De La Salle-College of Saint Benilde School of Multidisciplinary Studies Consular and Diplomatic Affairs Program

CHINAS CHARM OFFENSIVE:

Its Negative Effects and the Philippine Dile a

In partial fulfillment of the requirements for the Course Su !ect" Philippine International #rade $elations

Balingit% Arlene Cepriano% &essa &oy Chan% 'ar(ee )ernando% &ohn Allen &o(enir% Christelle *apata% Ma+ ,lla !S!"

April -% ./10

Ms+ Lorelie Astrera C#$%se S$&'ect P%#fess#%

!ist #f Ac%#n( s AC)A-AS,A1 2 China )rame3or4 Agreement AC)$-American Council of )oreign $elations AC#I5A- AS,A1 2 China #rade in 5oods Agreement ADB 2 Asian De(elopment Ban4 AS,A1- Association of South ,ast Asian 1ation B6#-Build-6perate-#ransfer CCM-China7s Charm 6ffensi(e C,C- Comprehensi(e ,conomic Cooperation CI- Confucius Institute CMD-China7s Monroe Doctrine C1MI-China 1ational Machinery Industry Corp CPD$-China7s Peaceful De(elopment $oad CP$-China7s Peaceful $ise D8,)-Da(os-style 8orld ,conomic )orum ,'P-,arly 'ar(est Programme ,ICA-,9port-Import Credit Agency ,:-,uropean :nion )A- )rame3or4 Agreement )#A- )ree #rade Agreement 5A#S- 5eneral Agreement on #rade in Ser(ice 5DP- 5ross De(elopment Product 'SL-'ighly Sensiti(e List 1A)#A- 1orth America )ree #rade Agreement PC-Peace Corps P$C- People7s $epu lic of China PSA-Pacific Strategies and Assesments PSC-Polit uro Standing Committee SC- Security Council SCS- South China Sea #IS- #rade in Ser(ice :1- :nited 1ations 8#6- 8orld #rade 6rgani;ation *#,-*hong <ing #ele-communications ,quipment

Table of Contents List of Acronyms+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++. List of #a le and )igures+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++= I+ Introduction++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++> II+ $e(ie3 of $elated Literature++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++? Soft Po3er in China7s )oreign Policy+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++? By &ustyna S;c;udli4-#atar% ./11+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++? Balancing 5am its in the #3enty-)irst Century% Philippine )oreign Policy" 5ains and Possi le Demise@+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++? By $enato De Castro% ./11 ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++? China-AS,A1 $elations in .//." Chronology of ,(ents+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++A By Cheun 'oe Bo3% .//.+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++A China-AS,A1 $elations% 6cto er .//. to &une .//0" Chronology of ,(ents++++++++++++++++++++++++++A By Cheun 'oe Bo3% .//0+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++A China-AS,A1 $elations% 6cto er .//0 to March .//-" Chronology of ,(ents+++++++++++++++++++++++A By Cheun 'oe Bo3% .//-+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++A 6n Studies of the 'istory of the Philippines in China+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++A By Maohong Bao% ./1.+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++A By Sheng Ding+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++1/ By ,llen '+ Palanca+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++1/ III+ Pro lem Statement+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++11 IC+ 6 !ecti(es of the Study++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++11 C+ #heoreticalDConceptual )rame3or4++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++1. CI+ $esearch Methodology++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++1. #his research paper requires gathering rele(ant data from se(eral oo4s% !ournals% electronic oo4s% and periodicals+ #his pro!ect 3ill use oth quantitati(e and qualitati(e data+ Data collection 3ill consist of citing information% recommendation% conclusion% figures and analysis from se(eral authors and organi;ations that is concerned of the topic+ ++++++++++++++++++++++++++++++++++++++++1. CII+ Scopes and Limitations++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++1. China7s )oreign Policy++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++1AS,A1 - C'I1A $elationship+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++1> ,ffects to the Philippines+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++1> C'I1A7S C'A$M 6)),1SIC,% C61C,SSI61A$B L6A1S A1D #', ISS:, 6) D,P,1D,1C,+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++1> Concessionary Loans+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++1A AS,A1-C'I1A )#A++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++./ Agreement on #rade in 5oods+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++./ Agreement on #rade in Ser(ices++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++.1 In(estment Agreement ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++.0 P$6BL,MS 8I#'I1 #', AS,A1-C'I1A )#A+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++.8hat could happen to AS,A1@++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++.C'I1A7S C'A$M 6)),1SIC,% C61C,SSI61A$B L6A1S A1D #', ISS:, 6) D,P,1D,1C,+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++.> C'I1A7S C'A$M 6)),1SIC, A1D MI1I15 I1 #', P'ILIPPI1,S+++++++++++++++++++++++++++++++++.E C'I1A7S F56I15 6:#G P6LICB A1D I#S IMPLICI# FMISSI61G+++++++++++++++++++++++++++++++++++++01

P6LI#ICAL 56ALS 6) #', C61):CI:S I1S#I#:#,+++++++++++++++++++++++++++++++++++++++++++++++++++++++++0. A11,< I+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++0=

!ist #f )a&le and Fig$%es

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I* Int%#d$cti#n #rade relations et3een the $epu lic of the Philippines and the People7s $epu lic of China had een esta lished se(eral centuries ago since the latter had opened its trading sector to the 3orld eginning 1/th century A+D+ #he earliest history of trading et3een the Philippines and China dates ac4 to 1//0 A+D+ IDacalanio% ./1.J 3hich e(idently sho3s that the ethnic Chinese played a decisi(e role in oosting Philippine economic gro3th and social de(elopment that attended to the interest and enefit of the ma!ority+ During the Spanish coloni;ation of the Philippines% many of the ethnic Chinese decided to permanently reside in the country in order for them to trade their goods and ser(ices easily+ During the Spanish reign% Chinese products and la or 3ere considered to e (ital for the colony7s progress+ 'o3e(er% their increasing population made the in(aders 3ary and e threatened+ As a result% in 1>/0% conquerors massacred thousands of them+ #hrough the opening of the ports on oth countries% the transfer and e9change of products ecame simple+ Certain e9amples of e9change in goods 3ere seen in trade situations 3herein the Chinese e9changed sil4 and porcelain for the hemp cloth and pearls of the )ilipinos+ As it appears in se(eral 3ritings of former Chinese settlers and traders in the country% the most important trade-center is Mindoro or Ma-i ecause of its large deposits of gold IAng See% 1EE?J+ Becoming important mem ers of a certain state7s social community 3as also achie(ed y the Chinese population+ #his notion of 3ide acceptance came prior to the massi(e Chinese diaspora during the 1Eth century shortly after the fall of the King ,mpire+ #hroughout history% the massi(e emigration of the Chinese population 3as caused y 3ars and star(ation in the Mainland China IBarme% ./1/J+ As their population migrated% they are trying to car(e out their cultural community in each respecti(e host states through the esta lishment of different Chinato3ns+ #he latter represents their cultural% social% and economic di(ersity 3hich they are trying to integrate 3ith the locals such as those in the Philippines+ ,sta lished in the 1=E/s% it is said that the oldest Chinato3n in the 3orld is Binondo in Manila IBuaron% ./1/J+ As a result% large num ers of indi(iduals 3ith Chinese lood had een d3elling not only the said community% ut also most parts of the 3orld+ China is considered the 3orld7s most populous nation and the fastest gro3ing economy+ #he $ise of China through its economic% political% military and its soft po3er is said to e the one 3ho 3ill determine the .1st centuryLs de(elopment IArsenault% .//?J+ As China7s economy gro3s% so its FcharmG and the increasing China7s )oreign Policy that has achie(e in attaining great po3er in the International Community that is according to &oseph S+ 1ye% &r+% 3ho argued that the future of International politics 3ill not rest on a country7s military or economic aspects% ut rather on the attracti(eness of a country+ Charm 6ffensi(e is also 4no3n as soft po3er 3herein it is to attain the desired results through appeal% seduction% and attraction+ It is neither persuasion% influence% sanction% nor a payment for proper eha(ior IS;c;udli4-#atar% ./11J+ 6n the other hand% in order to fully e9ercise its charm offensi(e% China tends to integrate in large groups of countries such as the Association of Southeast Asian 1ations IAS,A1J+ In the past% China pro(ided military assistance on one hand and on the other% fought a 3ar 3ith once ally Cietnam in 1E?E+ 1o3% China encourages increased cooperation in trade and in resol(ing order disputes and has ecome a 4ey outside mem er of AS,A1 and AP,C+ Con(ersely% upon the application of its charm offensi(e% China is percei(ed to e utili;ing the :S7 Monroe Doctrine in

e9panding its territorial demarcation through the seas+ #hus% one can see other Asian countries are implicitly losing their authority o(er their o3n oundaries IAcharya% ./11J+ II* Revie+ #f Related !ite%at$%e S#ft P#+e% in Chinas F#%eign P#lic( ,( -$st(na S.c.$dli/0)ata%1 2344 China7s soft po3er ecame the topic of S;c;udli4-#atar7s article+ #he author identified three tools that China uses to attain its goals through soft po3er+ #his can also identified as the sources from 3hich soft po3er is deri(ed+ #he first tool is culture+ China7s use of cultural and educational diplomacy has t3o strategiesMFin(iting inG Iqing !inlaiJ and of Fgoing outG I;ou chuquJ+ #he Fin(iting inG strategy consists of steps that China create to attract foreigners in their country+ Some e9amples are the enhancement of China7s higher education system to attract foreign students% scholarship programs and promotion of tourism+ 6n the other hand% the Fgoing outG refers to strategies that targets eneficiaries outside China+ Its o !ecti(e is to ma4e people 4no3 more a out China in a positi(e note+ 6ne e9ample is the esta lishment of Confucian Institutes 3hich promotes the teaching of Chinese a road+ Another 3ould e the .//A Bei!ing 6lympics 3hich ga(e chance to China to promote its cultural achie(ements and the country7s strength not only in sports ut its financial capa ility to host the super and magnificent quadrennial sports e(ent+ #he second source of China7s soft po3er 3ould e its foreign policy+ #his includes (isits Iofficial and unofficialJ% informal summits% sending of highly-professional diplomats in (arious parts of the 3orld% in(ol(ement in different international organi;ations and e(en in :1 Peace4eeping missions+ #he third source is its economic sources+ China has een employing economic diplomacy in many regions of the 3orld% especially in Africa% Latin American and South ,ast Asia+ Also% China is also acti(e in gi(ing aids to different countries% as 3ell as% loans and in(estment pro!ects+ )urthermore% S;c;udli4-#atar7s paper focused on three ma!or regions in the 3orld 3here China7s soft po3er are really e(ident+ In the Southeast Asia% 3here China 3ants to e 4no3n itself as region7s FleaderG% the country has three methods in order to get the countries7 good3ill+ #hese are the common Asian roots% similar historical e9periences and mutual ad(antages I3in-3inJ+ China has also esta lished a free trade ;one in the area 3ith si9 AS,A1 countries IBrunei% Indonesia% Malaysia% the Philippines% Singapore and #hailandJ+ Although% China7s po3er% specifically the soft one% has een gro3ing in se(eral regions of the 3orld% the article did not deny the fact that there are side-effects of the China7s in(ol(ement in these regions+ )irst is en(ironmental degradation% 3hich spans from o(erintensi(e mining to pollution to other negati(e e9ternalities+ Second is the gro3ing num ers of Chinese Diasporas 3hich as the nati(es of the different countries accuses them that they transfer Fprofit to China+G #he author challenges the different international organi;ations such as the ,uropean :nion to act in order to alance the gro3ing influence of ChinaMthat is Fto adopt an open attitudeG to3ards China% Feliminate stereotype thin4ingG and to Fde(elop its o3n soft po3er strategy competiti(e to China7s+G ,alancing 5a &its in the )+ent(0Fi%st Cent$%(1 Philippine F#%eign P#lic(: 5ains and P#ssi&le De ise6 ,( Renat# De Cast%#1 2344 1

