Nobel Prize Award: Why China's economic rise can help the Philippines

Who are your friends? “Tell me who your friends are and I’ll tell you who you are.” If recent events are any indication, it seems that the Philippines has now shifted its alliance to the left. In a surprising move and for reasons unclear, the Philippines, under the watch of the Aquino government has snubbed the invitation to attend the Nobel Peace Prize ceremony in Oslo, Norway.

One can make the easy intellectual leap to suspect that the pressure from Beijing has a lot to do with this decision. Ever since imprisoned Chinese scholar and activist Liu Xiaobo won the Nobel Peace Prize, China had been expressing its outrage against it and labeled it a “display of arrogance and prejudice against a country that has made the most remarkable economic and social progress.”

The Philippine government’s decision to send its regrets to Oslo also sent a strong statement to the rest of the world — that our country is not as self-reliant as we’d like to think and that our convictions are weak. Human rights activists were shocked by the decision. According to an Associated Press report, “human Rights Watch deputy director for Asia Elaine Pearson said in a statement Thursday that the Philippines is failing to live up to its promise to promote human rights in Asia.”

Some say that it is an attempt by the Aquino administration to appease China over the Mendoza Hostage fiasco on the 23rd of August 2010. Unfortunately, the snub highlighted that the Philippines counts itself among 17 other countries who have “flawed democracies”; “hybrid regimes” or are “authoritarian” states all of whom have declined the invitation to attend the awarding ceremony. One can interpret this as the Philippine government unofficially acknowledging our place among some of the world’s coddlers of human rights abusers. Others have labeled us “mukhang pera” for prioritizing the monetary gains before human rights.

Some analysts have put the Philippines on the same mound inhabited by countries such as Ukraine, Colombia and Serbia – countries that are not really “full fledged” democracies. Considering that the other countries that are not attending have U.S. sanctions against them like Cuba, Iran and Sudan, the Aquino government’s decision is a bit of a head scratcher if not a blow to U.S.-Philippine relations. Whatever the consequence of Malacanang’s decision, it “is a blow to the cause of free expression” according to Harry Roque, chairman of the Philippine-based Center for International Law (CenterLaw).

What does the ceremony signify, really? They say that the Nobel sends a signal to the young Chinese generation that the world is still concerned about China and its common values. Unfortunately, the message might just fly over the heads of most Chinese that are enjoying their country’s economic prosperity.

Most Chinese citizens do not even know who Liu Xiaobo is because he has spent most of his time in jail or under surveillance. And although he was a big figure during the 1989 Tiananmen democracy movement, many other Tiananmen-era activists have abandoned their campaigns and instead set their sights on the new glittery China. The Chinese Communist Party equation is simple: economics trumps politics, prosperity precedes polls, and social stability prevails over individual expression. What really is the agenda behind this ceremony? Whatever the West tries to push, China remains undeterred and there are more and more countries including the Philippines that are joining them.

Power Shift

As a result of the Global Financial Crisis (GFC), which has slowed down the American economy, it is becoming obvious to the rest of the world that the U.S. is slowly losing its grip on power around the globe. For a country that has gotten so used to commanding respect and influence worldwide, America has no choice but to learn how to walk again by treading carefully.

Couple the GFC with the atrocities committed by American military personnel during the Iraq war and the no-where-near-its-end war in Afghanistan; one cannot blame other countries if they begin to have doubts if America still has the moral high ground or the capacity to lead. Wikileaks documents haven’t really helped America with their tarnished image overseas. In other words, if you ask Julian Assange, the U.S. does not have any right to cry foul over human rights abuses by China when they have their human rights abuses to answer for.

The Philippines have always had America to rely on in times of crisis. This is despite futile attempts of some so-called Filipino patriots who insist that we should keep Uncle Sam out of our shores. Our lukewarm relationship with the west is enough reason I suppose not to burn bridges with the other super-“friend”, China especially, who for some time now has been flexing her muscles.

While the U.S. government does its best to recover from issues ranging from a huge budget deficit to their long drawn out crusades in Muslim countries, you can say that they are also preoccupied with a war with another country. And I’m not just talking about a war involving weapons of mass destruction. I’m talking about the currency war going on right under everyone’s noses involving the U.S. dollar and the Chinese Yuan.

Some Americans from both the Republican and Democratic parties have been accusing China of keeping the renminbi, its currency, undervalued and blaming it as the reason why the U.S. dollar is depreciating. Others are saying though that while China is keeping its currency undervalued, it is not the only reason why the U.S. dollar is weak. It’s not hard to believe both to be true but the U.S can’t keep stomping their feet and expect others to give in without reviewing their own economic policies.

For the past few decades, the U.S. has shifted its focus and imports more than it exports from 90 other countries around the world. Obviously, over the years, America has favored consumption more than production. According to an economic expert from Yale University, Stephen Roach; this has resulted in the U.S. dollar falling in value by 23% since 2002. In a nutshell, when you have less manufacturing, you have less trading partners. If you have nothing to trade, you can’t join the trading game. It’s that simple.

