Page last updated at 08:53 CST6CDT, Wednesday, 16 October 2019 PH
This does not mean, however, that we should not proactively seek closer economic relations with the Chinese business community. Because of the advantage of a huge domestic market, the Chinese can be Number One in developing some of the products and services of the fourth industrial revolution, especially electric vehicles, solar panels, smart phones, financial technology and biotechnology. I think it was wise, for example, for Globe Telecom to decide to continue their partnership with Huawei despite the ban imposed on Huawei by President Trump. Although it is not easy to completely distinguish between a state enterprise and a private enterprise in China, it would still be worthwhile to actively search for possible partnerships with Chinese private businesses in the new technologies that they can transfer to the Philippines. For this reason, it would be good to encourage more of our educated young people to master the Mandarin language which in no time at all will compete with English as the business language of Asia. As I have already discussed in a previous article, our agribusiness entrepreneurs should exhaust all possibilities of identifying high-value food products (e.g. mangoes, avocado, coconut water) for export to China.
Another “trap” into which China has fallen which we could convert into an opportunity is the “demographic trap”, already explained in a good number of my previous columns. China is suffering from rapid ageing. George Magnus in his book notes that Chinas has the world’s fastest ageing population. China’s declining working age population is a drag on the economy, and the increasing share of seniors in the population is extremely costly for its public finances. The problem with China, in contrast to Japan and European countries, is that is growing old before it is rich. A good number of those senior citizens among the 500 million middle-income individuals today may be enticed to retire in the Philippines if we are able to put up retirement villages with the care giving services that are unavailable in China because of the paucity of young people. Such retirement villages may be marketed to some of the 200,000 or so young Chinese workers who are now working in the online gambling industry. These workers would surely have parents and other relatives who are among the ageing population. Having enjoyed the hospitality and warmth of the Filipinos, these young workers may be able to convince their older relatives to consider retiring in the Philippines.
India in the next decade will have the largest population in the world, surpassing China. Unlike China, it has not been caught in the demographic trap. Its population will continue to grow until mid-century, reaching an estimated 1.68 billion in 2050. Its economy has also been growing briskly. In fact, as early as 2024, India’s population will already be larger than China. With median age of 26.7, India is younger than China at 37.0. Its younger and still growing population will be a competitive advantage. With the appropriate economic policy, India can transition from a low-middle income country into a high-middle income economy in the next decade or so. The Philippines can explore significant improvements in the bilateral economic relations with India as well as be a part of the ASEAN + 1 initiative that is in the agenda of both the AEC and India.
The Philippines at present imports from India vehicles and parts and accessories; oil seeds and oleo; frozen buffalo meat; rubber and rubber parts; pharmaceutical products; electronic and electric machinery; boilers; organic chemicals; iron; steel; and cotton. The Philippines exports electronic and electrical machinery; boilers, vehicles; paper products, organic chemicals; fertilizers; rubber and articles thereof; iron and steel. India has a much lower per capita income compared to China. In nominal terms per capita GDP of China is $7,589 while that India is $1,627. Because of its gigantic domestic market, however, India has industrialized more successfully than the Philippines. We can benefit especially from their iron and steel industry as well as the pharmaceutical products that have brought down significantly the prices of medicine. India is the world’s largest producer of generic medicines. (To be continued).