#his article tac4les the foreign policy of the Philippines and ho3 it came a out o(er the past years+ ,ssential points such as its economic ties 3ith the :S Iincluding special topics i+e+ counterterrorism effortsJ and China 3ere gi(en emphasis+ Moreo(er% the role of the Philippines in the alance of po3er et3een the t3o economic po3ers in the region 3as discussed+ China0ASEAN Relati#ns in 2332: Ch%#n#l#g( #f Events ,( Che$n H#e 7#+1 2332 #his is a compilation of the de(elopments in relations 3ith regards to China and AS,A1+ It includes the chronology of e(ents in China-AS,A1 relations and essential agreements produced y oth parties+ China0ASEAN Relati#ns1 Oct#&e% 2332 t# -$ne 2338: Ch%#n#l#g( #f Events ,( Che$n H#e 7#+1 2338 )ollo3ing the pre(ious article% this !ournal pro(ides the important highlights of the China-AS,A1 economic and y e9tension% political relations 3ithin si9 months+ Most of the acti(ities that too4 place in(ol(ed the disputed islands of the 8est Philippine Sea+ China0ASEAN Relati#ns1 Oct#&e% 2338 t# Ma%ch 233": Ch%#n#l#g( #f Events ,( Che$n H#e 7#+1 233" #his !ournal% once again% presents the chronological highlights of the China-AS,A1 relations+ Some of the most important highlights 3ere the tariff-reduction programs and state(isits made y the distinguished leaders to strengthen ilateral and multilateral relations 3ith each other+ On St$dies #f the Hist#%( #f the Philippines in China ,( Ma#h#ng ,a#1 2342 #his essay pro(ided an o(er(ie3 of the Philippine history underta4en in China since the 1E0/s+ #he processes are categori;ed into three 3a(es sho3ing the internal dynamic relationship of the t3o countries+ Considering the fact that the t3o are neigh oring states% they shared intert3ined histories such as" In Basilan% for instance% archaeologists found coins dating from the #ang dynasty and earliest 3ritten accounts 3ere collected from a Philippine Ningdom 4no3n as Ma-i+ Despite these esta lished connections et3een the t3o% the method of teaching Philippine history in contemporary China is still in the Fformation stageG+ In (ie3 of these historical e(ents% the author attempted to ans3er the questions a out the state of teaching Philippine history in China and the plausi le e9pectations that )ilipinos can get from Chinese scholars d3elling on this matter% through the analysis of the t3o countries7 historical relations and plausi le future de(elopment+ #he first oo4 on Philippine history in China 3as F'istory of the PhilippinesG compiled and translated y Li Changchuan in 1E0>+ #his oo4 3as a translation of FA Brief 'istory of the PhilippinesG 3ritten y Philippine nationalist historian Leandro )ernande; in 1E1E+ It ser(ed as 1

a starting point for the Chinese scholars studying the Philippines ha(ing its contents d3elling on nationalist historiography+ During 1E-E% after the esta lishment of the People7s $epu lic of China% Chairman Mao *edong encouraged the Chinese to learn the history of foreign countries including that of the Philippines+ #he latter demanded that e(ery country must ha(e a history oo4 3ritten y a Chinese or translated into Chinese+ 'o3e(er% due to the period of isolationism and Cultural $e(olution in China I1E-E-1E?>J% Chinese scholars could not e9ecute this important tas4+ ,specially that China formerly does not ha(e any diplomatic relations 3ith the Philippines% resulting into the lac4 of access in academic e9change+ #he esta lishment of the Sino-Philippine relations in 1E?= resulted into some oo4s to e translated or 3ritten to satisfy the reading demand of go(ernment leaders and diplomatic staff% thus% this 3as the first 3a(e of studies of the history of the Philippines in China+ #he second 3a(e of historiography of the Philippines in China occurred from 1E?A until the turn of the century+ During this period% China egan to practice an open door policy+ 6(erseas Chinese in the Philippines (isited their ancestral hometo3ns not only to in(est ut also to conduct academic e9change+ In order to satisfy the need for historical understanding% some oo4s on the history of the Philippines and the history of Sino-Philippine relations 3ere pu lished+ )rom an array of different Chinese scholars dre3 ne3 understandings of the history of Sino-Philippine trade% cultural e9change% and some aspects of the social% political% and economic systems of the Philippines% including the history of the )ilipinos7 struggle against Spanish coloni;ers+ #he second 3a(e continued the emphasis on the anti-colonial struggle% 3hile ma4ing ne3 inroads into the e9ploration of economic history+ :nder the frame3or4 of Sino-Philippine relations% economic history ecame the main topic for Chinese historians del(ing into Philippine history+ #he third 3a(e is eing pushed mostly y young scholars 3ho earned their doctorates in the t3enty-first century+ #he pu lished oo4s e9ecuted the increasing plurality and comple9ity of Philippine historical studies in China 3hether in perspecti(e% methodology% or theme+ In a departure from the general historical 3riting prior to .///% recent historical studies of the Philippines in China are ecoming thematic and more detailed+ 6n the other hand% despite the emergence of teaching Philippine historiography in China% these e(ents encountered challenges+ )irst% Chinese historical studies of the Philippines ha(e een strongly influenced y China7s o3n internal political culture and circumstances+ Second% Sino-Philippine relations and o(erseas Chinese history remain among the primary foci of historical studies of the Philippines in China+ #hird% Chinese historians ha(e had a long history of seeing Philippine history against the ac4ground of Southeast Asian history+ )ourth% historical studies in the field of Southeast Asian studies ha(e een on the decline in China+ )ifth% Chinese historians of the Philippines ha(e relied hea(ily on historical materials in ,nglish found in China and also those found in :S archi(es+ #he author enumerated his suggestions regarding the matter and articulated the follo3ing" 'istorical studies of the Philippines need to return to the mainstream of area studies in China+ #here must more time in training professional historians+ 1e3 doctoral graduates in Philippine history should e guaranteed positions in uni(ersity or go(ernment to continue their research+ Chinese historians of the Philippines should acti(ely see4 to set up !oint programs 3ith their Philippine colleagues+ Chinese historians of the Philippines could contri ute their o3n perspecti(e as outsiders and help pro(ide access to (alua le Chinese historical material on the Philippines hitherto un4no3n% unused% and una(aila le to other scholars+ )inally% Chinese historical studies of the Philippines should e increasingly done on four integrated le(els+ #he first is local% the second is national% the third is regional% and the fourth is glo al+

)# ,uild a Harmonious World: Chinas Soft Power Wielding in the Global South: A Summary ,( Sheng Ding Since it 3as officially presented y the Chinese President at the :nited 1ations summit in .//=% the term Fharmonious 3orldG has ecome one of the most popular le9icons for tal4ing a out Bei!ing7s ideal of international order in the age of China7s rise+ Classical international relations theorists elie(e that% in international politics% the quality of diplomacyMthe su stance and style of foreign policyMis not only the most important element of national po3er% ut also an immeasura le and unsta le element+ Since the end of the Cold 8ar% China7s rise has ecome a glo al phenomenon+ Although there are some disputes a out the speed and e9tent of China7s rise% much attention has een paid to the question of 3hether China7s gro3ing po3er portends a threat or ho3 China 3ill 3ield its national po3er+ Many China o ser(ers point to China7s territorial and demographic si;e% its fast-gro3ing economy% and its continuously rising national defense udget as e(idences that China may ecome a re(isionist po3er capa le of dominating the )ar ,ast and challenging American interests glo ally+ :nder this ac4drop% Bei!ing must carefully design its foreign strategy in order to esta lish a fa(orite national image Ii+e+% a peaceful and responsi le great po3erJ and create a friendly international en(ironment for its ascendancy+ Both ideas of Fharmonious 3orldG and FChinese soft po3erG can find their e(ident imprints from China7s ancient ideologies 3hich ha(e em edded in Chinese culture for hundreds of years+ #his study also finds Bei!ing has implemented the follo3ing specific soft po3er- ased foreign policies to3ard three targeted regions" I1J to uild a harmonious en(ironment 3ith its neigh oring countries for common de(elopmentO I.J to re-define its Fold rotherhoodG 3ith African countriesO and I0J to Fe9hi itG its o3n political (alues in Latin America 3here undemocratic or semi-authoritarian regimes remain common+ Chinas 9)O Ent%(: Effects #n its Ec#n# ( and I plicati#ns f#% the Philippines: A Summary ,( Ellen H* Palanca China ecame the 1-0rd mem er of the 8orld #rade 6rgani;ation I8#6J 6n Decem er 11% .//1+ #he Chinese economy has gro3n at an a(erage annual rate of close to ten percent since 1E?E+ De(eloped countries are the largest importers of ChinaPs lo33age% la or-intensi(e manufactured products+ In turn% ChinaPs imports of capital-% technology- and 4no3ledgeintensi(e goods necessary for its economic de(elopment as 3ell as those of high quality consumer goods% 3hich are increasing (ery rapidly ecause of rising population income% are mostly from the de(eloped countries+ #he de(eloping countries% on the other hand% face competition from China for mar4ets of similar la or-intensi(e manufactured e9ports and foreign direct in(estments I)DIsJ+ Becoming a mem er of the 8#6 means that China has to open its mar4et 3ider% oth in terms of regions and industries+ #he greater li erali;ation resulting from its 8#6 entry is e9pected to ha(e a positi(e effect on its economic gro3th% 3hich 3ill further e9pand its mar4et+ It is e(ident that ChinaPs 8#6 accession presents opportunities in the area of product and mar4et niches for de(eloping countries li4e the Philippines+ 'o3e(er% ChinaPs mem ership in this 3orld trade system also means that its competiti(eness% 3hich has already een a source of challenge for manufacturers all o(er the 3orld in the past decade% 3ill e further

strengthened+ #he Philippines 3ill face the negati(e impact of sharper competition from China in the formerPs domestic mar4et% in ChinaPs mar4et% and also in third mar4ets li4e the :SP and &apanPs+ Another much-feared negati(e impact for the Philippines is ChinaPs attraction for foreign direct in(estments% 3hich ha(e spiraled ecause of ChinaPs accession commitment to greater capital li erali;ation and its gro3ing gigantic mar4et+ 'o3e(er% the effect of such capital inflo3 to China may not necessarily result in the hollo3ing out of economic acti(ities in the de(eloping countries+ Impacts on the Philippines are the follo3ing" the Philippines can e9pect to gain mar4et opportunities in oth merchandise and ser(ice trade+ 8ith li erali;ation of the ser(ice trade% many ser(ice industries ha(e ecome open for access y foreign in(estors+ As China is e9pected to a ide y the rules of 8#6% Philippine in(estments in China and usiness transactions 3ith the Chinese can no3 en!oy etter protection than eforeO the tariff rate for carrageenan and other sea3eed products 3ill e reduced y ./ to 1/ percent in three yearsP time+ )or the Philippines% one important area of opportunities in ser(ice trade is professional ser(ices+ Professionals comprise a good part of Philippine la or e9ports+ At present% there are already many )ilipino usiness professionals such as managers and accountants 3or4ing for multinational corporations and !oint (entures in China+ 8ith such commitments to the 8#6% Philippine e9porters% professionals and in(estors 3ill en!oy etter protection of their usinesses and !o s in China+ ChinaPs economic gro3th 3ill also increase its capacity for in(estments- oth domestic and foreign+ )DI outflo3 from China is e9pected to increase not only ecause of the predicted economic gro3th% 3hich 3ill mean more income and foreign reser(es for in(estments% ut also ecause of the li erali;ation of capital outflo3 its accession to the 8#6 implies+

