A possible war between the Philippines and China in the West Philippine Sea could be a major loss to the former’s economy, Credit Rating and Investors Services Philippines Inc. chief economist Emmanuel Leyco said.

“A shooting war between the two countries could mean a devastating economic impact on the Philippines,” he told DAILY TRIBUNE in a LinkedIn message.

Leyco said this was possible as China contributes heavily to the country’s trade income. “China is a major trading partner of the Philippines and the biggest when combined with Hong Kong,” he said.

In April, China remained the country’s top supplier of imported goods with a 28.7-percent share and $3.15 billion in export value, based on data from the Philippine Statistics Authority.

It was also the Philippines’ fourth biggest export market with an 11.3-percent share and exported goods amounting to $702 million during the month.

However, the April exports were lower than China’s market share in March at 13.7 percent or $837.51 million in value, and the levels recorded in April last year at $772.47 million and 15.8 percent.

Meanwhile, Hong Kong, a special administrative region of China, was the top Philippine export market two months ago with receipts amounting to $1.03 billion.

Leyco said extreme violence in the disputed territory could shake the entire trade ecosystem.

“An escalation of the conflict between the Philippines and China could disrupt the trade between the countries and could also affect trade with other countries that may be concerned about its potential economic impact on the Philippines,” he said.

As the business community hopes for better relations between the two countries, Dindo Manhit, chief executive officer of Stratbase, a research and consultancy group, said economic opportunities still abound for the Philippines.

“Our economy is driven by consumption and the services industry through remittances. Our economy is supported by business process outsourcing (BPO) and jobs in light manufacturing in our ecozones,” he said in a Viber message.

US-based Filipinos continued to send the most remittances to the Philippines as of April, with a 41.1-percent share based on data from the Bangko Sentral ng Pilipinas (BSP).

Meanwhile, the Department of Trade and Industry said BPO workers mostly serve the US, European Union (EU), and other countries in the Asia-Pacific.

Foreign direct investments also continued to flow into the country in March as the BSP reported that Japan was the top investor in equities with a 64-percent share, followed by Singapore (16 percent), and the US (10 percent).

“Our export market remains to be Japan, the US and EU countries and we are the only country not beholden to the Chinese for growth and we continue to grow,” Manhit said.

The US and Japan were the top export markets for the Philippines in April, with 15.3-percent and 13.2-percent shares, respectively.

Bilateral talks

Philippine Exporters Confederation Inc. president Sergio Ortiz-Luis Jr. suggested the government give bilateral talks a chance to ease the tensions in the disputed West Philippine Sea.

Last 17 June, a Philippine Navy sailor lost a finger after the China Coast Guard attacked a Filipino resupply mission to the BRP Sierra Madre at Ayungin Shoal in the West Philippine Sea. The Chinese were seen in a video brandishing axes and knives at the Filipinos.

Luis said China might engage the Philippines diplomatically if it excludes interventions by other states, especially the US.

He said this as he pondered on the remarks of retired Air Force general Romeo Poquiz.

“Why do you think China harasses Filipinos conducting resupply missions to Ayungin Shoal but allows Vietnam unhampered reclamation and weaponization of the rocks and shoals it occupies in areas inside China’s nine-dash line? Because Vietnam does not act as a puppet of the USA unlike the Philippines,” Poquiz said in a Facebook post.

The US and China have had hostile relations due to the former’s anti-communism campaign and accusations of intellectual property theft against China.