Over a century ago, America’s hunger for raw materials was so great that ships steamed across the Pacific full of materials like Chinese pig iron and Philippine mahogany to help build their railways, roads, and ports. Nowadays, the ships most likely contain Nike goods and other clothing items. China’s hunger for raw material has definitely replaced that of any other Western nation.

Even Singapore and South Korea ship electronic components that are assembled in China and re-exported to the U.S. and Europe. And the Chinese have become big consumers as well with most of the stuff being imported into China consumed inside China and not just re-exported to another country. Vietnam and Indonesia bring in commodities such as coal, tin or foodstuff like coffee or shrimp just for Chinese consumption.

And while the U.S. is fast becoming irrelevant as a trading partner in the Asian region, China on the other hand, has signed bilateral free-trade agreements with 15 countries in the Asia-Pacific region compared that with the U.S. signing with only two countries, Singapore and Australia. This indicates that trade within Asia is deepening and diversifying in the Asian region’s economy with China acting as a magnet pulling all smaller Asian countries to its direction. This situation is calling into question the primacy of the U.S. dollar as a reserve currency and instrument of trade.

With the weakening greenback, China is said to be increasingly using the Yuan under a series of swap agreements to trade with its Asian partners including South Korea, Malaysia and Indonesia. It seems that China is setting the stage for a Yuan currency zone in Asia.

What does it all mean for the Philippines though? Are we even joining in the “fun” happening in our own region? Can our manufacturing and export sector benefit from China’s growth? China’s emergence as the world’s leading manufacturer resulted in its increased demand for primary commodities. China would need petroleum products, crude rubber, pulp and paper, which I know the Philippines have a potential to supply those if we can only manage our resources well.

With respect to the service sector, the Philippines may well position itself in business process outsourcing, and the latest industry arising out of Business Process Outsourcing (BPO) – knowledge process outsourcing (KPO). And, when China’s entrepreneurs’ manufacturing plants expand into the global markets, there will be a need for our highly skilled, English-speaking workforce to provide BPO services. It’s shame though that our tourism industry has suffered a setback in China because of the hostage fiasco.

Everything is happening at a lightning speed and the Philippines should really focus on the opportunity to jump on the bandwagon and say “If you can’t beat ’em, join ’em!” Perhaps not attending the ceremony at Oslo is in the short term, not good for human rights causes but good for the economy in the long term. That is, if we can get our priorities right.

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63 Responses to Nobel Prize Award: Why China's economic rise can help the Philippines

  1. Jack says:

    Great article…thanks….US and the west uses the garb of democracy and human rights to expand their hegemony and influence around the world. They commit more crimes in the world than even China or all of south east Asia put together.

    Very bold and long term move by the PH government to side with China on this one…If ever yuan comes as regional currency for trade…the inflation will come down like 50%…Its the US dollar which is making everything expensive. They don’t produce anything but just print the US dollar. The world needs a balance and China is gladly providing it .

    PH would only benefit from China in the long term, in fact all of Asia will.

    • ilda says:

      Hey thanks Jack!

      The U.S heavily influences the Philippines – from our form of government to our lifestyle choices. Problem is, Philippine society tend to copy only the superficial stuff without understanding the substance behind it. I think it is clear where we are heading if we continue to take the same path.

      They may be down economically now but one thing I can say about Americans is they constantly have scholars or experts who discuss and recommend ways on improving their society. While Filipinos tend to blame everything on corrupt public servants for all the ills of the land, a thinking that is both flawed and misguided.

      • Jay says:

        Despite downplaying America, they are content for being the 2nd or 3rd best economy. As long as they don’t end up being a Philippines. And why not? Their consumer market is dependent on many manufacturing countries, even a stalwart like China.

    • The Lazzo says:

      At least the US doesn’t send lethal-injection buses for mobile executions, or officially deny essential parts of their history like the Tianamen Square massacre.

      But hey, America is the worst offender, right? China’s the role model now?

      • ilda says:

        You can blame globalization for China’s rise. If Americans are afraid of China and want to stop China’s quest for world domination, they should stop consuming cheap products made in China and start manufacturing their own. 

        Opening up manufacturing plants in the U.S. will solve their unemployment problem. Likewise, since the products will be more expensive when its made in the U.S. it will help people spend less and be more thrifty. It will also be good for the environment because the throw away culture promoted by the easy access to cheap products will be a thing of the past.

      • palahubug99 says:

        Cheaper is better is the mantra of Wal-Mart and others that have propelled China to become an economic superpower. Americans don’t realize it’s their own choices and greed that is causing outsourcing, unemployment and a decline in the US standard of living. Unemployed people even shop at Wal-Mart even as their own jobs have moved to China. How stupid is that? There is a disconnect here. Someone once said the average American IQ is 98 (not 100) and I’m starting to believe this now.

      • Jay says:

        Americans don’t realize it’s their own choices and greed that is causing outsourcing, unemployment and a decline in the US standard of living.

        Which is still interesting considering that standard of living is still better than some of the emerging economic powerhouses like China in general. Sure the average american IQ is small, but they know how to treat their think tanks right. They still invest in research and development. They still value common sense (to an extent, maybe even in a microscopic legal sense), initiative and teamwork. But I do agree that greed, when unchecked is America’s worst enemy.