III* P%#&le

State ent

:$esti#n" Are there negati(e effects of ChinaPs Charm offensi(e that can affect the Philippines@ It is true that se(eral countries li4e the Philippines enefit from ChinaPs Charm 6ffensi(e ut it has negati(e effects that can affect different sectors in the Philippines+

IV* O&'ectives #f the St$d( #his paper 3ill try to define Charm 6ffensi(e% as 3ell as% to discuss the trade relations of Philippines and China from the past up to the recent data and statistics+ #his paper7s o !ecti(es are to discuss the AS,A1-China )ree #rade Agreement% to tal4 a out some pro lems of the AS,A1-China )ree #rade Agreement% to identify the different enefits of China7s Charm 6ffensi(e to the Philippines and also to some countries from the AS,A1 and other parts of the 3orld+ )urthermore% to enumerate and e9plain the negati(e effects of China7s Charm 6ffensi(e 3ith respect to the follo3ing areas such as economic and trade% en(ironment% political and sociocultural 3ill also e the main focus of this research 3or4+

V* )he#%etical;C#ncept$al F%a e+#%/ In e9amining the case of China7s utili;ation of its charm offensi(e% this paper employed the #heory of Soft Po3er and the #heory of $ealism+ #he theory of Soft Po3er 3as first introduced y &oseph 1ye in his oo4 FBound to Lead" #he Changing 1ature of American Po3erG pu lished in 1EE/+ &oseph S+ 1ye defined po3er as Fthe a ility to change the eha(ior of others to achie(e the desired result y such means as re3ard% punishment% or attraction+G It constitutes the po3er to appeal% seduce and attract other countries+ It is not a out persuasion% influencing or sanctioning other countries ut Fs4illfully shaping their preferences+G #here are three sources of soft po3erMculture% (alues and foreign policies+ #he culture mainly refers to the elements in one country7s culture that ma4es it appealing for others+ Calues 3hich can include political eliefs and (alues that are sho3n either through internal policies or e9ternal+ Lastly% foreign policies are also a source of soft po3er as tac4led in the 3hole article+ Another source that many scholars de ate upon is the economic policies such as the official de(elopment assistance I6DAJ and other humanitarian aid+ #he use of diplomacy and a nation7s standing in international odies ena le it to uild alliances IBohorque;% .//=J+ 6n the other hand% the theory of $ealism is one of the asic theories in international relations and it argues that e(ents in the 3orld follo3 one system+ It is 4no3n as the 'o esian system 3hich 3as proposed y one of the main proponents of the realist (ie3% #homas 'o es+ According to the 'o esian system% e(eryone must e (ie3ed as a threat and the only 3ay to sur(i(e is to gain more po3er than your ri(als+ It argues that the international system is anarchical 3hich means that there is no 3orld go(ernment to uniformly regulate all the international actors+ Another argument centers on the idea that states are the central or principal actor in the international system and this notion is also 4no3n as the principle of Statism+ Currently% China is percei(ed to e using the principle of Balance of Po3er 3hich refers to the tendency of an independent state to alance its economic and military pro3ess in relation to other countries 3ithin its o3n regional periphery+ #he final argument of the theory focuses on the idea that cooperation in the international system is difficult and unli4ely IAm ersagen% ./11J+ VI* Resea%ch Meth#d#l#g( #his research paper requires gathering rele(ant data from se(eral oo4s% !ournals% electronic oo4s% and periodicals+ #his pro!ect 3ill use oth quantitati(e and qualitati(e data+ Data collection 3ill consist of citing information% recommendation% conclusion% figures and analysis from se(eral authors and organi;ations that is concerned of the topic+

VII* Sc#pes and !i itati#ns )ocusing on the trade relations et3een the People7s $epu lic of China and the $epu lic of the Philippines% the scope of this research paper co(ers the historical ac4ground of trade patterns and eha(ior of the t3o countries upon each other% as 3ell as the e(olution of the effects of China7s rising economic po3er o(er the Asian region particularly on the Philippines+ By using the historical approach in scrutini;ing the gi(en issue% this paper can present an array of specific situations that mainly in(ol(e China and the Philippines% accompanied 3ith sets of statistical data 1

and information% as 3ell as research !ournals and inter(ie3s conducted y the researchers+ #his paper 3ill also ta4e a loo4 at the status of different countries regarding the effects of China7s Charm 6ffensi(e to their countries+

VIII* Res$lts and Disc$ssi#n CHINAS SOF) PO9ER IN FOREI5N PO!IC7: PEACEF<! ASCENDANC7 AND 5OOD NEI5H,OR!INESS

China is considered the 3orld7s most populous nation and the fastest gro3ing economy+ #he rise of China through its economic% political% military and its soft po3er is said to e the one 3ho 3ill determine the .1st centuryLs de(elopment+ Beginning in the 1EA/7s% China7s 5DP has een gro3ing from A to 1/ percent a year for o(er t3o decades+ Due to the tremendous effort of China7s go(ernment% it 3as a le to attain on lifting millions of its citi;en from po(erty and enriching the country through ma4ing !o s for its citi;enMcausing the thousands of countryside7s !o less citi;en to mo(e out of the from their homeland and mo(e in the city7s fast gro3ing industrial sector+ )urthermore% 3ith China7s economic gro3th% it 3as a le to uild ne3 factories% s4yscrapers and institutions to facilitate trade and usiness in the country IArsenault .//?J+ Chinas F#%eign P#lic( China as 3e 4no3 has a great amount of soft po3er ut if they 3ould e a le to use it in its foreign policy it 3ill only e useless as stated y &oseph 1ye+ According to 1iall )erguson a country not fully utili;ing its soft po3er 3ill !ust e considered Fsoft+G China has put great recognition of soft po3er in formulating their foreign policy+ #he Chinese go(ernment has categori;ed moderni;ation as a Fde(elopment path to a peaceful rise+G Accordingly% soft po3er is su ordinated to the foreign policy aims+ )irst is to continue reforms and economic de(elopment through political reforms+ Second is to search a road for ra3 materials ase and sales mar4et+ #hird is to ensure security in the region y coordinating to (ariety of organi;ations% including la3 enforcement% military% paramilitary% go(ernmental% and intelligence agencies 3hose aim is to protect China7s national security+ China also pursues the one-China principle to esta lish diplomatic relations 3ith the states that still maintain official relations 3ith #ai3an+ Last is to 3in the de(eloping states7 good3ill% so that they support China in the :+1 on issues concerning human rights% the isolation of #ai3an% or on loc4ing &apan7s permanent mem ership in the :1 Security Council+ A Chinese foreign policy cannot ris4 China7s economic gro3th and influence in the international system ecause 3ithout these premises China 3ill not e a le to FcharmG the 3orld+ According to Arsenault% in the end% China 3ill ha(e Fcomprehensi(e national po3erGMa com ination of international prestige% diplomacy% economic po3er% cultural influence% and military force+ According to Duan Bingren% the rise of China uses soft po3er so as not to ecome a threat to other states% especially those in the Pacific region and the :nited States+ ,conomically% it 3ants to incorporate itself in the glo ali;ing 3orld% and see4s to e an acti(e player in this 4ind of system+ Politically% China 3anted to and is acti(e to different international affairs such as !oining se(eral international organi;ations that 3ill esta lish the notion of a Ffriendly and helpful China+G #herefore% the passi(e emergence of China is a segue for them to achie(e their goals 3ithout utili;ing the idea of FhegemonyG% Fhot 3arG% Fcold 3arG% FChina threatG% Fdisintegration

of ChinaG etc+ theories+ FIt is a promise to the 3orld that the rise of China is peaceful+G IDeepa4% ./1.J

ASEAN 0 CHINA Relati#nship #he AS,A1 IAssociation of Southeast Asian 1ationsJ countries represent a group of states 3here Chinese influence is e9panding+ #he region7s culture and economies are greatly intert3ined 3ith China7s% thus% prompting the latter to pursue friendly relation 3ith the former and use soft po3er+ In the past% China pro(ided military assistance on one hand and on the other% fought a 3ar 3ith once ally Cietnam in 1E?E+ 1o3% China encourages increased cooperation in trade and in resol(ing order disputes and has ecome a 4ey outside mem er of AS,A1 and AP,C+ Most of China7s good3ill in the region stems from ho3 China handled the 1EE? Asian financial crisis+ #he fall in ,ast Asian currency caused massi(e stoc4 speculation and re(ersed the Asian #iger7s economic gro3th+ China% ho3e(er% refused to de(alue its currency and sa(ing the economy of the affected states+ 'o3e(er% the increased rift et3een China and many AS,A1 states% mostly on territorial disputes% egan a speculation from International $elations scholars to percei(e a FChinese Monroe Doctrine+G #he Monroe Doctrine 3as first enunciated in 1A.0 y the =th president of the :nited States &ames Monroe 3hich stated that Ffurther efforts y ,uropean countries to coloni;e land or interfere 3ith states in the Americas 3ould e (ie3ed as acts of aggression requiring :+S+G Scholars see parallels et3een that policy and China7s rise today+ #he 8est Philippine Sea ISouth China SeaJ is China7s ac4yard and% li4e 1Eth century-America% China is a rising po3er+ FChina7s commerce% and hence prosperity% depends (ery much on access to sea lanes through the Indian 6cean% the Malacca Straits and other areas o(er 3hich it has little control% and 3hich are dominated y :S na(al po3erG IChina Daily% ./10J+ Effects t# the Philippines In April ./1. China and the Philippines ha(e een in a standoff regarding the Scar orough $eef+ According to China Daily% the standoff has gone eyond from territorial clash to economic concerns such as those dealing 3ith fruit trade and tourism+ #he country suffered losses in fruit e9ports to China after some (arieties of fruit 3ere found carrying harmful acteria and pests% there y causing massi(e delays in shipments% follo3ing tighter inspections from China+ #he tourism sector has also faced a ma!or set ac4% 3ith Chinese nationals no3 instructed to limit their (isits to the Philippines on account of safety reasons+ ISa rina %./10J+ CHINAS CHARM OFFENSIVE1 CONCESSIONAR7 !OANS AND )HE ISS<E OF DEPENDENCE #he political and economic emergence of China in the t3enty-first century is eyond question+ In terms of economic ties% China egan e9panding its net3or4s 3ith the mem er states of the Association of the Southeast Asian 1ations IAS,A1J in the early .//1+8hile the 3ar on terror re(itali;ed the Philippine-:S security relations% China Fdecided to apply co-opti(e or soft po3er to create a 3edge et3een the Philippines and its former security allyG IDe Castro% ./11J+ During the =th China-AS,A1 summit in 1o(em er .//1% China offered the Philippines and the other AS,A1 states a free trade agreement 3hich ena led China to attain three (ery 1

important foreign policy o !ecti(es" I1J e9panding its mar4et accessO I.J gaining access to strategic resources andO I0J assuring smaller states that it 3ill not undermine their economic interests IMedeiros% .//EJ+ #he ne9t year% oth parties signed the )rame3or4 Agreement on China-AS,A1 Comprehensi(e ,conomic Cooperation 3hich heralded a China-AS,A1 free trade ;one in ./1/+ In .//>% rapid trade gro3th 3as e(ident to the t3o parties as it escalated to :SQ1>/+A illion% garnering .0+- per cent increase from the .//= trade le(el I<inhua% .//?J+ Figure 1: ASEAN-China Trade is Rising Rapidly

