Confrontation with China fails to pay off

By Mei Jingya, Sina English

The Philippines' dispute with China over Huangyan Island in the South China Sea is taking an economic toll on key Philippine industries, including its lucrative tourism and agricultural sectors, according to a report published on Wall Street Journal’s online edition on Wednesday.

Perhaps the most vulnerable sector is the Philippines' fruit exports. China's General Administration of Quality Supervision, Inspection and Quarantine ordered tougher inspection and in some cases imposed new restrictions on the entry of Philippine bananas.

As a result, over 150 container vans of bananas from Philippines were blocked entry into the Chinese ports, causing a loss of 1 billion Philippine pesos (about 148 million RMB).

To prevent more collateral damage, Philippine President Benigno S.C. Aquino III On Monday instructed Agriculture Secretary Proceso J. Alcala to explore new markets for the region’s banana growers.

However, finding new markets for their despised bananas in the near term would not be easy, said industry insiders.

Also vulnerable to the standoff is Philippine’s tourism industry. Two of China's largest travel agencies, CYTS Tours Holding Co. and Ctrip.com International Ltd., have called off tours to the Philippines. And accordingly, China Southern Airlines said on Tuesday that it also plans to reduce flights to the Philippines until June 30.

China is the fourth-largest source of tourists to the Philippines. From January to March, 96,455 Chinese tourists visited the Philippines – an increase of 8.40 percent from the same period last year, according to figure released by the Phillipine Star.

China is now the third-biggest trading partner of the Philippines, accounting for around 15 percent of total exports in recent years.

Under pressure from citizens and domestic industry associations, Philippine President Benigno Aquino named two "special envoys" to China on Wednesday. In their appointment papers, Aquino ordered veteran banker Cesar Zalamea and Filipino-Chinese business leader Domingo Lee to promote friendly exchanges between the two governments.

It’s a no-brainer to see that the sooner the island row is resolved, the better for the country’s already crippling economy.