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  1. #1

    Read What China wants, China gets...

    Hello mga ka Mobilarians!

    Today, we are going to talk about why China wants to expand their presence anywhere in the world. We know that we also become part of this expansion. It may not be a form of invasion but the more appropriate term would be 'hegemony' which means, 'taking its lead or dominance'.

    As you well know mga ka Mobilarians, Chinese presence is everywhere and I mean not the Chinese people per se but the deals their government is doing towards other governments in the world. We know for a fact that China had made deals (thru loans) with Sri Lanka, Montenegro, Djibouti, Laos, Maldives, Tajikistan, Kyrgyzstan, Mongolia, Pakistan, Cambodia, Indonesia, Vietnam, and almost all countries except those that are stable and self-sustained.

    The loans are given to finance infrastructure projects in a particular country usually under "One Belt, One Road" initiative. The funding is usually carried through their banks like Export-Import Bank (Exim) and Asian Development Bank (ADB). The non-DAC or ODA loan offers an interest rate usually at 3% per year, somewhat higher than the loans offered by Japan at 0.4%-1.2% per year and India at 1.5%-1.75% per year. The two latter countries provide low interest rates, however, they could not provide bigger loan packages. So, most of the time they turn to China. Usually, the loan's duration is given at 15 years and 5 years grace period with a commitment fee of 0.5% and an administrative fee of another 0.5%. Here's the catch, if you want the loan to be paid within 15 years you need to see to it that the project is finished right on schedule to avoid a cost overrun.

    Unfortunately, there is another side of the coin that you need to consider when you apply for a loan from China. China has a stiffer and nastier penalties should the borrower is in default of paying or unable to pay the loan within the duration period. We call this term as 'debt-trap diplomacy'. This is a, "type of diplomacy based on debt carried out in the bilateral relations between countries. It involves one creditor country intentionally extending excessive credit to another debtor country with the alleged intention of extracting economic or political concessions from the debtor country when it becomes unable to honor its debt obligations." (https://en.wikipedia.org/wiki/Debt-trap_diplomacy). A situation happened in Sri Lanka where they handed-over Hambantota Airport to China to be under their control for a period of 99 years. A similar situation also happened in Angola which gave China the leverage for Oil Exploration. In Djibouti, part of the deal is to install a Chinese military base which has to function as a support military logistics. However, this has created tensions between them and the Americans who already had an installed base before them.

    What could be the impact of these Chinese loans to the Philippines? In my own understanding and analysis, the loans provided could be a leeway for China to compromise our national security. It's like a Pandora's box that once it's opened, all evils could no longer be contained. I suspect that it has to do with the terms and conditions inherent in the loan. Should the Philippines as a debtor unable to pay its debts over a given period of time, the possibilities are:

    1. China may demand that the operational control of some infrastructures undertaken by them be in their hands or a Chinese firm for a definite period until the last penny is paid.

    2. China may demand for a concessionary offer to jointly or mutually explore the oil reserves or other reserves of the Philippines.

    3. China may demand for the installation of military support bases in various strategic locations of the country for support military logistics, disaster and retrieval operation, piracy monitoring and control, and counter-insurgency.

    4. China may demand that more Chinese investments be poured in various strategic business locations where government control is less and that they could operate independently.

    5. China may demand that more Chinese citizens be given freedom to work in the Philippines or ease in securing employment permits during the duration of the project/s or until the project/s has been deemed completed.

    6. China may demand for the free landing of their military assets, including refueling, repair, and logistics replenishment.

    7. China may demand for a loan restructuring in favor of the new terms set by the creditor bank; China may demand the payment for more exorbitant interest rates, penalty fees, etc.

    8. China may demand that as a support for promoting peace in Southeast Asia, the Ph needs to support the ideals of China.

    9. China may demand that should there be any grievances coming from both parties, that should be resolved bilaterally; and matters concerning national interest should be dealt privately and exclusively.

    10. China may demand that the Ph respect their 9 dash line as part of their territorial sovereignty.


    What's your opinion on the above? This can happen in the coming months and I'm sure you have something to say. From my point of view, we are at a disadvantage here. As to why I will explain later. Feel free to share your opinion.
    Last edited by Abdul Ampatuan; 16th Jan 2019 at 11:22.

  2. #2

    Default Re: What China wants, China gets...

    In my other thread, "Duterte: Puro Utang ang Inaatupag" many Mobilarians have participated in airing their views. This is good sign that democracy is fully working in the country and that everyone wants a fair share for the welfare of this nation. Some may have agreed to my point while others don't, but, over-all the discussion proves beneficial and educational. Again, let us keep mind that respect must always be maintained despite our differences in views/opinion.

    Many are still confused whether or not we still have to continue borrowing from China. They think that the on-going projects under the Duterte administration is funded by China. Well, from what I have heard is that these China loans are still in its MOU state (Memorandum of Understanding) and no actual money was infused. The projects that we have seen so far whether 'finished or unfinished' are funded by Japan and some by local Filipino investors, like San Miguel Corp., Metro Pacific Holdings, and others thru the PPP or Public-Private Partnership.