)rom 1EEA to .//?% Philippine-China trade escalated from a mere :SQ. illion to an o(er3helming :SQ0/ illion+ In the follo3ing years% China has ecome the Philippines7 third largest trading partner after the :S and &apan+ Alongside% the Philippines has een en!oying a trade surplus 3ith China% as the latter imports a huge (olume of semiconductors from the Philippines 3hich ma4es almost A= percent of Chinese imports+ In addition% the Philippines e9ports machinery and electronic appliances to China 3hich are intermediate goods for the manufacture of sound equipment and automated teller machines+ #he Philippines 3as seen to play Lthe China card7 after a desta ili;ed diplomatic relations 3ith the :S 3hen the go(ernment 3ithdre3 its troops in Iraq I$o les% .//-J+ #he Philippines and China agreed to increase defense cooperation such as sea rescue% disaster mitigation% and e9change of training+ #he t3o states also decided to set aside their territorial claim to the Spratlys and to engage in the !oint de(elopment in the disputed area+ #here 3as an increased e9change (isits et3een the heads of states of the Philippines and China+ Alongside 3ere !oint pro!ects such as the Chinese-funded 1orth Lu;on $ail3ay Pro!ect% under3ater seismic study for possi le cooperation in the e9ploration and de(elopment of maritime resources in the South China Sea% intensification of cooperation in addressing international terrorism and transnational crimes and policy coordination in implementing the AS,A1-China )ree #rade Agreement I<inhua% .//=J+ #he t3o countries% along 3ith Cietnam% conducted a !oint marine seismic sur(ey of the South China Sea in August .//=+ #his acti(ity in(ol(ed a three-phase program of data-gathering%

consolidation% and interpretation of a out 11%/// 4ilometers of .D seismic data in the location+ #he first phase 3as completed in 1o(em er .//=% the second in early .//?% and the last in &une .//A+ President Aquino contends that this pro!ect should not ha(e happened ecause it is an encroachment of the Philippine territory% gi(ing China% as 3ell as Cietnam% (alua le intelligence and data a out the oil reser(es in the contended area+ )urthermore% De Castro contends that as China7s economic and political influence in the region increases% many of its Asian neigh ors are gradually eing dra3n into its diplomatic or it% including the Philippines+ As a result of China7s increasing na(al pro3ess% it slo3ly egan asserting its long-held claim to the Spratly archipelago and South China Sea+ In .//A% the Philippine-China relations reached a lo3 point upon the corruption allegations intert3ined 3ith the *#,-1B1 deal+ #he contro(ersy spar4ed 3hen the :SQ0.E million deal 3ith the *hong <ing #ele-communications ,quipment Co+ Ltd+ 3as alleged to e o(erpriced y Q1E? million+ #he main goal of the pro!ect 3as to pro(ide more efficient and less costly communications for the go(ernment agencies ut there 3as another speculation that did not reach the mainstream Philippine media+ Before the partnership 3ith *#,% an American company named A$,SC6M proposed a transparent consideration of the matter% offering a relati(ely cheaper Q10= million deal ut the Philippine go(ernment chose the former option+ 1e(ertheless% President Arroyo 3as accused of etraying pu lic trust and 3as forced to 3ithdra3 the deal+ A recent study on Chinese acti(ism in the South China Sea commented that China had re(erted to a more asserti(e stance in its territorial claims% 3hich made it rely on its militaristic pro3ess% Fsee4ing to undermine the claims of other states through coerci(e diplomacyG ISchofield R Storey% .//EJ+ C#ncessi#na%( !#ans ,(en efore China7s use of charm offensi(e 3as fully reali;ed y the international community% it gradually egan uilding stronger ties 3ith its neigh or Cam odia 3hen China ser(ed as Cam odia7s ma!or supporter during the reign of Nhmer $ouge+ #he Cam odian officials recei(ed 1=%/// military ad(isers and e9ternal aid from Bei!ing% 3hich entitled China to e the most important foreign influence to Cam odia up to this day+ In addition% China ecame the ma!or pro(ider of foreign aid to Cam odia as the latter recei(es one of the larger aid pac4ages of any nation in the 3orld INurlant;ic4% .//>J+ Along 3ith that 3as the a rupt gro3th in the num er of Chinese language schools in Phnom Penh% 3ith appro9imately 1/%/// students each+ According to Nurlant;ic4% China egan utili;ing its charm offensi(e during the late 1EE/7s at the time of the Asian financial crisis+ 8hile the :nited States and &apan reluctantly responded to the crisis% China manifested a percepti(e re!oinder+ China refused to de(alue its currency% something if did not ta4e place 3ould ha(e uried the #hai and Indonesian currency deep 3ithin the crisis+ #his action pro(ed that China 3as standing up for its neigh ors 3hich earned the trust of the hea(ily-affected countries in Southeast Asia+ Su sequently% China started enunciating a doctrine of F3in-3inG relations% con(incing states that China 3ill not meddle 3ith their internal affairs ecause it 3ill not ma4e demands on the other states7 so(ereignty+ )ollo3ing that action 3as the gradual opening of its mar4ets% re(ersing its pre(ious disdain to3ards multilateralism% as it signed significant treaties 3ith the Southeast Asian mem er states 3hich impro(ed political and economic relations et3een the t3o parties+

Nurlant;ic4 argues that China7s strategy also in(ol(es strengthening its ilateral relationship 3ith the states that seemed to ha(e a declining relationship 3ith the :nited States and &apan% a detail that supports ho3 the Philippines 3as rought closer to China after it 3ithdre3 its troops in Iraq ac4 in .//-+ Shortly after said e(ent% China in(ited President Arroyo for a state (isit and egan offering greater cooperation and aid+ China furthered its use of soft po3er 3ith pu lic diplomacy that enforced peaceful de(elopment+ In Malaysia and Singapore 3ere museum e9hi its to cele rate >//th anni(ersary of *heng 'e% a Chinese admiral 3ho sailed across Asia ut did not conquer the lands he set foot into+ China7s pu lic diplomacy also included hosting o(erseas scholars and creating a (ersion of the Peace Corps to send young Chinese (olunteers to 3or4 for certain pro!ects in de(eloping countries such as Laos and Burma+ China also uilt net3or4s to ring Asian usinessmen for an e(ent li4e the 8orld ,conomic )orum+ 8hen it comes to esta lishments of cultural e9changes and financial aid% China has also ecome more acti(e in the recent years+ According to a study of 1ational Defense :ni(ersity in 8ashington% in .//0% China7s aid to the Philippines 3as four times greater than America7s% China7s aid to Laos three times greater% to Indonesia nearly dou le% and to Cam odia% nearly almost matched 3ith the :S le(els+ In early 1o(em er .//>% the construction of the 1orth $ail Pro!ect in the Philippines 3as made possi le 3ith funds coming from the state-o3ned Chinese ,9port Import Credit Agency+ #he 1orth $ail pro!ect 3as created in order to fi9 the congestion in the 1inoy Aquino International Airport I1AIAJ y connecting Clar4 International Airport to the 1ational Capital $egion (ia ullet train+ :nfortunately% the pro!ect 3as interrupted 3hen it 3as found to e tainted 3ith anomalies from the Arroyo administration and also ecause the Chinese contractor% China 1ational Machinery Industry Corp ISinomachJ had sought more money+ In ./1.% the Philippine go(ernment determined that the pro!ect must continue as the need to connect Clar4 International Airport to the 1C$ has een more emphasi;ed IManila #imes% ./1.J+ 8hen as4ed a out the renegotiation process% Bayan Muna $epresentati(e 1eri Colmenares said the follo3ing statement% F#he Chinese go(ernment 3as a3are of the loated o(erpricing and other irregularities in the 1B1-*#, dealO this is 3hy it did not e(en raise a 3himper 3hen former president 5loria Macapagal-Arroyo cancelled it+ $ecently% the Chinese go(ernment immediately agreed for a renegotiation of the 1orthrail contract 3hich 3as hea(ily fa(ora le to China to the disad(antage of the Philippines+G #he disad(antage that he 3as referring to concerns the circulation of money from China+ #he state-o3ned an4 3ould lend money and contractor to the Philippines for the construction Iincluding la orJ of the pro!ect ut the country 3ould still ha(e to pay for the loan in the follo3ing years+ China 3ould later on gain more than 3hat it ga(e the Philippines for the said pro!ect+ Nurlant;ic4 further contends that China7s charm offensi(e is meant to meet the follo3ing goals" I1J to maintain peace on China7s peripheryO I.J to reduce #ai3an7s influence in Southeast Asia% also to change a regional perception of China to een seen as a positi(e% enign actor in the region% and finallyO I0J to shift influence a3ay from the :nited States of America to create its o3n sphere of influence+ 8ith said acts% China 3as a le to uild its o3n sphere of influence 3ithin the region% gaining trust and support of its neigh ors+ Chinese (alues such as non-interference% respect for other nations7 internal affairs and economic gradualism added more appeal to China7s success story+

ASEAN0CHINA F)A In utili;ing its charm offensi(e 3ithin its o3n regional periphery% China managed to integrate itself 3ith one of the largest regional organi;ations in the 3orld 3hich is the AS,A1+ Due to intert3ining culture and preferences% it ecame an easy tas4 for oth parties to amplify their trade relations+ #his 3as done through the creation of the AS,A1-China )ree #rade Area IAC)#AJ 3hich is a free trade area among the ten Mem er States of the Association of Southeast Asian 1ations IAS,A1J and the PeoplePs $epu lic of China+ 6n 1o(em er -% .//-% the initial )rame3or4 Agreement I)AJ 3as signed in Phnom Penh% Cam odia% 3ith the aim of creating a free trade area among the ele(en nations y ./1/ and on &anuary 1% ./1/% it came into effect+ According to 3orld ran4ing of international organi;ations in terms of population% AC)#A is the largest and in the aspect of nominal 5ross Domestic Product I5DPJ% it ran4s as the third only after the ,uropean :nion I,:J and 1orth American )ree #rade Area I1A)#AJ I#he ,conomist% ./1/J+ It has the follo3ing three principal agreements 3herein they 3ill ase their pro(isions on tariff reduction of certain categories of tariff linesO 1+ AS,A1-China #rade in 5oods Agreement IAC#I5AJ% .+ AS,A1-China #rade in Ser(ices Agreement IAC#ISAJ and% 0+ AS,A1-China In(estment Agreement+ According to the statement of the Chairman of the 1= th AS,A1-China Summit in Phnom Penh% Cam odia last 1o(em er ./1.% AS,A1 is China7s third largest trading partner and China is considered to e AS,A17s largest trading associate+ Ag%ee ent #n )%ade in 5##ds :nder the AS,A1 2 China #rade in 5oods Agreement IAC#I5AJ% Parties are committed to reduce their tariffs ased on the follo3ing schedules" 1+ ,arly 'ar(est Programme 3hich is a free trade arrangement under the agreement 3hich implements the gradual reduction of tariffs on agricultural products+ It 3as signed and implemented on 6cto er >% .//0 at the Eth AS,A1-China Summit in Bali% Indonesia through a protocol to amend the )rame3or4 Agreement on the Comprehensi(e ,conomic Cooperation et3een AS,A1 and China+ It 3as planned to e implemented from .//-.//> and oth China and #hailand implemented according to their .//0 ilateral agreement+ After the )A 3as signed to implement the program% some AS,A1 Mem er States found that they are encountering difficulties in implementing the tariff reduction or elimination plan on their products+ In order to protect its agricultural sector% the Philippines et up a committee on August .//0 to re(ie3 its =%?// tariff lines to 4no3 its compati ility under the AC)#A frame3or4+ After the e(aluation% the go(ernment decided to raise its tariffs on ->- products y .-= percent from .//0-.//?+ China allo3ed AS,A1 Mem er States such as the Philippines to ha(e a list of products that 3ere granted fle9i ility on tariff rates and the country 3as a le to implement it on -// tariff lines+