      • ilda says:

        I cannot disagree with both of you palahubug99 and Jay.

        America’s lifestyle has to change. And here is an example of an expert who is promoting the need for a lifestyle change. Please watch the video:

        “Jean Twenge talked about the cultural consequences of narcissism, which she argued had grown exponentially in recent years.”

        http://www.c-spanvideo.org/program/286496-1

    • UP nn grad says:

      May be a lot simpler why Persi-Noynoy sided with China. Reason is Ronald Singson, charged by Hongkong for drug trafficking. Maybe some heavyweights 💡 from Mindanao, Ilocos or Rizal province reminded Malacanang about the case. It will 😐 “uncomfortable” if bail for Congressman Singson is cancelled and he is ordered to return to a Hongkong jail.

      • ilda says:

        That makes a lot of sense UP nn grad I’m pretty sure we have a lot of “atraso” already with the Chinese. The lack of public relations skill of PNoy did not help at all with his “smiling dog” thingy making things worse for all Filipinos.

  2. frustratedcitizen says:

    …if the president and his government is ‘smart’ enough to figure this out, then maybe the Philippines would have some improvement after all. But, alas, the president and his government is too busy to listen to other people, let alone have other people’s comments sink deep into their minds. 

    The government can still prove me wrong though. As indicated in this article, ‘That is, if we can get our priorities right.’

    • ilda says:

      We’ll never know whose bright idea it was to boycott the ceremony in Oslo. I’ll be surprised if it was PNoy’s. As far as I know, we didn’t even hear any new bilateral trade agreements between Philippines and China. So the “what’s in it for me” factor is missing with regards to this move to appease China.

  3. J.B. says:

    @Ilda, I took notice of your BPO relationship in favour of the Philippines once China manufacturing sectors continue to expand.

    At the moment, many Chinese manufacturing plants are still tied up to the west in the form of joint ventures or direct suppliers.

    This form of agreement tend to favour more of Westward friendship for the Philippines rather than Eastward friendship e.g. China.

    It may eventually…but for now the BPO advantage of the Philippines is still too dependent on the Western economies.

    • ilda says:

      Well, we should really look into other means of expanding our business with them if that is the case. I’m sure we are missing out on golden opportunities because of the glacial speed with which we come up with something to offer.

  4. ChinoF says:

    The downside of this is that our country is looking like a fool. For example, western countries consider us their ally, and then all of a sudden, we side with China. That dismays them, and we can have a lot of investors from them too. 

    Another issue is that this is a mere appeasement attempt after the Bus Hostage Crisis. The sad part is that we’re looking like fools to China, since what they wanted was the removal of the bungling officials in the hostage crisis. But instead they got kept. So what we’re doing is crawling on our knees and saying, “we’re on your side,” bootlicking. But the Chinese gov’t will look down on us further. If Chinese investments are saved, that’s more of a consolation for me. 

    • ilda says:

      What’s new ChinoF? We’ve always looked like a fool anyway. Even if we attend the ceremony, it is too hypocritical because our human rights record is appalling.

      Whether we attend or not, do we even have anything new to offer with anyone apart from the OFWs?

      • ChinoF says:

        On the Human Rights thing, if we declined out of humbleness, that we admit that bad HR record, it would’ve been better. But our poorly informed admin had to choose, “we side with China.” Perhaps the only thing we can offer the world is a negative example to study, as Lee Kuan Yew made of us. 

      • ilda says:

        As per article on Philstar, it wasn’t a snub but a conflict of sched according to Malacanang. Yeah right.  Ang dami nilang palusot!

  5. Lorenz says:

    I just don’t like the style of the Chinese government. I’ve been to China and i’ve learned you can’t access the internet unless you’re 18. What’s more is that there are a lot of banned sites in China. I already know their disrespect of human rights but what i really don’t like from them is their authoritarian style of governing (too much sensitivity on trivial issues concerning Chinese, too much control, and strong censorship).

    Don’t forget about the Spratlys Islands issues. There was a recent news wherein China just built a lighthouse on a PH claimed island which raised concerns.
    http://ph.yfittopostblog.com/2010/12/08/china-builds-lighthouse-on-phl-claimed-territory-in-spratlys/

    Also, Ilda, you better read this:
    http://www.time.com/time/magazine/article/0,9171,2019534,00.html

    • ilda says:

      Thanks for the link Lorenz

      I found the last sentence from an excerpt of the TIME article so funny:

      “The acquisition of sophisticated weapons indicates two things: First, that Southeast Asian nations are more wary of each other than fraternal declarations at ASEAN meetings suggest. Second, that a region that publicly welcomes China’s soft power is also quietly tooling up for the hard version.

      I think as long as China remains a communist country, no one will be able to fully trust them. Everyone is being very diplomatic on the outside but nervous on the inside.

      China is certainly very aggressive and it does not hurt for other Asian countries to keep the U.S. on its speed dial.

      I don’t know if we can still do anything about the Spratlys. We’ll have to rely on the U.S. again for help when the proverbial brown stuff hits the fan.

