82 million US dollars-worth of grants from China to fund the construction of iconic bridges and drug rehabilitation facilities, and conduct several feasibility studies on our infrastructure projects, among other forms of assistance.
We are also in the midst of creating more institutional facilities to further enhance trade and economic cooperation. For instance, payments and settlement arrangements are being put in place designed to improve the efficiency of using our own currencies. Last year, thirteen local mainstream commercial banks, and a local branch of the Bank of China entered into a memorandum of agreement for the creation of the Philippine Renminbi Trading Community. The volume of business between our two economies justifies establishing this. We anticipate a significant reduction in the cost of doing business across our two economies as a result of this initiative.
The progress of the Philippines-China bilateral relationship is underscored by the increasingly frequent exchange of high-level visits, including those of our two leaders. President Duterte is the only leader that President Xi Jinping has met eight times and five of these were in China.
The synergy created by closer Philippines-China economic cooperation is true for all the rest of the region. This is the reason we see even closer economic integration between China and the ASEAN economies.
Multilateral institutions such as Asian Infrastructure Investment Bank have been extremely helpful to the economies of the region. We could complement this by working further on establishing a multi-currency payments and settlement system to improve the efficiency of an open trade regime.
The RCEP, which we support with vigor, will be the centerpiece of our collective efforts to build beneficial multilateral partnerships. The well-developed relationship between China and the ASEAN form the core of this emerging partnership.
We look forward to the finalization of agreements for the RCEP. With this framework for enhancing trade and investment, the development of the economies of the region will be further enhanced. We will be able to build a sanctuary for free trade and investment cooperation against the forces of protectionism elsewhere. This will be a major force shaping the development of the world’s economy.
The prosperity and well-being of billions of people in our region will depend on how we can foster growth through increased connectivity and increased integration of our economies. Enhancing our cooperation with China is essential in ensuring the region’s vibrant economic future and achieving our shared-goal of dramatically reducing poverty among our peoples.
The partnerships and agreements we continue to build today will provide a solid foundation for a more beneficial future for our region. These channels of cooperation are among the many reasons for which there is so much optimism that the countries of this region will lead the rest of the world in economic growth long into the future.
Thank you and good day.
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