Understanding Philippines’ Trading Allies: Can China hold the Philippine Economy Hostage?
This is our first mini-project for our Data Mining and Wrangling class. This was created alongside Kevin Delgado, Tsoy Hipolito, Julia Las, and Leonard Limkaichong. We were tasked to wrangle numerous MS Excel files and perform exploratory data analysis.
Executive Summary
Globalization is one of the means so that a country can achieve a certain level of sustainability especially that not all resources (products or goods) are available or even accessible within its jurisdiction. Smaller nations tend to be trade-dependent compared to larger ones. Being a developing country, the Philippines relies heavily on imports for certain goods and products. By looking into the imports data of the Bureau of Customs, we now have an overview of Philippine importation data, and what types of goods are mostly imported. This study aims to understand the extent of trade the Philippines conducts with other countries and to what extent does China dominates.
In this study, import data from the Bureau of Customs covering President Rodrigo Duterte’s term from July 2016 to April 2020 (which was the latest data at the time of writing) was explored. This is not necessarily an assessment of his trade policies but was only chosen to maintain homogeneity in relation to the type of administration.
Figure 1. Importation Network Reach of the Philippines.
In the current administration alone, above 200 countries across all continents have exported goods in the Philippines. Given this number, it appears that the Philippines is very connected with the world trade-wise.
During this period, the Philippines has traded with over 200 countries, with the highest in terms of value of goods being China, Japan, South Korea and the United States of America. Machinery and electrical products are the most imported items where 41% of which comes from just China and Japan. Across different categories, China remains to be in the top 5 while obtaining the top position in 11 out of the 15 product categories.
Figure 2. Map showing export of countries to the Philippines by frequency of transactions and total amount of goods imported.
It may seem that the Philippines is importing across all countries but Figure 2 shows the disparity between the contributions of each country in terms of number of transactions and value they bring in the country. The customs value in pesos, which can also be explained by the magnitude and frequency of the transactions of the Philippines with other countries, varies per country. It can be inferred from this that China contributes the largest, followed by Japan, then by the United States and Singapore which have comparable values.
Evidenced by this study, China is clearly the biggest exporter to the Philippines. This allows China to have a strong influence on the Philippine economy. This causes the Philippines to grow dependent to China, it might not affect the Philippine’s economy in the short term, however it has affected the Philippines from a political perspective in the present and will continue to in the future. A strong trade relationship with the said country may be good for our country due to the abundance of products China has, but given the current situation in the world, this might cause weakening of our relationships with other countries and even sever ties with others. Thus, it is imminent that the Philippines balances this out through enhancement of trade relationships by means of diversification.
Our ASEAN neighbors such as Vietnam, Thailand, Indonesia, Singapore are countries where the Philippines could potentially increase imports from to increase diversity, given we already have good trade relationships with them based on our analyses.