    • ChinoF says:

      Oo nga no. I forgot to mention this: 
      “Spratlys row: Beijing claims indisputable sovereignty”
      http://www.philstar.com/Article.aspx?articleId=637528&publicationSubCategoryId=63

      Wonder if current admin is going to give up the Spratlys to China. :/ 

      • Maki_Alam says:

        Knowing how wishy-washy this administration is, they probably will give it up. Also as compensation for the eight Hong Kong tourists. And for changing their minds about the Nobel Peace ceremony.

      • ilda says:

        Nabasa kasi nila yung article ko so they changed their mind…lol.

        😉

    • Jay says:

      Singapore may not be as concerned considering their very modern military can scare what the Chinese can muster, even if they do have the numbers. But Philippine military?

      • Lorenz says:

        The Philippine military was never mentioned in the TIME article because probably AFP/PN didn’t buy anything at all. Obviously, Philippine military is the weakest in Asia. But, would any country even bother to conquer our land (except the Spratlys) in these modern times?

      • Jay says:

        I’ll bet the Filipino elites can be wormed in to sell the land to any incoming overlord as long as they still retain their own share and still have access to their own wealth.

      • peste says:

        What should concern the Philippines is that our neighbors have submarines now while we have nada. Well, actually, local warlords have submarines while our military has none. We don’t even have sonar. The country is deaf to what is happening under our very own waters.

        Subs are very handy vehicles, you see. You can smuggle people and things in and out of the country with these. Malaysia (or the US) could support the Muslim secessionist movement by bringing in the weapons and helping the rebel leaders escape. China (or the US) can support the Communist movement with the same technique. This month, Santa will deliver Christmas tidings via his magical underwater sleigh! Ho! Ho! Ho!

      • peste says:

        Nope. If it’s just a matter of a one-on-one military showdown, China will merely flick its finger and Singapore will crumble. All it has to do is isolate the island and cut off its water supply. Heck, even Malaysia can do that.

        Singapore is not that much concerned of any military muscle-flexing because it is assured of its place in the world. But even that is fleeting. Singapore is just an island, whatever future development or expansion it will have will be small compared to China’s potential. They have to play right or else China may suck off wealth from them like a giant black hole.

  6. ulong pare says:

    dang!… reality check: tsekwaland: 1.5B (with a B) tsekwas, 70% live and work worst than flips… 50% migrants/ofws… tsekwas govt undercuts world’s labor $$… politburo dictates how they live and fcuk… onli one pulubi per family… flipland: 99+M, 70% class c and d gung gongs (buti na lang, i belong in the 1% goodlookings); 10% migrants/ofws… flips are free to multiply like kakroaches… flips are just a drop in the bucket compared to tsekwas… tsekwas will employ their own slit eyes before englitzched spoklong flips…. and y’all like that, huh?!… go ahead, flips… start ‘bakwetting to tsekwaland… dali an na!

  7. dumb-oh says:

    “ You know China would not have intruded into the Mischief Reef if they
    [the Philippine government] didn’ t pull out the Marines there,” he said. He recalled that following the People
    Power revolution in 1986, the
    administration of President Corazon
    Aquino pulled out all the Marines from
    Palawan, which is nearest to the
    Spratlys, and sent them to Tawi-Tawi and Sulu because of their perceived
    loyalty to her predecessor, former
    strongman Ferdinand Marcos.
    “ So the Spratlys became vulnerable; that’ s when China came in,” Sabban added.

    http://www.manilatimes.net/index.php/top-stories/34261-china-builds-lighthouse-on-spratly-islands

    • ChinoF says:

      The Aquino governments are prime examples of weak political will. 

      • ChinoF says:

        You see, my view is that siding with China was not a smart move. It showed how finicky and cowardly this current government is compared to the last. Then it backflips and sends some people in the end… they react out of knee-jerk fear, not out of thoughtfulness. 

  8. Hyden Toro says:

    We never had any Nobel prize winner. This may have cause Noynoy Aquino not to send any delegation…Give us a Nobel prize winner, and he will send a delegation…

  9. UP nn grad says:

    I just got an e-mail which is kind of funny, but is this true? Is it true that Malacanang has ordered streamers and banners along Roxas blvd and in Makati saying

    Shèngdàn kuàilè !!!
    shèngdàn kuàilè — Mandarin for Merry Christmas!!!

    Beijing has really gotten Malacanang to 😀 dance, hasn’t it???

    • Hyden Toro says:

      To appease a Giant: you have to dance to his tune….

    • ChinoF says:

      This I gotta see, and it is funny if it comes out. 

      Also means that Beijing has the Yellow Regime in the palm of its hand. Aw geez. 

      • UP nn grad says:

        Or maybe what is at risk is this — Congressman Ronald Singson, Hongkong drug trafficking case — he will be uncomfortable 😦 if his bail gets cancelled by HongKong.

      • ChinoF says:

        Nyahaha… it might be better for him to be uncomfortable… serves a drug trafficker a good lesson. Imagine how many kid’s lives he ruined by supplying drugs for them. 

  10. The Lazzo says:

    http://www.maplecroft.com/about/news/hrra.html

    Apparently, we’re an important emerging economy now. It’s a shame that the only people even putting an effort into promoting labor rights are the populist-Marxists with their minds still romantically anchored in the pre-martial-law 1960s.

