Philippines: Arbitration Results Will Not Affect China'S Textile Export Pattern

The arbitration tribunal of the Philippines Nanhai arbitration court made the final ruling of illegal invalidation in July 12th.

In response, China has repeatedly stated that the Republic of the Philippines Aquino III government unilaterally referred to arbitration contrary to international law, and the arbitration tribunal has no jurisdiction. China does not accept it or does not recognize it.

10 of the association of Southeast Asian nations, Philippines

Exports are most dependent on the US market. Exports to the United States account for about 80% of Philippines's clothing exports.

According to data released by the US Commerce Department, foreign trade imports dropped by 34.1% in the first quarter of 2015, down 17.5% from the previous quarter.

Personal consumption expenditure, which accounts for 2/3 of the US gross domestic product (GDP), dropped by 0.1% in April, the second consecutive month of decline in US consumer spending.

What is the status of Philippines's textile and garment industry?

Compared with other ASEAN countries, Philippines's clothing exports are most dependent on the United States.

Exports to the United States account for about 80% of Philippines's clothing exports.

According to WTA statistics, in 2008, Philippines exported $1 billion 340 million of global clothing, down 11.3%, accounting for Philippines goods.

2.7% of total exports.

Among them, US exports to US $1 billion 60 million, down 11.1%; exports to the European Union 88 million US dollars, down 9.8%, accounting for only 6.5% of the total, ranking second; the United Arab Emirates is the third largest market, with a share of 4.2%, a higher export growth rate of 50.4%, and the above three large market share has accounted for 90% of Philippines's clothing exports.

In the 90s of last century, the clothing industry was once one of the important industries in Philippines, with 1 million employees. But after the textile integration agreement, Philippines could not compete with other countries in China, South Asia and Southeast Asia because of its lack of labor price advantage, and lost large orders. The garment manufacturing industry was gradually shrinking. At present, there are only 200 thousand workers in the Philippines garment industry, and the share in the clothing import market of the United States has been gradually surpassed by Vietnam, Kampuchea, Thailand, Pakistan and Sri Lanka.

In August 2008, the US government promulgated the Consumer Goods Safety Improvement Act 2008, setting new safety standards and more stringent regulatory measures for children's products.

The Philippines exporters union regards the bill as a good news, because about 40% of the children's clothing in the US market comes from Philippines, and the children's garments exported to the United States must be subject to third party inspection and certification after the request of the bill. This measure will increase the extra inspection cost to the exporters, and will also make the children's garments in Philippines more competitive than those exported to China.

The government of Philippines will offer tax incentives and a tax exemption policy for imported textile equipment for this purpose, hoping to attract more investors.

In addition, Philippines garment enterprises will also turn their eyes to Japan, because the economic partnership agreement (JPEPA) adopted by Philippines and Japan in the fourth quarter of 2008 will benefit both sides.

According to the statistics obtained by the customs, the total import and export volume of textiles and clothing reached US $110 billion 172 million in 1-5 months in 2016. Compared with the same period last year, the total import and export volume of textiles and clothing in China decreased by 2.84%. The import and export volume of textiles and clothing in Asia reached 55 billion 163 million US dollars, down 0.82% compared with the same period last year, reaching 15 billion 699 million US dollars for ASEAN textile and clothing imports and exports, an increase of 0.04% compared with the same period last year.

How is the export of textiles and clothing in Philippines?

In the past two years, the number of garments exported to Philippines has dropped sharply. From the amount, it has dropped to fifteenth place from the eleventh largest importing countries of American clothing last year, accounting for 1.9%.

According to statistics from the US office of textiles and clothing, in 2008, the United States imported 1 billion 360 million dollars and 390 million square meters of clothing from Philippines, and the amount and quantity decreased by 20.9% and 15.6% respectively.

Philippines's main clothing products exported to the United States are mainly made of cotton and chemical fiber shirts and trousers, which account for 57.9% of the total clothing imported from the United States. However, the share of Philippines's import market in Philippines is not high. The highest is the 638/9 class knitted shirts made of chemical fiber, and the share of the amount and quantity is only 2.8% and 2.5%.

The countries and regions that ranked the top three countries of import and export amount are the United States, Japan and Hongkong respectively. In 1-5 months, China's textile and clothing imports and exports totaled 16 billion 230 million US dollars, down 3.2% compared with the same period last year, and exported 8 billion 762 million US dollars to Japan, down 5.83% compared with the same period last year, reaching 5 billion 877 million US dollars for Hongkong's import and export volume.

What's the impact on China's textile and clothing exports?

In the past few years, only Southeast Asia's major garment producing countries have been declining in Philippines.

In 2008, the European Union imported garments from Philippines for 230 million US dollars, down 16.2%, accounting for 0.25% of the EU's imports from the EU.

Take the six categories of clothing products that were monitored by the EU in 2008, for example, the six categories of products exported to Philippines in 2008 all showed a downward trend. Moreover, the proportion of the 31 categories of bra was 1.4%, and the remaining five categories were less than 0.5%, which is far from our country.

In terms of textile and clothing trade, Philippines's "bulk" is not big, and it will not affect China's textile and garment export pattern in the short term.

From Philippines's gross domestic product (GDP) and industrial production index and other economic indicators, it also fully shows that Philippines's prospects for local economic development are slim.

According to the Philippines social survey station "social weather station" in March 3rd March 2016 2 -4 survey, the first quarter of 2016, Philippines's unemployment rate was 23.9%, the highest in the past three years.

The main reason is that the Aquino III government did not effectively attract foreign investment to create employment.

Compared with other ASEAN neighbors, Philippines is far from attracting foreign investment.

In 2015, Philippines attracted foreign investment at $5 billion 724 million, down from 2014.

On the contrary, Malaysia attracted foreign investment in 2015 for us $10 billion 960 million, Vietnam for us $11 billion 800 million, Indonesia for us $19 billion 213 million and Singapore for us $65 billion 328 million.

China's investment in ASEAN countries is a major upward force.

The economic circles also believe that the Aquino III government unilaterally referred to arbitration in violation of international law, but also concealed the reality that we want to cover up the domestic economic downturn.

Earlier, the Research Institute of Asian Development Bank (ADBI) in Tokyo issued a research report which pointed out that if China's economy slowed to 6.2% from 2016 to 2020, Philippines's GDP would drop by about 0.47%.

In addition to GDP growth, ADBI also believes that Philippines's export earnings, import payments and the proportion of total trade in GDP will also be affected by the slowdown in China's economy.

Philippines's export trade will drop by 0.75% from 2016 to 2020, and import trade will grow by 0.45%.

The report believes that the slowdown of China's economy will inhibit the export growth of Philippines, China, Taiwan and Hongkong, and reflect China's core position in the industrial chain of textile, clothing and electronic products in the region.