Xi’s threat was unmistakable.

This was Xi’s message: “We’re friends as long as you accept the
fact that the South China Sea is ours, all of it including the portion you call the West Philippine
Sea. As long as you accept this, we will provide you with generous loans to fund your
infrastructure projects. But if you drill for oil there, we will declare war on you.”

Economic Impact

It is plain and simple that we have more to lose than we have to gain, if we fight China on the
Scarborough issue in terms of economy. China is the bigger economy and can withstand any
trade sanctions we throw. And based on experiences of other countries which had previous
squabbles with China, the fight quickly went from political to economic. This is what we are
trying to avoid, because when China retaliates in the economic front, the Filipino people will
instantly feel its repercussions. Based on history, when the United States increased tariff rates
on Chinese steel and aluminum, China retaliated. When South Korean installed a missile
defense system under opposition of the Chinese Government, China retailed by boycotting
products from South Korea’s biggest conglomerates Hyundai and Kia. And the Philippines will
definitely not be an exception.

 In terms of trade, China was our 2nd biggest trading partner with up to 18 billion USD
worth of goods being bought and sold between the countries.
 In terms business holdings, China holds 40% of our National Grip Corporation, the entity
which controls the supply of electric power throughout the country. China also holds
significant investments in the Mining and Shipping industries, all of which are vital
industries to national development.
 In tourism, Chinese tourists are the top second visitors according to Dept. of Tourism,
and are seen spending an average 27 Billion Pesos PER MONTH. That translates to 27
billion pesos monthly income to average Filipino business as well as taxes to the
Government. Tourism is a major source of income for the Philippines.
 Our agricultural, electronics, and plastics industries are also dependent on China,
whether for sales, or for raw materials.

Our reliance on China in the economic front is evident, both in terms on exports and imports,
and in the influence they have on vital industries due to their significant investments in certain
Philippine businesses. Assuming arguendo, that we are able to compel the executive branch to
enforce the favorable Scarborough judgment against China, it is unclear what benefits we derive
from being able to free explore in these contested islands and rock formations. While the
potential of these islands are undisputed, it is doubtful whether we even have the capability to
exploit and take advantage of the resources of Scarborough. The setbacks of enforcing the
judgments however, are very clear. China will retaliate no doubt. And all those industries which
they have significant influences will suffer, all of which are important to the average Filipino.

The trade off is clear. Winning a group of island that we may not know what to do with, is not
worth losing billions of pesos worth of trade we have with China. We must not focus too much in
trying to win the battle in distant seas, only to lose the war at home.