.+ 1ormal #rac4 3hich refers to the arrangement of gradual tariff reduction or elimination on goods starting from /-= percent on &uly 1% .//= for the first pac4age% > percent tariff reduction y .//? for the second pac4age% and complete tariff elimination on the products under the normal trac4 y ./1/ for the last pac4age+ China% Brunei% Indonesia% Malaysia% Myanmar% Singapore% and #hailand instigated the ne3 tariff rate on time since its implementation on .//=+ 'o3e(er% the Philippines together 3ith Laos% Cam odia% and Cietnam 3as not a le to !oin the implementation of the ne3 tariff rate on time due to the fact that they need to complete the requirements for the appro(al procedure such as list of tariff lines that 3ill e co(ered y reduced tariffs and the fle9i ility of the latter+ 6n May ./% .//>% the Philippines ecame the se(enth AS,A1 Mem er State to !oin the ne3 tariff rate+ 0+ Sensiti(e #rac4 3hich is di(ided into the FSensiti(e ListG ISLJ and the F'ighly Sensiti(e ListG I'SLJ+ #he trac4 is comprised of unprocessed agricultural products and the num er of tariff lines for each Party shall e su !ected into a ma9imum ceiling+ #he difference et3een the t3o factions under the trac4 is that those products under the 'SL came from the tariff lines originating from the AS,A1 > IBrunei% Indonesia% Malaysia% Myanmar% Singapore% #hailandJ and China+ #heir tariff lines shall not e more than -/ percent of the total num er of tariff lines under the Sensiti(e #rac4 and products under this category are granted fle9i ility options for safeguarding measures 3hen eing e9ported o(erseas+ 6ne e9ample of a product under the 'SL is the rice production coming from Indonesia% Malaysia% and the Philippines+ #ariffs under this category shall e reduced to =/ percent y ./1=+ 6n the other hand% those products co(ered y the SL ha(e an access on the phasing of tariffs for a shorter timeframe+ It requires tariffs to e reduced to ./S y ./1. and shall e follo3ed y a reduction of /-= percent y ./1A+ #he implementation of AC#I5A is e9pected to enefit Parties to the Agreement in terms of fair and equita leDreciprocal mar4et access treatments 3ith each other7s e9port commodities+ #he Philippines implemented its commitments through the follo3ing legal enactments 3hich has allo3ed traders to en!oy lo3 tariffs 3hen e9porting to China I1J ,9ecuti(e 6rder I,+6+J -A? for the implementation of 1ormal #rac4 concessions co(ering the first pac4age Ii+e+ .//=-.//AJ to comply 3ith the /1 &uly .//= milestone% I.J ,+6+ >10 for the second pac4age of 1ormal #rac4 concessions follo3ing the schedule of reduction eginning /1 &anuary .//? to 01 Decem er .//A and I0J ,+6+ A1- 3hich 3as signed on 0/ &une .//E for the last tranche of tariff reduction concessions+ #he third pac4age consists of all 1ormal #rac4 products 3hose tariff rates 3ill follo3 the schedule of reduction eginning /1 &anuary .//E to 01 Decem er ./1/D./1. under the AC)#A modality+ Ag%ee ent #n )%ade in Se%vices #he #IS Agreement 3as signed in &anuary .//? in Ce u% Philippines and entered into force on /1 &uly .//?+ :nder this Agreement% ser(ices and ser(ices suppliersDpro(iders in the region 3ill en!oy impro(ed mar4et access and national treatment in sectorsDsu sectors 3here commitments ha(e een made+ Ser(ices ha(e ta4en on an increasingly important role in AS,A1+ )aced 3ith e9acer ating competiti(e pressures on the 3orld merchandise trading front% particularly 3ith the accession of China to the 8orld #rade 6rgani;ation I8#6J in .//1% AS,A1 mem ers ha(e stirred into introducing a gamut of measures aimed at impro(ing its domestic in(estment climate

and regaining competiti(eness on (arious fronts+ #his can e seen through the 4ey initiati(es of the AS,A1+ In .//=% AC#ISA sa3 the largest foreign-domestic deals ta4ing place in financial ser(ices sector in China% rather than manufacturing and industry+ #his ser(es to epitomi;e the heightened interest and opportunities in ser(ices trade et3een China and AS,A1+ #he mode of consuming a road ecame (ery present and this is percei(ed to e a part of China7s F5o 5lo alG strategy since .///+ #he AS,A1 2 China #rade in Ser(ices Agreement IAC#ISAJ pro(ides for the e9pansion of trade in ser(ices in the region+ :nder this Agreement% ser(ices and ser(ices suppliersDpro(iders in the region 3ill en!oy impro(ed mar4et access and national treatment in sectorsDsu sectors 3here commitments ha(e een made+ #he mar4et access commitments of the Parties to the AC#ISA are contained in the first pac4age of specific schedule of commitments that are attached to the Agreement+ #he Agreement pro(ides for li erali;ation on su stantial co(erage of sectorsDsu sectors especially in more than >/ additional su sectors committed y AS,A1 Mem er Countries 3hich are parties to the 5A#SD8#6+ #he latter includes management consulting% ad(ertising% accounting% an4ing% securities% insurance% logistics% mo(ies% construction% shipping% and (alue-added telecommunications ser(ices+ In .//=% China and the AS,A1 started negotiations on finance and insurance+ Some AS,A1 countries chose to negotiate 3ith China on their issues of greatest concern+ Singapore% as an e9ample% is more interested in the ser(ice sectors 3hile the less-de(eloped AS,A1-- ICam odia% Laos% Myanmar% and CietnamJ are more interested in e9port opportunities and infrastructures+ 8ith the Agreement% it is e9pected that trade in ser(ices in the region 3ould e9pand and gro3 in scale through the four modes of ser(ice deli(ery% namely" 1+ cross- order supply 3hich refers to the independence of foreign suppliers to3ards other country7s consumers Ie+g+ telecommunication% postal ser(ices% e- an4ingJ% .+ consumption a road 3hich refers to the situation 3herein the consumers of the ser(ices are non-resident in the country 3herein the ser(ice is eing produced and consumed Ie+g+ tra(el and training of studentsJ% 0+ commercial presence 3hich refers to the suppliers of ser(ices eing an affiliate or ranch of a foreign supplier Ie+g+ local ranches of Multinational Corporations% an4sJ% and -+ mo(ement of natural persons 3hich refers to suppliers of ser(ices eing non-residents of a country in 3hich they temporarily reside to conduct usiness Ie+g+ professionals% construction 3or4ers% domestic helpersJ+ Aside from increased trade% the #IS Agreement is also e9pected to ring a out higher le(els of in(estments in the region% particularly in sectors 3here commitments ha(e een made% namely" usiness ser(ices such as computer related ser(ices% real estate ser(ices% mar4et research% management consultingO construction and engineering related ser(icesO tourism and tra(el related ser(icesO transport ser(icesO educational ser(icesO telecommunication ser(icesO health-related and social ser(icesO recreational% cultural and sporting ser(icesO en(ironmental ser(icesO and energy ser(ices+ #he AS,A1-China #IS Agreement 3as signed in &anuary .//? in Ce u% Philippines and entered into force on /1 &uly .//?+ AS,A1 and China are in the final phase of negotiations on the second pac4age of commitments IBo% .//>J+ Figure 2: Increasing Rate of ASEAN isitors to China

Source: National !ureau of Statistics of China" 2##$% Invest ent Ag%ee ent It 3as signed on August 1=% .//E+ It is the third of the three main agreements concluded under the .//. AS,A1 2 China )rame3or4 Agreement on Comprehensi(e ,conomic Cooperation+ China7s in(estment in AS,A1 3as a cumulati(e :SQ>+1 illion up to the end of .//A% 3hile AS,A17s in(estments into China alone totaled :SQ=+> illion in .//A ID#I% .//AJ+ Since .//0% China and the AS,A1 Mem er States held many rounds on negotiations on in(estment+ #he AS,A1 )oreign Direct In(estment I)DIJ to China mainly comes from Singapore% #hailand% Malaysia% and Indonesia+ #he AS,A1 2 China In(estment Agreement is the third of three main agreements concluded underthe .//. AS,A1 2 China )rame3or4 Agreement on Comprehensi(e ,conomic Co-operation+ #he conclusion of an In(estment Agreement is timely as this pro(ides an ena ling en(ironment that 3ill lead to enhanced in(estment flo3s et3een oth sides at a time 3hen AS,A1 and China are oth 4ey emerging economies 3ith strong economic prospects+ China7s in(estment in AS,A1 3as a cumulati(e :SQ>+1 illion up to the end of .//A% 3hile AS,A17s in(estments into China alone totaled :SQ=+> illion in .//A+ #he AS,A1-China In(estment Agreement 3as signed on 1= August .//E ID#I% .//AJ+ 6ne of the most (isi le manifestations of the In(estment Agreement et3een AS,A1 and China is the 5reater Me4ong Su -region De(elopment 3hich 3as proposed y the Asian De(elopment Ban4 IADBJ in 1EE.% thus% is a much earlier proposal compared to the AC)#A+ It is considered to e a (ery important part in the cooperation et3een China and the AS,A1 countries+ It is also percei(ed to e a helpful aspect in the esta lishment of a free trade area IBo% .//>J+ Figure &: Top Fi'e Countries in the China-ASEAN FTA

Source: (N Co)trade* !ei+ing A,is Analysts" -2#12.%

PRO,!EMS 9I)HIN )HE ASEAN0CHINA F)A Chinas M#tivati#n +ithin the EHP According to Lu Bo% one of the researchers 3ho 3as a le to produce non-conference papers% China7s engagement to the ,'P has Freal Ipolitical or strategicJ intentionsG+ Lu analy;ed the ,'P y product categories% implementation timeta le% specific list% e9clusion list% and rules of origin+ According to the )A% a party shall en!oy tariff concessions y all the other parties for the products co(ered+ #he ,'P co(ered a out >// agricultural products and Lu Bo found out that AS,A1 has ad(antages on most of them+ As a result% China ga(e unilateral concessions to AS,A1 Mem er States on most of them and the latter agreed to cut tariffs on meat% fish% fruits% (egeta les% and mil4 from the former+ It is percei(ed that the ,'P is so generous that many o ser(ers 3ondered at FChina7s moti(ation ehindG+ Another suspicion from the international community regarding China7s integration to the ,'P is the (isi le progress of the 8#6 agricultural negotiation 3herein the former has amplified interests+ According to Lu Bo% opening China7s agricultural mar4et to AS,A1 is a good test efore its opening to the 3orld+ ,conomically% it is important for China to ta4e one step out into its neigh oring countries and ma4e sure it is safe efore it mo(es for3ard to the 3hole 3orld IBo% .//>J+ 9hat c#$ld happen t# ASEAN6 4* Mac%#ec#n# ic I pact