    • ilda says:

      Thanks for the link. You are correct The Lazzo

      The international community see our potential. Who can blame them when our country is rich in natural resources and still have relatively cheap labour. It’s just a shame our human rights record is bad.

      Investors from the outside see a lot of promise because the newly elected President PNoy has a high trust rating (as created by the media allied to him) and they actually think he will bring in reforms. What they don’t know is that he lacks substance and does not even have a clue where to put the necessary changes to our flawed system and culture.

  11. J_ag says:

    In case anyone has failed to notice, the unipolar moment for the U.S. has passed. The world is seeing a shift from the dominant position of the West for the past 200-300 years to a re-balancing of economic and political power by the emerging powers in the East.

    Thank goodness there are some pragmatic guys in the present government. The Philippines is still systematically and strategically dependent on importing demand (export orientation) for economic survival.
    For a country with a systemic and structural lack of aggregate demand, its foreign policy choices are very very limited.

    The troubles in European community most especially lay bare the follies of economic integration with the glacial pace of political integration even amongst the many states in the EU.

    More so in Asia where the attempts at economic integration is still in its infancy as with the varying divergences in political systems.

    Trying to impose the standards of the more evolved systems of representative government in the West on China that has had its own history of political evolution is stupid.

    There are only two major economies with the largest economic /political unions on the planet, China and the U.S. China will eventually be the largest within the next generation. Greater China (Taiwan + Asean) is bound to be number three eventually.

    • ChinoF says:

      There are pragmatic guys in gov’t? Or you mean weak-willed bootlickers? 

    • Sareet L says:

      I would agree with your points here – except the one about having pragmatic people in the Aquino government. Since when? Sounds more like, ‘can’t get their act together’ business as usual – backpedalling on their initial confusing messages, only to confuse the rest of the world even more.

    • ilda says:

      ”Trying to impose the standards of the more evolved systems of representative government in the West on China that has had its own history of political evolution is stupid.

      There are only two major economies with the largest economic /political unions on the planet, China and the U.S. China will eventually be the largest within the next generation. Greater China (Taiwan + Asean) is bound to be number three eventually.”

      You make it sound like China did not learn anything from the U.S. Mr J_ag. Don’t forget that if China didn’t open up their market and embrace globalisation, they wouldn’t be in the position they are in right now. What are they going to do without their biggest customer, the Americans?

    • Jay says:

      @Sareet

      I would agree with your points here – except the one about having pragmatic people in the Aquino government. Since when?

      Backpedal even further and there haven’t been any saavy pinoy politicians capable of taking advantage of looking towards what the future can bring. Well… Marcos came the closest but caved in to his own little corruption of his cronies. Thing is there have been people who think like Dick, Nick Perlas and even Gibo. Except they are often under appreciated or just plain silenced.

      Also, in part of the elites decision of the U.S. to cave into more of their greed and outsourced labor even more has helped create the monster that is China now. As ilda have mentioned

      What are they going to do without their biggest customer, the Americans?

      the relationship of the two, including that of Japan is symbiotic. When China does learn to manufacture for their own, it may tip the scales further but unless there is another powerful consumer market besides the U.S., the relationship is one where both sides highly benefit from each others’ economy.

      Besides, if China didn’t learn, they would still be backward-ass strictly leftist thinking people trying to hinder their progress to continue perpetuating Mao’s influence. If he was never in the picture, imagine China going full steam towards the 21st century, while learning from their other neighbors like Taiwan, Singapore, South Korea and Japan first.

  12. J_ag says:

    Ilda, the so called currency wars deserve a comment. Your take on the clash of monetary policies between the U.S. and China is not a currency war.

    In simple language it means that the monetary authorities in China refuse to follow the monetary policies imposed by the Federal Reserve. China employs very strict capital account controls on foreign exchange in China. It also maintains a very narrow trading band for its currency peg with the dollar and other major currencies. Its currency is not fully convertible. The U.S. dollar is fully convertible and its rate is determined by a free market float.

    The U.S. government would love its currency to depreciate against the Chinese renminbi as a boost for U.S. exports and to rebalance the world economy. That would mean the renminbi would appreciate vs the dollar.

    The dialectic or opposites are based on what each government believes is best for their national interest.

    Please note macro-economic policy is in simple terms state intervention in the economy. Some intervene massively as in China and some only based on the economic business cycle. and regulation as the U.S.

    Here in the Philippines which is a weak state we import the macro economic policy of the U.S.

    We are too small to do our own… Very few people in the Phils know or understand this….

    Most including yourself frequently talk micro oblivious of the fundamentals.

    • ChinoF says:

      The only fundamental I see is that you like to bootlick China just to spite the US system. If you hate the US system that much, then support parliamentary gov’t. 😉 

    • ilda says:

      @J_ag

      “The U.S. government would love its currency to depreciate against the Chinese renminbi as a boost for U.S. exports and to rebalance the world economy. That would mean the renminbi would appreciate vs the dollar”.

      From what I understand, the U.S. is actually accusing China of manipulating the renminbi which makes the U.S. dollar weaker.

