Chinese Invasion of the Philippines

August 22, 2020

 

The 2020 presidential election in the United States will probably go down in history as the dirtiest. It will be an election where foreign powers became overtly involved. Thanks to the incumbent, Donald Trump for creating false scenarios like demonizing the Chinese at the expense of his opponent, former VP Joe Biden. This strategy became convenient with the ongoing pandemic. 

 

Russian interference in the election as it did in 2016, is largely ignored. Russia is helping Trump by confusing American voters and dividing its citizenry through the use of billions of bots to spread disinformation campaigns about China, among other issues. These bots mined social outlets to determine what ticks in certain areas or demographics. 

 

These disinformation internet materials are making their way to the Philippines through Trump’s supporters who are affiliated with Christian Evangelicals. These fake news are finding traction in the Philippines, particularly in Bicol where VP Leni Robredo, potential presidential candidate in 2022, is from. This is further inflamed by the oligarchs (i.e. ABS-CBN) with an axe to grind against President Rodrigo Duterte. 

 

These bots have picked the issue of the South China Sea as a topic that strikes raw nerves among Robredo supporters. Thus, the memes being passed around through likely-minded inboxes that China is a bad actor who created the virus to gain world domination and supremacy, and that it will eventually invade the Philippines (if Duterte or his chosen one, is not stopped).  

 

There is a lot to unpack here but let us focus on the purported Chinese invasion. Picture in your mind, the Chinese military rampaging on Philippine soil. It is indeed scary, if true. But beyond the Chinese military structures already built on the disputed islands, there is nothing outright redeeming for the Chinese to send its troops on Philippine shores. Instead, former presidents, including Duterte, have abetted their coming and taking roots in the Philippine society through business acquisitions. 

 

Based on the 2019 Forbes ranking, 12 of the 18 Philippine billionaires have Chinese surnames or Chinese ancestry. The Chinese have been coming to the Philippines even before the Spaniards landed in Cebu some 500years ago. They are smart and wily businesspeople. They assimilated and even borrowed Filipino surnames to stay below the radar. Chinese business people also helped each other out so they don’t stay at the base of the pyramid where the majority of poor Filipinos dominate. 

 

But they had help from presidents on down to the LGU level willing to be bribed or be rolled over. Elected officials, of course, get significant campaign contributions that have changed election outcomes. Such an environment allowed the Chinese (and other oligarchs) to attain billionaire status by just using a simple business model popularized in 2002. Indian born C. K.Prahalad conceptualized that fortune can be made by focusing on the low-income market at the bottom of the pyramid (BOP) while pursuing a noble cause of helping the poor. 

 

The world economic pyramid consists of about 4 billion low income people at the base, followed by 2 billion middle income, and about500 million at the top of the pyramid. The failure of multinational corporations to gain traction among the world’s middle class allowed the billions at the base to become a magnet for emerging markets. Let’s take for example Shoemart (now SM) in the Philippines. When Henry Sy founded it in 1985, SM only had one superstore in Manila. With the large population of poor and middle income populations in the metropolis, SM became popular.  This approach was replicated all over the country post-EDSA revolution. Provincial and city officials understood the power of the BOP concept. 

 

Take Naga City for example. Under Jesse Robredo as mayor, Naga was transformed into a progressive and business friendly city. Robredo initiated a series of reforms focused on good governance and helping the poor that earned him multitude of awards including the prestigious Ramon Magsaysay Award for Good Governance.  Of the major reform programs he initiated, none of them was about inviting major businesses to the city. He didn’t have to because his reform and clean government reputation became the magnet for them to come. Naga City had a 96% increase in the number of commercial establishments, 15 new banks, more hotels and other financial institutions that brought new jobs (and taxes) for Nagueños. 

 

Robredo was the son of a Chinese who married a Filipina and assumed a Filipino surname. Having established a good reputation for the city, SM came in 2009. SM Holdings happened to own several banks in the city: Banco de Oro, China Bank, China Savings Bank, and Equitable Bank (eventually merged with BDO). Other Chinese-owned city banks: Bank of Commerce (Ang), Metrobank (Ty), RCBS (Yuchengcos), Asia United Bank (Ng/Chua), East West Bank(Ng), and so on. You get the drift. 

 

Arguably, Chinese-owned businesses have been good but instead of worrying about a Chinese invasion, Nagueños should instead look at whether the Chinese invasion that has already occurred in the city has indeed benefitted the BOP. To do this, there has to be a comprehensive look at the whole thing.  

 

The major reason for this Chinese phenomenon is the fact that the Philippines has had defective foreign policy focus by various administrations. The Philippines has been more dependent for trade, investment, credit, and military assistance from the United States for decades. Such partnership has not really helped the country develop a strong state structure. Instead, it allowed patronage politics, corruption, poor bureaucracy, and policies favorable to the oligarchs under the guise of democracy, to prosper. Consequently, the concentration of wealth occurred and maintained at the top of the pyramid. 

 

As long as the gap between the poor and the rich continues to be wide, there will be unrest. There has to be a reality check of the pyramid structure in the Philippines. Whether Filipinos like it or not, Chinese interests will remain intermingled with Filipino interests.  The business philosophy of merging profits and purpose (of uplifting the poor) that allowed the Chinese (and other billionaires) to prosper in the Philippines must be tested, and broken up if needed. 

 

Like the Naga City example, was there a dramatic reduction of extreme poverty among Nagueños? Has it offered other opportunities for entrepreneurial solutions (i.e. small businesses, micro lending, etc.) that helped narrow the gap? The use of cell phones (and internet cable) is now ubiquitous in the city, did such proliferation resulted in better service and significantly lowered the cost of communication and learning? This is especially apropos during the pandemic where online learning may be the best option for public schools. 

 

Granted that products made in China allowed businesses to offer affordable retail at extremely low prices (and made huge profits because of volume), did it help lower malnutrition or disease occurrence either directly or indirectly? While banking is easier in the city, are there more people at the BOP able to save and access such banks? Did it help deliver better healthcare or helped LGUs emergency response? Did having more media communication outlets resulted in more literate masses or did they just offer placebos for their miseries? These questions are difficult but they must be asked!

 

 

 

 

 

 

 

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