Association of Southeast Asian 1ations IAS,A1J - China )ree #rade Agreement I)#AJ 3ill mainly enefit AS,A1 through an increasing mar4et access in China7s huge mar4et+ A rise in AS,A17S e9ports% such as rice% sugar% (egeta le oils% te9tiles% and leather products increases the demand for primary factors of products+ #he )#A results in a significant trade creation+ 1amely% there 3ill e a =0+0 per cent surge in AS,A17S e9ports to China 3hile AS,A17S imports from China 3ill rise y .0 per cent+ #his leads to an increase in the total e9ports of /+E= per cent+ #he )#A 3ill create some trade di(ersion effects+ #he intra-trade 3ithin AS,A1 mem ers 3ill significantly decline+ )or e9ample% e9ports of #hailand to Cietnam and to the Philippines 3ill e declined y > per cent and =+0 per cent respecti(ely% 3hile the e9ports of AS,A1 to the :nited States and &apan 3ill drop y /+A0 per cent and 1+-1 per cent respecti(ely+ I5ill% .//?J #he intra-trade di(ersion gi(es a ig impact among the AS,A1 mem ers regarding their trading 3ith each other including AS,A17s trade 3ith the :nited States and &apan+ #he logic here is that% the products and ser(ices 3hich are the imports of China to the AS,A1 mem ers are lo3-quality ut (ery cheap so the AS,A1 mem ers 3ould prefer China7s cheaper products that the :nited States7 and &apan7s high-quality products ut e9pensi(e+ #he intra-trade di(ersion has t3o ma!or negati(e impacts to the relationship of AS,A1 and the :nited States and &apan and the second one is the relationship among AS,A1 mem ers themsel(es+ )irst% the )#A et3een AS,A1 and China hinders the economic trading of the AS,A1 mem ers to the :nited States and &apan ecause the )#A decreases the trade imports and imports of the AS,A1 mem ers to the :S and &apan due to the lo3er cost of import y the AS,A1-China )#A+ Second% the )#A also decreases the economic trade of imports and e9ports y the AS,A1 mem ers themsel(es ecause AS,A1 mem ers 3ould rather choose to patroni;e China7s products ecause they are cheaper than the local products of the AS,A1 mem ers+ 2* Sect#%al I pact Due to lo3er AS,A17s lo3er trade arriers% imports from China 3ill cause a decline in AS,A17s output of (egeta les and fruits+ In addition% etter cost competiti(eness of other Chinese food products% apparel and leather products due to the )#A is li4ely to cause AS,A1 output to suffer IChirathi(at and Malli4amas% .//=J+ Chinese products are cheaper ut lo3 quality compared to the products of :nited States and &apan and e(en to the S,A1 local products% ut the AS,A1 3ould rather choose Chinese products e(en though it is lo3 quality ut cheap and the local products of AS,A1 3ill e undermined y Chinese products+ 8* Negative I pact f%# !#+e% C#st #f I p#%ts

#rade creation 3ill more offset trade di(ersion for AS,A1 3hile for China there is no o (ious trade di(ersion+ It remains to e seen ho3 AS,A1 and China 3ill use these opportunities to strengthen their economic relationships+ China 3ould loo4 increasingly at AS,A1 as an alternati(e source of inputs for natural resource- ased or intermediate products IChirathi(at and Malli4amas% .//=J+ Cegeta les and fruits 3ill e9perience a decline in output due to import su stitution+ AS,A17s tariff reduction of = per cent 3ill increase imports from China y 1E+A per cent 3hile the sector7s total imports 3ill rise y =+1 per cent+ As a result% the output 3ill drop y /+- per cent and the trade alance 3ill decline y :S Q?.+E million+ Apparels li4e food 3ill face a higher competition from Chinese lo3er cost of production and AS,A17s

-+=1 per cent tariff cuts in imports+ #hese 3ill increase imports from China y 1/?+= per cent+ #otal imports of apparels are li4ely to increase y =+E per cent+ As a result% the output in this sector 3ill decrease y /+0A per cent+ I5ill% .//?J Cheap% lo3-(alue-added manufactured goods e9ported y China also dominate in the structure of the most AS,A1 mem ers7 e9ports% so there is a ris4 that an increase in imports of these products Ie+g+ te9tiles% clothing% foot3earJ from China 3ill hurt the local enterprise+ CHINAS CHARM OFFENSIVE1 CONCESSIONAR7 !OANS AND )HE ISS<E OF DEPENDENCE #he political and economic emergence of China in the t3enty-first century is eyond question+ In terms of economic ties% China egan e9panding its net3or4s 3ith the mem er states of the Association of the Southeast Asian 1ations IAS,A1J in the early .//1+8hile the 3ar on terror re(itali;ed the Philippine-:S security relations% China Fdecided to apply co-opti(e or soft po3er to create a 3edge et3een the Philippines and its former security allyG IDe Castro% ./11J+ During the =th China-AS,A1 summit in 1o(em er .//1% China offered the Philippines and the other AS,A1 states a free trade agreement 3hich ena led China to attain three (ery important foreign policy o !ecti(es" I1J e9panding its mar4et accessO I.J gaining access to strategic resources andO I0J assuring smaller states that it 3ill not undermine their economic interests IMedeiros% .//EJ+ #he ne9t year% oth parties signed the )rame3or4 Agreement on China-AS,A1 Comprehensi(e ,conomic Cooperation 3hich heralded a China-AS,A1 free trade ;one in ./1/+ In .//>% rapid trade gro3th 3as e(ident to the t3o parties as it escalated to :SQ1>/+A illion% garnering .0+- per cent increase from the .//= trade le(el I<inhua% .//?J+ )rom 1EEA to .//?% Philippine-China trade escalated from a mere :SQ. illion to an o(er3helming :SQ0/ illion+ In the follo3ing years% China has ecome the Philippines7 third largest trading partner after the :S and &apan+ Alongside% the Philippines has een en!oying a trade surplus 3ith China% as the latter imports a huge (olume of semiconductors from the Philippines 3hich ma4es almost A= percent of Chinese imports+ In addition% the Philippines e9ports machinery and electronic appliances to China 3hich are intermediate goods for the manufacture of sound equipment and automated teller machines+ #he Philippines 3as seen to play Lthe China card7 after a desta ili;ed diplomatic relations 3ith the :S 3hen the go(ernment 3ithdre3 its troops in Iraq I$o les% .//-J+ #he Philippines and China agreed to increase defense cooperation such as sea rescue% disaster mitigation% and e9change of training+ #he t3o states also decided to set aside their territorial claim to the Spratlys and to engage in the !oint de(elopment in the disputed area+ #here 3as an increased e9change (isits et3een the heads of states of the Philippines and China+ Alongside 3ere !oint pro!ects such as the Chinese-funded 1orth Lu;on $ail3ay Pro!ect% under3ater seismic study for possi le cooperation in the e9ploration and de(elopment of maritime resources in the South China Sea% intensification of cooperation in addressing international terrorism and transnational crimes and policy coordination in implementing the AS,A1-China )ree #rade Agreement I<inhua% .//=J+

#he t3o countries% along 3ith Cietnam% conducted a !oint marine seismic sur(ey of the South China Sea in August .//=+ #his acti(ity in(ol(ed a three-phase program of data-gathering% consolidation% and interpretation of a out 11%/// 4ilometers of .D seismic data in the location+ #he first phase 3as completed in 1o(em er .//=% the second in early .//?% and the last in &une .//A+ President Aquino contends that this pro!ect should not ha(e happened ecause it is an encroachment of the Philippine territory% gi(ing China% as 3ell as Cietnam% (alua le intelligence and data a out the oil reser(es in the contended area+ )urthermore% De Castro contends that as China7s economic and political influence in the region increases% many of its Asian neigh ors are gradually eing dra3n into its diplomatic or it% including the Philippines+ As a result of China7s increasing na(al pro3ess% it slo3ly egan asserting its long-held claim to the Spratly archipelago and South China Sea+ In .//A% the Philippine-China relations reached a lo3 point upon the corruption allegations intert3ined 3ith the *#,-1B1 deal+ #he contro(ersy spar4ed 3hen the :SQ0.E million deal 3ith the *hong <ing #ele-communications ,quipment Co+ Ltd+ 3as alleged to e o(erpriced y Q1E? million+ #he main goal of the pro!ect 3as to pro(ide more efficient and less costly communications for the go(ernment agencies ut there 3as another speculation that did not reach the mainstream Philippine media+ Before the partnership 3ith *#,% an American company named A$,SC6M proposed a transparent consideration of the matter% offering a relati(ely cheaper Q10= million deal ut the Philippine go(ernment chose the former option+ 1e(ertheless% President Arroyo 3as accused of etraying pu lic trust and 3as forced to 3ithdra3 the deal+ A recent study on Chinese acti(ism in the South China Sea commented that China had re(erted to a more asserti(e stance in its territorial claims% 3hich made it rely on its militaristic pro3ess% Fsee4ing to undermine the claims of other states through coerci(e diplomacyG ISchofield R Storey% .//EJ+ C#ncessi#na%( !#ans ,(en efore China7s use of charm offensi(e 3as fully reali;ed y the international community% it gradually egan uilding stronger ties 3ith its neigh or Cam odia 3hen China ser(ed as Cam odia7s ma!or supporter during the reign of Nhmer $ouge+ #he Cam odian officials recei(ed 1=%/// military ad(isers and e9ternal aid from Bei!ing% 3hich entitled China to e the most important foreign influence to Cam odia up to this day+ In addition% China ecame the ma!or pro(ider of foreign aid to Cam odia as the latter recei(es one of the larger aid pac4ages of any nation in the 3orld INurlant;ic4% .//>J+ Along 3ith that 3as the a rupt gro3th in the num er of Chinese language schools in Phnom Penh% 3ith appro9imately 1/%/// students each+ According to Nurlant;ic4% China egan utili;ing its charm offensi(e during the late 1EE/7s at the time of the Asian financial crisis+ 8hile the :nited States and &apan reluctantly responded to the crisis% China manifested a percepti(e re!oinder+ China refused to de(alue its currency% something if did not ta4e place 3ould ha(e uried the #hai and Indonesian currency deep 3ithin the crisis+ #his action pro(ed that China 3as standing up for its neigh ors 3hich earned the trust of the hea(ily-affected countries in Southeast Asia+ Su sequently% China started enunciating a doctrine of F3in-3inG relations% con(incing states that China 3ill not meddle 3ith their internal affairs ecause it 3ill not ma4e demands on the other states7 so(ereignty+ )ollo3ing that action 3as the gradual opening of its mar4ets% re(ersing its pre(ious disdain