      The Chinese also bought a lot of U.S. dollars so if that depreciates even further, they will be stuck with it. Which is probably the reason why it makes sense that China is increasingly using the yuan with their trading partners within the Asian region.

      “Here in the Philippines which is a weak state we import the macro economic policy of the U.S”. ….

      I never said that the Philippines is a strong state. I actually said in my other comment above to Jack that we basically copy everything from the U.S.

      “We are too small to do our own… Very few people in the Phils know or understand this….”

      Sometimes in order to understand something, you don’t have to go too far. You just need to go back to basics. As I said in the article, America manufacture less nowadays that’s why they have less trading partners. This is part of the reason their unemployment rate is high and spending power is low.

  13. J_ag says:

    My my we have a person that may be stuck on stupid. If the U.S. Congress would like to pass a law charging that China is keeping its currency undervalued vis a vis its trading partners that would normally mean that they would like the Chinese to allow their currency to appreciate.

    In particular against the mighty U.S. dollar. That would mean that the dollar would depreciate against the Chinese currency and Chinese imports into the U.S. would cost more since you would need more dollars to pay for Chinese imports. That also would mean that Chinese imports from the U.S. would get cheaper and lead to more imports from the U.S. Currencies are always denominated always in pairs. If one goes up then the other pair must go down.

    What is so difficult to understand. When the Euro first came out all you needed was 0.80 U.S. cents to buy one Euro. Today one would need close to $1.30 to buy one Euro. That would mean that the dollar devalued versus the Euro… At one point it almost reached $1.60.

    Where have you been living all this time? The U.S. Fed has said that it need to keep creating more money to buy long term U.S. debt to keep interest rates low to help the U.S. from getting back into recession. Indirectly that is also going to debase the value against all currencies. It is simple to fight, deflationary expectations you must create inflationary expectations.

    Even Bernanke has come out and nicely told the Chinese to stop trying to defend an undervalued currency. Appreciation of the Chinese currency would mean a depreciation of the U.S. currency. The U.S. is a major trading partner of the Chinese. The U.S. has been running a major trade deficit with the Chinese for many years.

    Now as far as the U.S. economy and manufacturing. The U.S. still the major manufacturing economy in the world. Their plants can be found all over the world directly and indirectly. In fact the total value of U.S. assets overseas total close to $18 trillion. In an age of globalization
    manufacturing is not bound by national boundaries. That is why the most popular status car in China is the Buick. Ilda if you live in the Philippines please check where you Tide, Colgate, Oreos, Safeguard are manufactured.

    Sweet cheeks do not get into a discourse that you obviously do not understand.

    Most of the major exports of the Chinese are exported to the major democratic countries of the world. They are more often outsourced to toll manufacturing in China with major technological assistance from the Western economies. These major Western economies knowingly separate their political beliefs from their economic interests that is tied with the cheap labor policy of China.

    Grow up and understand that the world is a complex place if one is a total idealist.

    • ilda says:

      It is so typical of J_ag to call people names in desperation. Try not to sound like you have three corn cobs up your…never mind.

      Reading all my comments again, I can’t understand where your animosity is coming from. Why is it so difficult for you to accept that we are just bouncing ideas off each other here? Don’t be such as stuck-up. I think you are the one who needs to grow up Mr J_ag. You just want to make it look like you are smarter than everybody else here.You also seem to think that you have all the answer to the problems of the world. Unfortunately for you, your ego is eclipsing your so-called economic “expertise”.

      Yes, the Fed’s think that by printing more money it will solve all their problems. But it is just masking the problem and not solving the underlying cause of their misery. It’s not sustainable in the long term. I understand the U.S. is also worried about their exports and would prefer to keep its dollars down but isn’t that manipulation as well?

      Also, according to a more recent article in TIME magazine:

      http://www.time.com/time/magazine/article/0,9171,2026799,00.html

      (…)China and the U.S. are heading toward a currency war anyway — and the rest of the world could be affected too. The war will be a logical consequence of changes in Federal Reserve policy in the U.S. With unemployment stubbornly high and the recovery running out of momentum, the smart money is on the Fed undertaking a new round of quantitative easing, nicknamed QE2. This policy allows the Fed to “create” new money through purchases of Treasury bonds. The goal is to prevent deflation and push banks to lend and companies to invest and hire by making more cash available.

      By increasing the amount of dollars in the world, the Fed would depress the greenback’s value. Mere anticipation of the Fed’s strategy has already weakened the dollar in global markets. That, in turn, places greater strain on the yuan. China’s central bank would have to intervene on an even bigger scale by buying more and more dollars to stop the yuan rising in value. (On Oct. 19, the bank hiked its benchmark interest rate, signaling it would not fight potential inflation by allowing the yuan to appreciate.)

      Can the U.S. force Beijing to loosen its grip on the yuan simply by generating more dollars? In theory, yes. The Fed has the ability to produce as many dollars as it wishes, potentially placing limitless pressure on China to let the yuan appreciate. Otherwise, Beijing would have to keep amassing dollar currency reserves it doesn’t need. In practice, however, the Fed is unlikely to keep the printing presses humming indefinitely. Its aim is to aid the U.S. economy, not undermine China’s currency regime or destroy the standing of the dollar.

