By Herman Tiu Laurel

 

China has concluded its annual Central Economic Work Conference in Beijing, held from December 10, setting the economic direction for 2026—the opening year of the People’s Republic of China’s 15th Five-Year Plan (2026–2030). These conferences are closely examined worldwide because they signal how the world’s second-largest economy intends to deploy policy tools with significant global spillover effects.

After seventy-five years of sustained development, China’s economic planning remains consequential not only for itself but also for developing economies across Asia, Africa, and Latin America. In recent years, these plans have been closely watched as China adjusted to external pressures, including trade restrictions and tariff measures imposed by major economies.

China’s Successful economic planning.

China’s 14th Five-Year Plan (2021–2025) demonstrated strong economic resilience. Despite disruption from the global pandemic and intensified trade disputes, China sustained growth and, according to multiple trade analyses, significantly reduced reliance on the U.S. market by diversifying exports toward Asia and the Global South. This shift enabled China to record, for the first time, a trade surplus exceeding US$1 trillion, while stabilizing supply chains, providing affordable manufactured and high-technology goods, and expanding market access for imports from developing countries.
 

The Central Economic Work Conference for 2026 signals a continuation of this trajectory. The plan calls for more proactive macroeconomic policies, support for “new quality productive forces,” and—most relevant to developing economies—measures to boost domestic demand and further open China’s economy to imports. These policies are particularly important for the Global South, whose growth increasingly depends on access to large and expanding consumer markets.

ASEAN to benefit most.

ASEAN is well positioned to benefit. Amitendu Palit, senior research fellow at the Institute of South Asian Studies at the National University of Singapore, has noted that China’s push to import more goods will benefit Asian economies, especially as the United States raises tariffs on multiple trading partners. ASEAN, one of China’s closest neighbors and largest trading partners, recorded trade exceeding US$1 trillion with China this year.

Trade frameworks strengthen this advantage. The ASEAN–China Free Trade Area (ACFTA) 3.0 and the Regional Comprehensive Economic Partnership (RCEP), which includes China as its largest market, have reduced tariffs by up to 92 percent. These agreements facilitate stronger flows of goods, services, and investment, lower entry barriers for Southeast Asian small and micro enterprises into China’s 1.4-billion-person market, and create opportunities for joint ventures in manufacturing and technology.

Phiilippines needs China now!

While several ASEAN economies are positioned to capitalize on these openings, the Philippines stands in contrast.

The Philippine economy is facing mounting pressures. Exports have been contracting: in 2024, Philippine merchandise exports declined by 0.5 percent, while Vietnam’s exports grew by 14.3 percent, Cambodia recorded growth of 15–17 percent largely driven by China trade, and Thailand’s exports to China expanded by 10 percent. These economies are poised to gain further from China’s domestic demand stimulus and outward investment push under the 2026 plan.

By comparison, Philippine exports to China have continued to decline. Banana exports illustrate this trend clearly. The Philippines was ASEAN’s top banana exporter to China in 2019, shipping around 1.4 million metric tons at peak. By 2024, exports had fallen to approximately 460,000 metric tons. Meanwhile, the Philippines continues to import low-cost, high-quality, and high-technology Chinese products, contributing to a widening trade deficit.

Tourism reflects a similar pattern. Chinese tourist arrivals dropped from 1.8 million in 2019 to about 330,000 in 2024, resulting in an estimated US$1.5 billion loss in tourism revenues, even as neighboring countries actively restored their China tourism markets.

These sectoral declines have broader consequences. International financial institutions have revised down Philippine growth projections for 2026 and beyond. The International Monetary Fund and World Bank have lowered expected growth from around 6 percent to approximately 5.1 percent. Employment data reinforce these concerns: agricultural employment declined by 6.6 percent in 2024 compared with January 2023, while manufacturing reportedly shed about 300,000 jobs by August 2024.

The Philippine economy is entering a critical phase amid intensifying political pressures. Economic underperformance risks compounding social and political instability. Addressing this requires a strategic turnaround that prioritizes growth opportunities over geopolitical posturing.

China’s 2026 Economic Work Plan offers such an opportunity. The expansion of domestic demand, supported by state policy, will require reliable suppliers of food, agricultural products, consumer goods, and intermediate inputs—areas where the Philippines has capacity but has lost ground. To benefit, the government must adopt a focused and pragmatic strategy: re-engage on agricultural market access, align trade and investment promotion with China’s consumption-driven sectors, and depoliticize economic engagement in favor of national development objectives.

The opening is clear. Whether the Philippines chooses to step through it remains a matter of policy will and strategic clarity. ###

   

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