    Why do we need to be alarmed of China loans? For simple reasons, not only the strings attached or the terms and conditions that might be stiffer and nastier, but the nature of loans itself which accompanies exorbitant interest rates. Let me explain further thru a graph below:

    Screenshot_3.png https://www.forbes.com/sites/andersc.../#283f79e42fb6

    It is expected that the Philippines will receive a big amount of $167 Billion and $3.7 Billion for 30 smaller projects during President Duterte's term. However, the promised loans were still stalled and to this day of 2019 it's unclear whether the said loan of $167B has been translated to a binding legal contract. Do you think that the $167B can still be given within the last three years of Duterte's term?

    According to the source, the graph above simply means that if $167B be given as an external foreign debt, then we'll have to pay $275B at the end of 10 years with an interest rate of 5% compounded annually. For me the more conservative view would be to add up the latter to our present debt which is at $72B (current). The assumed total external debt would be $347B after 10 years. Do you think this is still manageable?

    Maybe, it's a good thing to know our GDP first to determine the tentative Debt-GDP Ratio at the end of 10 years. The Debt-GDP Ratio is a good indicator to find out if we can really pay for our debts and at the same time still allocate a portion of national budget for Filipino well-being. Our GDP at present is at $314B and at the end of 10 years we expect that this amount becomes $502B assuming a steady annual growth rate of 6% (realistic). Hence, the Debt-GDP Ratio would be 0.69 or 69% ($347B/$502B), which means that 69% of our economic output will have to be allocated for debt repayment and the remaining 31% will be used for our nation's needs. This is very alarming since above 50% Debt-GDP Ratio would signal an economic meltdown, unless, certain extraordinary decisions be made to counter the negative effects. Well, the good thing about this is that President Duterte is no longer in this era to be blamed for, however, the bad thing of course is that the millennials will surely bear the consequences which could lead to overtax burden and debt-trap.

    I did not include the 30 smaller projects costing at $3.7B. It seems that it would be best to leave the computations to our fellow Mobilarians.
    Last edited by Abdul Ampatuan; Yesterday at 10:12.

  3. #3

    Default Re: What China wants, China gets...

    Aba eh maganda itong thread mo Abdul, masasabi nating educational nga. Masasabi kong may mga Chinese loans na talagang na aprubahan na. Pero sa tingin ko yong mga $3.7 Bilyon muna na mga proyekto ang inuna nila. Yong railways at dams na kasama sa $167 B, yan sa tingin ko baka matuloy rin sa mga susunod o ngayong taon. Ang government to government loans kasi ayon sa Korte Suprema ay di na kinakailangan pa ng bidding. Kaya wala tayong info at datos kung alin sa mga foreign loans ang natuloy. Naghahanap din ako ng datos sa media pero wala akong nakita, sana nga may makapagbigay dito.

    Sa tingin ko parang wini withhold ng gobyerno ang mga sekretong transaksyon nila sa China, kahit yong Wikipedia ay di naaupdate yong 'external foreign debts ng Pilipinas' especially yong Debt-GDP ratio. Yong last na nakalagay sa Wikipedia at TradingEconomics eh parang bumaba pa yatang ang utang ng Pinas sa ibang bansa. Nasa $73B nitong 2017 at 2018 from $77B nuong 2015. So ibig sabihin walang pumasok na utang, bagkus, puro pagbabayad nga ang nangyayari. Di rin na update yong 'national government debt', ang last na nakalagay ay 2014 pa, na 'deficit' ang status. Ibig sabihin nito, sa pamumuno ni Duterte hindi siya nagka 'deficit' kundi nagka 'surplus' pa nga kasi nga mababa ang foreign debts natin. Kasi kung 'deficit' sigurado tataas yong foreign debt natin dahil dun kukunin ng gobyerno ang ipambabayad niya dahil sa 'deficit'.

    May tinatago yata na di ko maintindihan, malalaman na lang natin yan sigurado pagkatapos ng termino ni Pres. Duterte. Sana lang wag tayo ma bigla baka malaki na talaga yong utang natin. Ang delikado dyan pag di kaalyado ni Duterte yong susunod na Presidente ng bansa baka mag-iba na naman ang ihip ng hangin ng Tsina. Baka ma pressure tayo sa pagbabayad. Kawawang Pilipino, malulubog tayo sa utang na sinasabi mong "Debt-Trap". Baka matulad tayo sa Venezuela o di kaya mas dadami na yong mga taxes na babayarin natin, pati nga siguro lahat ng transaksyon natin sa gobyerno ay may bayad lahat. Baka pag kumuha ka lang ng Birth Certificate sa PSA eh iba iba na ang mga charges ex. iba ang charge sa BC pag pasaporte, iba naman ang charge pag school requirement lang. Hahayzzz siguradong magiging negosyo na talaga.
    Last edited by xDigoyx; Today at 12:58.

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