to3ards multilateralism% as it signed significant treaties 3ith the Southeast Asian mem er states 3hich impro(ed political and economic relations et3een the t3o parties+ Nurlant;ic4 argues that China7s strategy also in(ol(es strengthening its ilateral relationship 3ith the states that seemed to ha(e a declining relationship 3ith the :nited States and &apan% a detail that supports ho3 the Philippines 3as rought closer to China after it 3ithdre3 its troops in Iraq ac4 in .//-+ Shortly after said e(ent% China in(ited President Arroyo for a state (isit and egan offering greater cooperation and aid+ China furthered its use of soft po3er 3ith pu lic diplomacy that enforced peaceful de(elopment+ In Malaysia and Singapore 3ere museum e9hi its to cele rate >//th anni(ersary of *heng 'e% a Chinese admiral 3ho sailed across Asia ut did not conquer the lands he set foot into+ China7s pu lic diplomacy also included hosting o(erseas scholars and creating a (ersion of the Peace Corps to send young Chinese (olunteers to 3or4 for certain pro!ects in de(eloping countries such as Laos and Burma+ China also uilt net3or4s to ring Asian usinessmen for an e(ent li4e the 8orld ,conomic )orum+ 8hen it comes to esta lishments of cultural e9changes and financial aid% China has also ecome more acti(e in the recent years+ According to a study of 1ational Defense :ni(ersity in 8ashington% in .//0% China7s aid to the Philippines 3as four times greater than America7s% China7s aid to Laos three times greater% to Indonesia nearly dou le% and to Cam odia% nearly almost matched 3ith the :S le(els+ In early 1o(em er .//>% the construction of the 1orth $ail Pro!ect in the Philippines 3as made possi le 3ith funds coming from the state-o3ned Chinese ,9port Import Credit Agency+ #he 1orth $ail pro!ect 3as created in order to fi9 the congestion in the 1inoy Aquino International Airport I1AIAJ y connecting Clar4 International Airport to the 1ational Capital $egion (ia ullet train+ :nfortunately% the pro!ect 3as interrupted 3hen it 3as found to e tainted 3ith anomalies from the Arroyo administration and also ecause the Chinese contractor% China 1ational Machinery Industry Corp ISinomachJ had sought more money+ In ./1.% the Philippine go(ernment determined that the pro!ect must continue as the need to connect Clar4 International Airport to the 1C$ has een more emphasi;ed IManila #imes% ./1.J+ 8hen as4ed a out the renegotiation process% Bayan Muna $epresentati(e 1eri Colmenares said the follo3ing statement% F#he Chinese go(ernment 3as a3are of the loated o(erpricing and other irregularities in the 1B1-*#, dealO this is 3hy it did not e(en raise a 3himper 3hen former president 5loria Macapagal-Arroyo cancelled it+ $ecently% the Chinese go(ernment immediately agreed for a renegotiation of the 1orthrail contract 3hich 3as hea(ily fa(ora le to China to the disad(antage of the Philippines+G #he disad(antage that he 3as referring to concerns the circulation of money from China+ #he state-o3ned an4 3ould lend money and contractor to the Philippines for the construction Iincluding la orJ of the pro!ect ut the country 3ould still ha(e to pay for the loan in the follo3ing years+ China 3ould later on gain more than 3hat it ga(e the Philippines for the said pro!ect+ Nurlant;ic4 further contends that China7s charm offensi(e is meant to meet the follo3ing goals" I1J to maintain peace on China7s peripheryO I.J to reduce #ai3an7s influence in Southeast Asia% also to change a regional perception of China to een seen as a positi(e% enign actor in the region% and finallyO I0J to shift influence a3ay from the :nited States of America to create its o3n sphere of influence+ 8ith said acts% China 3as a le to uild its o3n sphere of influence 3ithin the region% gaining trust and support of its neigh ors+ Chinese (alues such as non-interference% respect for

other nations7 internal affairs and economic gradualism added more appeal to China7s success story+ CHINAS CHARM OFFENSIVE AND MININ5 IN )HE PHI!IPPINES ,n(ironmental degradation descri es the erosion of the natural en(ironment through the depletion of resources% the destruction of ecosystems and the e9tinction of the plant and animal species+ It can e caused y direct and indirect human acti(ities and natural e(ents li4e earthqua4es% intense rainfall% tidal 3a(es% and (olcano eruption+ #his issue increased since the Industrial $e(olution+ #his is mainly caused y the e9traction of the natural resources% production 3aste% and pollution in their natural ha itat+ Some of the human acti(ities include mining% deforestation% fuel urning% and pollution+ I)8D 5roup Pty Ltd% ./1.J Mining is one of the most popular !o s in the rural areas that ha(e good payment for the people in that area to sur(i(e+ #hey are paid in a contractual asis that has sta le !o s for month% or for a 3hole year+ Some people thin4 that this is a good opportunity especially to those people 3ho does not 3ant to ta4e the opportunity in the ur an areas+ #he hunger for metals% a report from the Pacific Strategies and Assesments Ia political and security ris4 consultancyJ said% could partly e responsi le for China7s gro3ing role as a ma!or e9port mar4et for the Philippines+ #here are at least .> Chinese mining companies that are legally registered for operation in the Philippines+ #hey are here for the digging not !ust for gold ut also for iron% nic4el% copper% manganese% lead% ;inc% chromite and co alt+ Some of the Chinese largest gold producers ha(e esta lished here in the Philippines+ 6ne of these is the *i!in Mining group Company Ltd 3herein they ha(e signed% together 3ith the Philippine go(ernment% a Q1 illion :S dollars in gold and copper e9ploration for = years+ #his is one of the ma!or Chinese mining deals in ./11+ 'o3e(er% there has een a passage 3ay for the illegal Chinese mining companies to enter the Philippines+ #hey made it through the small-scale mining companies+ #hey ha(e intermediaries 3ho are responsi le for the tal4s et3een them and the small-scale companies+ #hey are ma4ing these small-scale mining companies as a pro9y for them to operate fully 3ith paying a lesser ta9+ ,9ample of an illegal Chinese mining company is the Prime $oc4 Mining 3herein it 3as registered under the name of Benito Salandanan of Bicol Chromite+ I6ur Correspondence% ./1.J #hese illegal Chinese mining companies may e registered as a small-scale mining usiness ut actually it is under a ig Chinese company+ Some of these companies are 6riental Synergy% Macao Kuanta% 1ihao Mineral resources% Peng Cheng Metallic resources% Prime $oc4 Mining I'ote% ./1.J and 1icua Mining Corporation+ I'ote% Part )our" )ilipino or Chinese@ ./1.J An organi;ation got a3are of this pro lem especially in the Pala3an area and campaign a no mining in Pala3an 3herein most of the natural resources e9tracted came from+ Industry sources suggest that Chinese mining firms claiming to manage small-scale (entures actually engage in largescale operations using hea(y equipment% mercury% cyanide% and (arious types of e9plosi(es to e9tract ore% contracting to national mining la3s+ In &une ./1.% the en(ironmental agency sought help from the Presidential Anti-6rgani;ed crime tas4 force and the Bureau of Customs after the Mines and 5eosciences Bureau reported a 0A percent first-quarter decline from the pre(ious year in production (alue% and from P01+-/ illion to PE+>1 illion% a shortfall of P11+?E illion IAsian Sentinel% ./1.J+

China7s mine safety record is the 3orst in the 3orld+ More than .%>// Chinese miners died in mining accidents in .//E+ 8hile China accounts for -/S of the 3orld7s glo al coal output% it accounts for A/S of mining deaths in the 3orld IBBC% ./1/J+ Inside China% safety in coal mining in China is a critical issue+ #he num er of fatalities is unaccepta ly high% particularly due to the num er of unregulated small coal mines that ha(e operated in recent years I8orld Coal 6rgani;ation% ./1.J+ Industry sources suggest that Chinese mining firms claiming to manage small-scale (entures actually engage in large-scale operations using hea(y equipment% mercury% cyanide% and (arious types of e9plosi(es to e9tract ore% contracting to national mining la3s+ #he Chinese companies thus are gaining a reputation for tramping on en(ironmental standards+ #he illegal Chinese mining companies seem to go under the PhilippinesP policies go(erning mining matters+ #here are t3o specific la3s that are (iolated y Chinese mining companies+ )irst is the Small-Scale Mining Act of 1EE1 3hich supposedly is for the enefit of the small-scale miners that only utili;e sho(els to e9tract underground resources+ A small-scale mining company can ha(e a permit directly from the local go(ernment units 3hich only cost for a out 1/%/// P'P IQ.-1J only and an additional of Q0=/ for the en(ironmental permit in the pro(incial le(el+ Second is the Philippine Mining La3 of 1EE= that states that the country7s resources should not e e9ploited for the supply of other country or for their enefit+ Many of this e9tracted resources% only 0S are eing declared in the customs 3hile the E?S are processed illegally I$odis% ./1.J+ Chinese mining companies are a le to e9port these resources 3ithout paying the right ta9es thru 3hat 3e call F ac4 door7 3herein they can ri e the local officials+ Ta/le 1: 0ist of 1Registered2 Chinese 3ining Co)panies in the 4hilippines

CHINAS =5OIN5 O<)> PO!IC7 AND I)S IMP!ICI) =MISSION> CONF<CI<S INS)I)<)E $ight after esta lishing a pilot institute in #ash4ent% :; e4istan% in &une .//-% the first Confucius Institute opened on 1o(em er .1% .//- in Seoul% South Norea+ It has its highest concentration in the :+S% &apan% and South Norea and its headquarters is in Bei!ing+ 'an anDConfucius Institute 'eadquarters% as a pu lic institution affiliated 3ith the Chinese Ministry of ,ducation% is committed to" pro(iding Chinese language and cultural teaching resources and ser(ices 3orld3ideO meeting the demands of foreign Chinese learners contri uting to the de(elopment of multiculturalism andO the uilding of a harmonious 3orld I'an an% ./10J+ #he institutes culti(ate simplified Chinese characters rather than the classic Chinese characters used in #ai3an and 'ong Nong+ Michael Churchman% a PhD scholar 3or4ing on the history of the ron;e-drum-ma4ing peoples of the Lingnan region of southern China during the Si9 Dynasties period and is a 3riter in the China 'eritage Kuarterly% argued that teaching only simplified characters 3ill hinder students 3ho also 3ant to learn classic Chinese characters IChurchman% ./11J+

PO!I)ICA! 5OA!S OF )HE CONF<CI<S INS)I)<)E According to scholars and analysts% the CI also has the goal of enhancing ChinaPs picture a road and remo(ing the notion of a FChina threatG in the conte9t of the countryPs increasingly strong economic climate and military+ Li Changchun% the =th-highest-ran4ing mem er of the Polit uro Standing Committee 2 F#he Confucius Institutes 3ere a crucial part of China7s a road propaganda set-up+ An article from #he ,conomist noted that one site% supported y the Chinese go(ernment praised the efforts of unnamed Confucius Institutes in opposing Chinese dissident groups a road+ Chinese analysts (ie3ed CIs as a part of a igger Tsoft po3er initiati(eT promoted y 'u &intao% aimed at increasing ChinaPs influence o(erseas y means of cultural and language programs+ According to an article pu lished from the American Council of )oreign $elations% China is trying to isolate #ai3an through persuading the 3orld of their peaceful intentions+ 6ther initiati(es consist of Chinese modern art e9hi itions% tele(ision pac4ages% concerts y common singers% translations of Chinese literature% and also the gro3th of state-run ne3s channels such as <inhua 1e3s Agency and China Central #C ICarlson% ./1.J+

I?* CONC!<SIONS AND RECOMMENDA)IONS &oseph S+ 1ye% &r+% argued that the future of International politics 3ill not only rest on a country7s military or economic aspects% ut rather on the attracti(eness of a country+ As China7s economy gro3s% so does its influence in the 3orld+ It has ecome such an important state that any decisions a out economic or foreign policy ha(e to ta4e China in consideration+ China7s economy garnered and 3ill continue to garner considera le admiration% as it increases glo al trade% hits many corners of the 3orld and spreads China7s traditional and pop culture+ As long as China continues to maintain their economic status in the International Community% then China7s soft po3er 3ill continue to gro3+ In this time 3e can clearly see the influence of China e(ery3here pro(ing its status as a strong nation+ China7s soft po3er% ecause of the positi(e and negati(e effects% rings the Philippines in a dilemma et3een gi(ing its confidence on China7s charm offensi(e and ha(ing reser(ations regarding the topic+ Philippines should 3eigh the pros and cons of the country7s trade relation 3ith China+ Philippines should determine ho3 3e can grasp the opportunities that lay ahead of us in terms of the country7s ilateral relation 3ith China such as the latter7s ig mar4et+ 'o3e(er% the challenges and the limitations in the Philippines7 relation 3ith China should also e considered li4e the conditions stated a o(e+ 5i(en the facts stated on this paper% the country should e careful and ta4e precautions regarding China7s Charm 6ffensi(e+ Philippines should assert its so(ereignty and its la3s a o(e all the e9ternal forces such as those concerning China7s Charm 6ffensi(e+

