By Philip M. Lustre Jr.
DEALING with China is dealing with a rogue state.
This appears to be the main lesson Italy has learned
when it has opened its economy to China. Worst, Italy is one of the most
ravaged country by the novel coronavirus pandemic.
The troubles arising from Italy-China relations offer
a cautionary tale for the Philippines, which like Italy, has opened its economy
to China’s entry. The Philippine political leadership, led by the foul-mouthed Rodrigo
Duterte has opened major sectors – telecommunications, energy, tourism,
and key infrastructures to Chinese entry and control.
This is not to mention the entry of so-called Philippine
offshore gaming operators, POGOs, mostly, if not all, Chinese firms that
provide online gaming operations to specific markets, particularly China. The
presence of tens of thousands of Chinese POGO workers has been a major irritant
to many Filipinos mainly because of their unhealthy, or unsanitary, ways.
Italy-China relations offer many lessons. Press reports said a year after Italy signed
up to China’s global investment program, the Belt and Road initiative, relations
between Rome and Peking have started to deteriorate rather than strengthen.
The much awaited economic benefits for Italy have yet
to materialize, as its trade deficit with China has widened in 2019. The Covid-19
pandemic did not alleviate the situation, as Italy had moved to stop all
flights to China over worries about the dreaded virus.
Alongside stalled investments, trade benefits did not
add up for Italy. Italian exports to China showed a decline of one percentage
point in 2019, even as overall foreign sales rose, according to preliminary figures
released by statistics agency Istat in January. With Chinese imports growing,
Italy’s total trade deficit with China climbed to €18.7 billion ($20 billion).
Tensions related to the virus “will blow over once Covid
disappears,” said Jan Weidenfeld of the Mercator Institute for China Studies in
Berlin. “But those fundamental issues of reassessment of what’s doing business
with China means, that is here to stay.”
Italian author Giacomino Nicolazzo recounted the way ex-
Prime Minister Matteo Renzi’s government has allowed China to get away with
purchases and acquisitions in violation of Italian laws and European Union trade
agreements with the United States and the United Kingdom.
“In 2014, China infused the Italian economy with €5
billion through purchases of companies costing less than €100 million each. By the time
Renzi left office (in disgrace) in 2016, Chinese acquisitions had exceeded €52 billion,” said
Nicolazzo.
When the dust settled, China owned more than 300
companies representing 27 percent of the major Italian firms. Nicolazzo said
the Bank of China now owns five major banks in Italy, all of which had been
secretly and illegally propped up by Renzi using pilfered pension funds. He claimed
soon after, the China Milan Equity Exchange was opened and much of Italy’s wealth was being funneled
back to the Chinese mainland.
Chinese state entities own Italy’s major
telecommunication corporation (Telecom Italia) as well as its major utilities (ENI and ENEL) and national
power grid. “Throughout all of these purchases and acquisitions, Renzi’s government
afforded the Chinese unrestricted and unfettered access to Italy and its
financial markets, many coming through without customs inspections,” said
Nicolazzo.
“Quite literally, tens of thousands of Chinese came
in illegally through Milan and went back home carrying money, technology and
corporate secrets. Thousands more were allowed to enter and disappeared into
shadows of Milan and other manufacturing cities of Lombardy, only to surface in
illegal sewing shops, producing knock-off designer clothes and slapping ‘Made
In Italy’ labels on them -- all with the tacit approval of the Renzi
government.”
“This should hopefully be a warning to the world that
while we work to rid ourselves of the virus, we should just as vehemently endeavor to rid
ourselves of any government that circumvents the Constitution and ignores the laws of
the land,” stressed Nicolazzo.
The Philippines has been following in Italy in its
unabashed foreign policy pivot to favor China. Since Duterte’s election in
2016, China’s presence has been quite noticeable.
Encroachment into the country is highlighted by published
reports that 3,000 members of the Chinese People’s Liberation Army (PLA) have
entered the country either tourists or
workers in POGO firms. Sen. Panfilo
Lacson, chair of the Senate committee on national defense and security, said he
had received what could be considered an unverified information from a source
that 2,000 to 3,000 PLA personnel are in the country on “immersion missions”
and other unknown purposes.
“If true, we have every reason to be concerned
because of the circumstances surrounding the West Philippine Sea, not to mention the unusually
high number of Chinese influx and the unexplainable amount of monies flowing into the
country from [the] Chinese…” said Lacson.
The PLA report comes at the heels of security fears
hounding the Philippines’ power and telecommunications sectors, due to China’s control
over the national grid and the entry of the third major telecommunications firm.
Legislative probes have already been conducted into national
security threats resulting from Chinese ownership and control of the Philippines’
power grid, given that the State Grid Corporation of China is the single biggest equity
holder in the National Grid Corporation of the Philippines (NGCP) at 40%.
In the telecommunications sector, the Philippine
military is opening up its bases and camps to Chinese government presence by
allowing Dito Telecommunity to build facilities in military camps and installations.
Dito is a consortium of Filipino businessman Dennis Uy’s holdings firm Udenna Corporation
with a 35% stake, his listed company Chelsea Logistics, 25%, and the Chinese government-owned
and -controlled China Telecom, 40%.
According to Sen. Francis Pangilinan, an assessment
from the Armed Forces of the Philippines (AFP) on the move to allow Dito Telecommunity to put
up its towers in military camps warned of the possibility of eavesdropping by the
China-linked telecommunications firm.
With anti-China sentiment rising in the Philippines,
the Duterte government can learn from the experiences of its European
counterpart. Italy’s former deputy prime minister and opposition leader Matteo
Salvini warned that “trade agreements, friendship and cultural relations are
fine, but handing over the keys of our home to Chinese companies, which depend
on the state -- no.”
German Foreign Minister Heiko Maas cautioned that if
some countries “think they can do clever deals with the Chinese, they will come down to
earth with a bump.” #
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