      The fed’s answer to the country’s economic woes is to keep pumping in more dollars. Its basic aim is to just aid its ailing economy. They also want the yuan to appreciate more. Who are they to impose their will on the world economy anyway? By pumping more dollars in, China can also accuse them of manipulating the dollar. Who are they to judge China for manipulating their yuan then? It’s a question you don’t have to answer especially since you take the subject about the economy personally.

      J_ag said:

      “If the U.S. Congress would like to pass a law charging that China is keeping its currency undervalued vis a vis its trading partners that would normally mean that they would like the Chinese to allow their currency to appreciate.”

      The U.S. house of representative did pass a bill stating that it would impose tariffs on Chinese goods. To quote:

      http://www.time.com/time/world/article/0,8599,2024090,00.html

      ”On Sept. 29, the House of Representatives passed a bill with overwhelming support from both Democrats and Republicans. It would punish China for keeping its currency undervalued by slapping tariffs on Chinese goods.

      There’s no doubt that China keeps the renminbi, its currency, undervalued so it can help its manufacturers sell their toys, sweaters and electronics cheaply in foreign markets, especially the U.S. and Europe (…)”.

      Chinese companies make many goods for less than 25% of what they would cost to manufacture in the U.S. Making those goods 20% more expensive (because it’s reasonable to suppose that without government intervention, China’s currency would increase in value against the dollar by about 20%) won’t make American factories competitive.

      J_ag said:

      Now as far as the U.S. economy and manufacturing. The U.S. still the major manufacturing economy in the world. Their plants can be found all over the world directly and indirectly. In fact the total value of U.S. assets overseas total close to $18 trillion. In an age of globalization manufacturing is not bound by national boundaries.”

      You are technically agreeing with what I said. The problem is you don’t want to acknowledge that by outsourcing their manufacturing overseas, the U.S. is also denying their own countrymen livelihood. The west came up with a bright idea called globalization just to increase their “sales” and “growth” but they did not foresee that it will cause major problems in their own backyard like unemployment.

  14. J_ag says:

    Sweetcheeks
    This is most especially for your education. The U.S. has devalued its currency three times in the past as a tool of economic policy.

    http://www.marketwatch.com/story/bernanke-turns-up-heat-on-china-currency-policy-2010-11-18

    http://www.time.com/time/magazine/article/0,9171,905590-1,00.html

    Ilda just check on Plaza Agreement on the third time the U.S. formally devalued its currency against its major trading partners under Reagan… The target then was Japan.

    You can’t just be spoon fed….

    The U.S. is now trying to get china to agree to devalue the dollar by having the Chinese appreciate their currency some more. Since 2005 the Chinese renminbi has appreciated 20% against the dollar.

    • ChinoF says:

      Wonder where all this leads to… side with China or the US? 

      A smart politician knows how to play both sides of the fence. Unfortunately, our current politicians in power are clueless. 😉 

    • benign0 says:

      That is all true, Mr J_ag — from the small square within which you think, that is. As usual, (perhaps imprisoned by the textbook knowledge you so ironically love to exhibit here), you come from a rather small frame of reference.

      If you step back to the bigger scheme of things, you’ll be able to trace back much of the prosperity you see in China to its ultimate origins — the intellectual capital originating from the industrial revolutions and the creative explosions that began in the West that went into the commercial, technical, and industrial infrastructure that paved the way for the unprecedented quantity of capital and the unprecedented efficiency of it allocation that we see today. Without all that — i.e. without the origination of this capital and the facilitation of its movement and allocation to those who need it the most — China will never have been the “manufacturing base” that it is today nor India (and now the Philippines) as the outsourcing capitals of the world today. For that matter, neither will the Middle East see any of the oil wealth they enjoy today (because the ideas of the petroleum guzzling machinery and the production and lifestyle demand for these were all originated from the West). Japan, mighty industrial power that it is, itself started out as a net importer of capital (not just funds but intellectual capital, plez) from the West.

      I go into detail about the nature of wealth in the usual form that only a guy like me can take in Page 55 of my brilliant book.

      Might I cite this excerpt from the section where I introduce some concepts of “wealth” and “capital” that may sound a bit counter-intuitive to textbook minds such as yourself:

      We have so far used the word “capital” in this chapter but have gone nowhere near any discussion about financial stuff. For most people, this can be quite disconcerting. However, a discussion on capital can potentially go on and on without ever touching on the subject of Finance. That is because financial stuff merely represents the mechanism – and a flawed one at that – for keeping track of and quantifying the value of capital. The fact is, capital continues to be created and destroyed below the radars of most economies’ financial systems. This flaw manifested itself many times in history, most notable of which were the stock market crash in the 1930’s that led to the Great Depression, the Asian Currency Crisis in 1997, and the Dot-Con meltdown in early 2000. In all of these instances, financial data consistently provided misleading information right up to the end when panic finally gripped the investing public. The financial indicators of the value of capital showed robust gains, but the subsequent crashes demonstrated with a vengeance the true value of the underlying capital itself (the assets – both tangible and intangible – owned by the businesses whose shares were traded in the equities markets) when people suddenly came to their senses. Nevertheless, we will describe the nature of what, at best, is the loose coupling between finance and capital to appease those with much more established notions of what capital is.

