China and the World

Welcome home!

Aquino promotes trade, but South China Sea issue left unresolved

Welcome home!

In his DNA: Acquino

In 1861, Co Yu Hwan left Hongjian village, his hometown in Fujian province, for the Philippines. Taking Manila as his new home, Co converted to Catholicism and took on a new name – “Jose Cojuangco,” an amalgamation of his former Chinese name.

Like all immigrants, Co would have wanted his children to thrive in the new country while remembering their roots. So he would be pretty satisfied by his descendents who have visited Hongjian to pay their respects.

Co senior’s great-granddaughter, Corazon Cojuangco Aquino, the first female president of the Philippines, visited the village in 1988. And last week, her son, current president Benigno Aquino III, led the lighting of incense at the Co clan’s ancestral temple there.

The latest visit came at the end of Aquino’s first trip to China in an official capacity. He described it as a success, arriving home with $1.3 billion of confirmed new investment, plus an additional $3.8 billion of “almost certain” Chinese capital commitments.

The industries promoted as potential investment targets included infrastructure, tourism and energy, with a bilateral trade target of $60 billion by 2016 also agreed.

As ever, natural resources are the main draw, and China’s largest nickel producer, Jinchuan Group, signed agreements during the trip that will lead to investments in two Filipino mines. Jinchuan has already invested heavily in the country, buying a nickel mine for $1 billion in 2006.

Chinese companies are also already on the ground in the Philippines, developing infrastructure projects, like nattily titled Henan Road and Bridge Group, and Henan Water Conservancy No.1 Bureau, which are building highways in Mindanao, the southernmost island in the Philippine archipelago.

Despite the apparently congenial economic relations, the geopolitical mood in the South China Sea makes for more of an irritant between the two countries. Both lay claim to the Spratly Islands, an area supposedly rich in oil and gas. In June this year, relations dipped again when Manila summoned the Chinese ambassador to express its concern over naval incursions into disputed waters.

On the political front, talks between Hu Jintao and Aquino failed to result in any breakthrough on the issue – although both sides did agree that their differences would be settled peacefully. But there was also a commercial agreement that could have political implications: the Filipino Ministry of Trade agreed to allow Chinese oil companies to invest $1 billion to engage in joint exploration in the waters of the South China Sea.

But Ye Hailin, a researcher at the China Academy of Social Sciences, told Phoenix TV that he sees problems ahead. The Manila authorities will expect the exploration teams to comply with Filipino law while in the disputed waters, implying its own sovereignty over the area.

But China’s own policy in joint development of South China Sea resources is conditional on resolution of the sovereignty issue. Unless this is resolved, said Ye, he doesn’t see how the deal can work.

Aquino’s visit also roused the Global Times into some traditional tub-thumping. An editorial accused the Philippines of using the South China Sea dispute to squeeze economic benefits out of China, while at the same time siding with the US on security policy in the region.

Living up to its feisty reputation, the newspaper suggested an appropriately direct solution to the situation, even dispensing with the need to feign impartiality on the topic.

“China need not worry about accusations that we use economic power as leverage for other disputes,” the editorial warned. “Since we have this power, we should use it openly to shape relations in East Asia.”

© ChinTell Ltd. All rights reserved.

Sponsored by HSBC.

The Week in China website and the weekly magazine publications are owned and maintained by ChinTell Limited, Hong Kong. Neither HSBC nor any member of the HSBC group of companies ("HSBC") endorses the contents and/or is involved in selecting, creating or editing the contents of the Week in China website or the Week in China magazine. The views expressed in these publications are solely the views of ChinTell Limited and do not necessarily reflect the views or investment ideas of HSBC. No responsibility will therefore be assumed by HSBC for the contents of these publications or for the errors or omissions therein.