By Adolfo Quizon Paglinawan

 

My first observation regarding the Asia-Pacific Economic Cooperation summit in Peru is that Chinese President Xi Jinping got a red-carpet treatment upon his arrival at the airport while US President Joe Biden did not.

This is however easy to appreciate, because the focal point of Xi’s visit is the inauguration of Peru’s new US$3.5 billion Chancay Port funded and operated by China. Beijing and Lima also plan to sign some 30 bilateral documents, including an updated free-trade agreement.

The Chinese delegation has some 400 businessmen and entrepreneurs attending the APEC event. President Xi quoted an ancient Chinese saying, ‘Bringing benefit to the people is the fundamental principle of governance. We will encourage Chinese companies to create more jobs and fulfill their social responsibilities in Peru, making our friendship more tangible and beneficial.”

The next interesting development is that press is already billing US President Biden, as a lameduck. Victor Cha of the Washington-based Centre for Strategic and International Studies told media “There’s no real point for a US-China bilateral meeting to advance any new agenda, other than to ensure some sort of stability in the interim before the transition to the next administration.”

Biden and Xi will of course meet again, the first known interaction since an April phone call and their first in-person meeting on the sidelines of last year’s APEC meeting in California.

The pair is expected to discuss issues that have normally come up in Sino-American talks in recent years: Taiwan, alleged human-rights violations and Beijing’s support for Russia’s invasion of Ukraine, all as Biden prepares to leave office in two months.

“It’s ironic that Trump will be talking about tariffs across the board while at APEC it is being announced that Xi Jinping is going to sign a new updated free-trade agreement with the host country, Peru,” added Cha.

APEC and the various sideline meetings would be overshadowed by policy questions tied to the recent US election which was won by Donald Trump, who has already named several China hardliners to top posts in his coming administration.

Beijing will try over the course of this week and next, to position itself as a “responsible global citizen” as the US turns increasingly inward. The US president-elect campaigned on an “America-first” agenda of anti-immigration and protectionist tariffs, including a threatened 60 per cent tax on all Chinese imports.

However, China is the second-largest trading partner for South America after the US. It is also the largest trading partner for many countries on a bilateral basis and has free-trade agreements with five countries.

Beijing also has 22 projects under way in South America through its Belt and Road Initiative, the mainland government’s scheme to improve trade and economic integration around the world.

In an earlier statement, President Xi said that China was ready to work with Peru to “practice true multilateralism, promoting an egalitarian and orderly multipolar world and a universally beneficial and inclusive economic globalization”.

Great Inca Trail connection

Xi said that Chancay, a 15-berth, deep-water port, is the successful start of a “21st-century maritime Silk Road” and part of China’s Belt and Road Initiative.

China is willing to work with the Peruvian side to take the Chancay project as a starting point to forge a new maritime-land corridor between China and Latin America and connect the Great Inca Trail,” Xi added, referring to a 15th-century mountain network that joined the Inca empire.

The newspaper El Peruano quoted Xi saying the Chancay project would generate $4.5 billion in annual revenue, create more than 8,000 direct jobs and reduce the logistics costs of the Peru-China route by 20%.

The China-controlled megaport was built by Cosco Shipping Ports, and received $1.3 billion in Chinese investment for its first phase. China is expected to spend billions more as Beijing and Lima work to position it as a major shipping hub between Asia and South America.

The first ship is due to set sail from Chancay next week, transporting Peruvian fruits to China, said Mario Ocharan, Peruvian director of the Chancay Chamber of Commerce.

According to Ocaharan, China’s main motivation for developing the megaport, is establishing access to neighboring Brazil, where a new railway line is planned to carry Brazilian exports such as soybeans and iron ore to the port.

Building that link is “crucial” to improve transportation of soybeans, as Brazil is the top seller of the agricultural commodity to China, he said.

The inauguration of the port comes as Beijing is looking to further tap into resource-rich Latin America, amid trade tensions with Europe and concerns about Trump’s announcements of future U.S. tariffs on Chinese exports.

Galleon Trade

My initial discussions on the Chancay port within the Asian Century PH family is reminiscent of the Manila galleon, Spanish sailing vessel that made an annual round trip across the Pacific between Manila and Acapulco from 1565–1815.

During the heyday of the galleon trade, Manila became one of the world’s great ports, serving as a focus for trade between China and Europe. Though Chinese silk was by far the most important cargo, other exotic goods, such as perfumes, porcelain, cotton fabric from India and precious stones, were also transshipped via galleons.

After unloading at Acapulco, this cargo normally yielded a profit of 100–300 percent.

While the trade did not substantially benefit the economic development in the Philippines because most all Spanish capital were devoted to speculation in Chinese goods, the trade was the sole means of communication between Spain and its Philippine colony and served as an economic lifeline for the Spaniards in Manila.

Suffice it to say, the Spaniards in Manila came to depend on the annual vessel so much that when a shipwreck occurs or a ship was captured by English pirates, the colony was plunged into economic depression.

I remember my discussions with the late General Victor Corpus, an Asian Century PH author and subject matter expert, attempting to revive the galleon trade in as recent as 2017, with the Philippines, through a new  blue water port In Davao Oriental, serving as the transshipment base of the Belt and Road Initiative, southwards to the East Asian Growth Area, primarily Brunei, Indonesia and Malaysia; southeast to Australia and New Zealand, and eastward to Latin America though countries in Oceania.

The Philippines government, obviously was not prepared to  engage intellectually with bold trade and economics even during the term of President Duterte, and were mostly interested in lawyering for the Americans to render reputational cost against China.

Our country is missing many opportunities again during the present dispensation, as the world undergoes faster transformation unseen in a century as China embarks into a community of shared future with developing countries.

That the Philippines would join the Belt and Road Initiative is still a pie in the sky, as we speak.

The APEC meeting this year is thematic of “Empower. Include. Grow.” Created in 1989, when Asian economies were booming, the intergovernmental organization aims to expand regional trade and reduce trade barriers.

The group’s 21 member economies combined represent about 60 per cent of global GDP and more than 40 per cent of global commerce

But APEC’s own research suggests impediments are increasing in line with global trends and that its economic growth is likely to lag the rest of the world.

In the case of the Philippines, its dalliance with a declining power, the United States and its counterproductive and destructive geopolitics, rather than engaging the ascending economies now aligned with Brazil, Russia, India, China and South Africa, has seriously thrown the country under the bus of robust regional development.

Left behind in ASEAN, we now see China’s infrastructural assistance going to Indonesia, China’s investments going to Malaysia and Vietnam, and Chinese tourists going to Laos and Cambodia.

With this APEC, what we see now is that the Philippine loss has become Peru’s gain. #

   

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