Refe%ences Acharya% A+ I./11% &uly 11J+ !eyond the Chinese 3onroe 5octrine+ ,ast Asia )orum+ $etrie(ed March 1A% ./10% from http"DD333+eastasiaforum+orgD./11D/?D11D eyond-the-chinesemonroe-doctrineD Am ersagen% S+ I./11J+ Realis)" 0i/eralis)" and Constructi'is) in International Relations% $etrie(ed March 1E% ./10 from http"DDam ersagen+hu pages+comDhu D$ealism-Li eralismand-Constructi(ism-in-International-$elations Ang See% #+ I1EE?J+ Chinese in the 4hilippines% (ol+ .+ pp+ 0% A-10+ Naisa Para sa Naunlaran% Inc+" Ma4ati City Arsenault% P+ I.//?J+ $etrie(ed March 10% ./10% from Academia" http"DD333+academia+eduD.-1/??DSoftUPo3erUAndU)oreignUPolicyUCharmUInUChinasU$i seU#oU5reat-Po3erUStatus Barme% 5+ I./1/J+ Strangers at 6o)e% #he 8all Street &ournal+ $etrie(ed March 10% ./10 from http"DDonline+3s!+comDarticleDSB1///1-.-/=.?-A?/->A.>/-=?=0>E0E/>>//E=1..+htmlVar ticle#a sS0Darticle Bo% L+ I.//>J+ ASEAN-China Free Trade Agree)ent: Negotiations" I)ple)entation" and 4rospect% AS,A1-China ,conomic $elations+ IS,AS Pu lishing" Singapore+ p+ = Buaron% D+$+ I./1/J+ !inondo: 3anila7s China To8n% #ourism Philippines+ $etrie(ed March 10% ./10 from http"DDtourism-philippines+comD inondo-manilas-chinato3nDBergonia% #+ I./11J+ Chinese 3ining Fir)s S9irt 46 0a8s% Inquirer 1e3s+ $etrie(ed from http"DDne3sinfo+inquirer+netD?>/=Dchinese-mining-firms-s4irt-ph-la3s Carlson% B+ I./1.J+ Confucius Institute: Education !onus or :ily Tro+an 6orse;% 5lo al Post+ $etrie(ed March 1E% ./10 from http"DD333+glo alpost+comDdispatchDne3sDregionsDasiapacificDchinaD1./>/1Dconfucius-institute China Daily+ I./1.% &une .1J+ China 5aily+ $etrie(ed March 1-% ./10% from http"DD>-+1E+1-.+11D333+china-usa+netD3p-contentDuploadsD./1.D/.Dsouth-china-seadispute+gif China La our Bulletin+ I./11J+ <$= of China7s >old 3ines iolate 5ust E)ission Safety Standards ? Sur'ey% $etrie(ed from http"DD333+cl +org+h4DenDcontentDE=-percent-china S,.SA/SEEs-gold-mines-(iolate-dust-emission-safety-standards-sur(ey Churchman% M+ I./11J+ Confucius Institutes and Controlling Chinese 0anguages% China 'eritage Kuarterly+ $etrie(ed March 1=% ./10 from http"DD333+chinaheritagequarterly+orgDarticles+php@ searchtermW/.>Uconfucius+incRissueW/.> Colin+ I./11% 6cto er .1J+ E,pat Chronicles+ $etrie(ed March 10% ./10% from http"DD333+e9patchronicles+comD./11D1/Dmonroe-doctrine-an-o(er(ie3D Dacalanio% S+ I./1.J+ Inside Ancient Relationship /et8een China and 4hilippines% Demoti9+ $etrie(ed March 1=% ./10 from http"DD333+demoti9+comDne3sD1=/=.E0Dinside-ancientrelationship- et3een-china-and-philippinesVmedia-1=/-AE0 D#I+I.//AJ+ ASEAN-China Free Trade Agree)ent -FTA.% $etrie(ed March 10% ./10 from http"DD333+dti+go(+phDdtiDinde9+php@pW>AA )o9man% S+ I./10J+ The Asian 4o8er Shift that7s 4ropping up China% Kuart;+ $etrie(ed March 1=% ./10 from http"DDq;+comD>-=1=Dthe-asian-po3er-shift-thats-propping-up-chinaD 5al(e;% D+ I./1.J+ The China Analyst% #he China Sourcing Blog+ $etrie(ed March 1E% ./10 from http"DD333+chinasourcing log+orgDregulationD

5ill% B+ I.//?J+ The Rising Star: China7s Ne8 Security 5iplo)acy% #he Broo4ings Institution" 8ashington% D+C+ 5o% &+ I.//AJ+ A !rief 6istory of Chinese in the 4hilippines% Bou#u e+ XCideo )ileY+ $etrie(ed March 1=% ./10 from http"DD333+youtu e+comD3atch@(W0aP)ais)C8'olmes% &+ I./1.% &une ..J+ China@s 3onroe 5octrine+ $etrie(ed March 1-% ./10% from #he Diplomat" http"DDthediplomat+comD./1.D/>D..Dchinas-monroe-doctrineD.D 1ational Bureau of Statistics of China+ I.//=J+ Rising ASEAN isitors to China% AS,A1-China ,conomic $elations" Mo(ing #o3ards Ser(ices+ Chang Chiou Bi+ p+ 1=A 1ational Statistics 6ffice+ I./1.J+ $etrie(ed from http"DD333+census+go(+phDsitesDdefaultDfilesDattachmentsDitsdDtradeDi1.1.ta =+pdf Pacific Strategies and Assessments+ I.//EJ+ China7s 3ining Accupation of the 4hilippines% $etrie(ed from http"DD333+psagroup+comDinde9+phpDchinas-mining-occupation-of-thephilippinesD Pastrana% D+ I.//AJ+ BTE-N!N Scandal Triggers 4olitical Crisis in the 4hilippines% 8orld Socialist 8e site+ $etrie(ed March 1=% ./10 from http"DD333+3s3s+orgDenDarticlesD.//AD/0Dphil-m/?+html $odis% $+ I./1.J+ China7s 3ining Accupation of the 4hilippines% Inquirer 5lo al 1ation+ $etrie(ed from http"DDglo alnation+inquirer+netD=E0?EDchinas-mining-occupation-of-thephilippines Sa rina% A+ I./10% March .1J+ International !usiness Ti)es+ $etrie(ed March 1A% ./10% from China-Philippines #erritorial Standoff Leads #o Clampdo3n on #radeO ,conomic Sanctions Li4ely" http"DD333+i times+comDchina-philippines-territorial-standoff-leadsclampdo3n-trade-economic-sanctions-li4ely->EA.1= Sil(erio% I+ A+ I./11J+ !ayan 3una tells ACuino to Slo8 5o8n on 4lans to Forge Ne8 5eals 8ith China% 5lo al Balita+ March 1=% ./10 from http"DDglo al alita+comD./11D/ED1/D ayanmuna-tells-aquino-to-slo3-do3n-on-plans-to-forge-ne3-deals-3ith-chinaD S;c;udli4-#atar% &+ I./11J+ Soft 4o8er in China7s Foreign 4olicy +#he Polish Kuarterly of International Affairs+ 8ars;a3a" Centrum Poligrafii Sp+ ; o+o+% ul+ Zopus;a[s4a =0% /.-.0. #he ,conomist+ I./1/J+ The China-ASEAN Free Trade Agree)ent: A+ar for !usiness% $etrie(ed March 1?% ./10 from http"DD333+economist+comDnodeD1=.11>A. :ni(ersal Access to Competiti(eness and #rade+In+dJ% ASEAN-China FTA 4ri)er% XPD) fileY+ $etrie(ed March 1?% ./10 from http"DD333+phile9port+phD arterfli-phile9port-fileportletDdo3nloadDpolicyUmar4etde(D)#AUregionalUfreeUtradeDaseanchinaprimer+pdf 8orld Coal Association+ In+dJ+ Safety Issues% $etrie(e from http"DD333+3orldcoal+orgDcoalsocietyDsafety-issuesD In+aJ+ I./10J+ Introduction to Confucius Institute% 'anBan+ $etrie(ed March 1E% ./10 from http"DD333+han an+comDintroductionDconfucius-instituteDintroduction-confuciusinstitute+html

ANNE? I !a+s Vi#lated &( Chinese Mining C# panies P%esidential Dec%ee N#* @3" in 1E?- for fishing and fisheries+ I8ith the amendment in 1E?=J FSection &&% Illegal fishing* illegal possession of e,plosi'es intended for illegal fishing dealing in illegally caught fish or fisheryDaCuatic products% It shall /e unla8ful for any person to catch" ta9e or gather or cause to /e caught" ta9en or gathered fish or fisheryDaCuatic products in the 4hilippine 8aters 8ith the use of e,plosi'es" o/no,ious or poisonous su/stance" or /y the use of electricity as defined in paragraphs -1." -). and -d." respecti'ely" of Sec% & hereof: 4ro'ided" That )ere possession of such e,plosi'es 8ith intent to use the sa)e for illegal fishing as herein defined shall /e punisha/le as hereinafter pro'ided: 4ro'ided" That the Secretary )ay" upon reco))endation of the 5irector and su/+ect to such safeguards and conditions he dee)s necessary" allo8 for research" educational or scientific purposes only" the use of e,plosi'es" o/no,ious or poisonous su/stance or electricity to catch" ta9e or gather fish or fisheryDaCuatic products in specified area: 4ro'ided" further" That the use of che)icals to eradicate predators in fishponds in accordance 8ith accepted scientific fishery practices 8ithout causing deleterious effects in neigh/oring 8aters shall not /e construed as the use of o/no,ious or poisonous su/stance 8ithin the )eaning of this section: 4ro'ided" finally" That the use of )echanical /o)/s for 9illing 8hales" crocodiles" shar9s or other large dangerous fishes" )ay /e allo8ed" su/+ect to the appro'al of the Secretary%E IPresidential Decree 1o+ ?/-" re(ising and Consolidating all la3s and decrees affecting fishing and fisheriesJ #he penalty is the follo3ing" 1-1. !y the penalty of i)prison)ent ranging fro) t8el'e -12. years to t8enty-fi'e -2$. years in the case of )ere possession of e,plosi'es intended for illegal fishing* /y i)prison)ent ranging fro) t8enty -2#. years to life i)prison)ent" if the e,plosi'e is actually used: 4ro'ided" That if the use of the e,plosi'e results in 1. physical in+ury to any person" the penalty shall /e i)prison)ent ranging fro) t8enty-fi'e -2$. years to life i)prison)ent" or 2. in the loss of hu)an life" then the penalty shall /e life i)prison)ent to death%2 IAmendments on Presidential Decree 1o+ ?/-J

8ith the amendment in 1EA1 F:6EREAS" despite the pro)ulgation of 45 No% 1#$F a)ending 45 No% G#H /y increasing the penalties for certain for)s of illegal fishing and dealing in illegally caught fish or fishery aCuatic products and pro'iding that the )ere possession of such e,plosi'es 8ith intent to use the sa)e in illegal fishing punisha/le" it appears that illegal fishing is still ra)pant* :6EREAS" so)e fiscals are hesitant and reluctant to file illegal fishing cases against the 'iolators of the fishery la8s" rules and regulations /ecause of the pro'ision in the last paragraph of Section &F of 45 No% G#H 8hich states that action on any 'iolation )entioned in Chapter I thereof shall /e ta9en if the 3inister so decides* and :6EREAS" to effecti'ely and successfully prosecute" illegal fishing cases" it /eco)es i)perati'e to further a)end 45 No% G#H /y deleting the afore)entioned constraint*G