Belt/Road

Anyone who watched the Heroes Day ceremonies at the Libingan ng mga Bayani would not have missed the distinct camaraderie between President Rodrigo Duterte and the Chinese ambassador to Manila. That warm camaraderie was magnified by the glaring absence of the US ambassador during that event.

Clearly, the Duterte administration has taken a more holistic view of Philippine-China relations. It is a view that looks beyond the intractable overlapping claims over barren reefs in the South China Sea.

Instead of ranting and rattling sabers, as the previous administration did, the new administration is taking a more mature stock of the state of our bilateral relationship with the second largest economy in the world. Like all the other ASEAN nations, Manila understands war is an unwinnable option and a wide array of economic partnerships beckons if we manage our relations well.

As far as geopolitics is concerned, the first realization is that one cannot choose neighbors.

One Mexican leader was so memorably quoted: Poor Mexico, so far from God and so close to the United States. We might make the same complaint about our proximity to China. Our most pragmatic option, however, is to make that proximity a blessing instead of a curse.

For the next hundred years, our relationship with China will continue to be difficult. But that does not mean it will be unproductive.

A few days ago, one of China’s top economists, Professor Zhang Yuyan, spoke on “The Role of China in Global Affairs.” In that lecture, it was clear that the centerpiece of China’s economic strategy is building what is now called the New Silk Road.

The old Silk Road was the ancient trading route that linked imperial China all the way to what we now call the Middle East. That was the route that took Marco Polo from Italy to the cities of the Middle Kingdom. The old Silk Road, even during Marco Polo’s time, extended to the sea routes. The Italian adventurer exited imperial China through the South China Sea trading routes.

Today, China is investing much in building a New Silk Road. This is the reason Beijing is spending billions of dollars in foreign aid to help build roads and rail lines in South and Southeast Asia. At the Chinese capital, they refer to this as the Belt and Road project.

In 2015, bilateral trade between China and other countries along the Belt and Road totaled $995.5 billion, accounting for a quarter of China’s total trade. China’s expanded Belt and Road trading framework includes 50 “economic cooperation areas” (to use Beijing’s term for bilateral partnerships).

Last year, Chinese companies made direct investments in 29 countries along the Belt and Road amounting to $14.82 billion. That represents a hefty increase over the preceding year.

The New Silk Road is an ambitious and massive project that will redefine the logistical dynamics of global trade over the next decades. We should not wander too far away from it.

Audit

Rep. Robert Ace Barbers called on the Department of Energy (DOE) to conduct a no-nonsense audit of the country’s power generation plants. The purpose of this audit is to clearly determine current installed and dependable capacities.

Last month, several yellow and red alerts were issued due to unscheduled outages of several old power plants. These outages make our power supply precarious. They likewise tend to push up generation charges and the average cost of power.

Official estimates of our power supply are based on the rated capacities of existing plants – although many of them are ageing and inefficient. Many of them are down too many times. These estimates alone should not be the basis for estimating the new capacities we will need over the next decade or so, as our economy moves onto a higher growth plane.

Many of our old power plants supply expensive power. They cry out to be decommissioned. But they are maintained, despite the costs, because our power reserves are thin.

It is not easy to install new capacity in this country. According to Energy Secretary Alfonso Cusi, a total of 122 signatures are required before an investment in new power sources gets the green light. After that, it might take over four years before a new plant actually begins generating electricity.

If the bureaucratic requirements are not tough enough, there are environmental policies to deal with. The current DENR secretary, for instance, frowns upon the use of coal to generate power.

Fully 45 percent of our available (and dependable) power supply is generated using coal. Natural gas (whose supply is uncertain) accounts for 23 percent. Geothermal, hydro and other renewable resources contribute 25 percent.

Green energy is good. No question about that. But it is also unreliable. We need a more robust base load generating capacity if our economy could support industrialization.

Players in the energy sector are asking the Duterte administration to make explicit its energy-mix policy. That will enable potential investors to properly calculate their business risk. We need to accomplish two things simultaneously: ensure energy security and bring down the average cost of power to be at par with the rest of the region.

Earlier this week, Energy secretary Al Cusi raised the possibility of reactivating the Bataan Nuclear Power Plant. By just raising that possibility, Cusi appears to be signaling that our power reserves have become too thin for comfort.

The costs, to be sure, remain uncomfortably high. There is urgency in making our energy strategy explicit and in building public consensus behind it.