      Read it and weep, dude. Download this masterpiece of extremely rare outside-the-square thinking here! 😀

      So for your sake, step back a bit from your rather quaint fixation on current events and the sort of geo-politico-socio-economics that frame the comments you make here and step up that you may count yourself a true netizen of this excellent blog site.

    • ilda says:

      Thanks for the link Mr J_ag but you just proved my point that the U.S. is also a currency manipulator.

      We’ll see if this move will help their economy again. Everybody is just speculating, even you.

  15. bubi78 says:

    With its billion plus consumer base, China is a seller’s paradise and the Philippines should exploit this market for all its worth. Any economic policy maker worth his salt surely knows this and the same goes for the astute businessman who is looking to break new grounds for investments and for business opportunities; but because the Chinese economy’s main thrust is export oriented, the Philippines cannot compete with them on that front. Of course, we can resort to selling them raw materials like crude rubber, lumber, ores etc but that will be like supplying the fuel and the ingredients to cook the broth which we will be buying afterward. The same thing happened in the 70’s and the 80’s when we supplied the raw materials to the emerging economic powerhouses like Japan and Taiwan but we have nothing to show for it save our logged over hillsides, abandoned mines, and poisoned farmlands. Finding a niche market for our finished or semi-processed products is the way to go and our government’s economic planners in tandem with the business sector should put their heads together in coming up with a feasible and sustainable plan of action vis-à-vis our export strategy to China.
    Tourism is a veritable gold mine which can be exploited to the hilt. If say a quarter of the billion Chinese have not been to a beach that would roughly translate to a potential 250 million tourists who are eager to experience the sand, the sea and the ocean breeze for the first time. With the right marketing blitz we can overcome their innate Confucian penny pinching trait and convince them to part with their Yuan to cavort and frolic in our sun drenched beaches. Hordes of Chinese tourists are descending on the shores of Thailand, Malaysia, Indonesia and scores of other Asian countries. Why can’t we do the same in enticing these Chinese tourists to come to our shores?
    I acknowledge that hedging our future on China being the next global superpower is indeed a prudent assessment and a foregone conclusion, but to prostrate ourselves before their “imperial court” and kowtow to their every wish smacks of a sellout; we are not their vassal state to be dictated upon on matters of principles. The Nobel Prize is a venerable institution by itself and it has ceased to be one man’s legacy to the world but has come to represent, in a sense, our collective gratitude to those who confer the “greatest benefit on mankind” in the fields of physics, chemistry, peace, medicine, and literature. By not sending a representative to the awarding ceremony, our government has turned its back on humanity and for what? To save the lives of our countrymen on China’s death row as bandied about by the Palace and their cohorts in media? If their intention was to spare the lives of those in death row, they should send a high-level team to Beijing and exhaust all diplomatic means to secure leniency for the inmates or better yet let PGMA handle the negotiations. The Chinese government after all respects PGMA as evidenced by the US embassy cable released by WikiLeaks. The government would also do well to drill into the minds of our OFWs the perils of running afoul with the strict drug laws of China and of other countries as well.

    • ilda says:

      I cannot disagree with any of your points Mr. bubi78, especially the part where you asserted that we have neither the foresight nor the desire to manage our resources well. I guess we were quick to cut trees back in the heydays but were slow on replacing them or did not replace them at all. Of course the result was deforestation, which continues to wreak havoc on our environment. The “bahala na” attitude always gets in the way of our progress.

      Unfortunately, it will take some time before we can entice the Chinese tourists back to the Philippines no thanks to the Mendoza hostage fiasco and PNoy’s lack of P.R. or any leadership skills.

      I also believe that if we genuinely have something better to trade with the Chinese, it wouldn’t have been an issue for Malacanang to send a representative to Oslo. The truth is, we have no bargaining chip. We just come across as a hanger on.

      The Philippines is obviously not a very important trading partner of China. Other nations can most certainly fill in for us to serve China’s needs. We are not even competitive in terms of wages. Other low-wage economies like Vietnam, India and Bangladesh are beating us to the punch.

      • bubi78 says:

        It gets so exasperating sometimes, you either slink away to the sideline and keep your peace or go the way of the Oklahoma bomber just to make a statement. TG there’s AntiPinoy to let off some of that steam!! Thanks guys and Merry Christmas to you, mam Ilda.

  16. macassar says:

    Interesting and balance, but what about the Philippines ? It’s easier to speak about others. For “Human rights Abuses” Philippines are among the best, if not the Best in time of peace. Did you are blind ? 170 private armies are not enough to be seen, not enough abductions, tortures, not enough force disappearances, not enough journalists killings to notice that, on those point China is better, far better, cleaner by far. Philippines need urgently “Human Rights Lessons” ! Mostly those unaccountable atrocities are run by the country “Owners”. China don’t need to conquest the Philippines as it is already done since long time. Pinoy are just charming slaves/squatters in theirs own land, educated with fake text book’s below trees as there is classroom’s shortages, ironically, all happened thanks the Churches(Vatican helpers blessing criminals giving envelops) and the US choosing the monster’s to keep the country in mendicancy.

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