From galleon trade to the 21st Century Maritime Silk Road

“In Manila, on Luzon, the sound of bells echoes from the great churches in the center of the city, south of the swamps along the Pasig River, and from the more modest ones in the Chinese Christian suburbs north of the river. Junks have begun to arrive from the ports of China.”

This was a scene depicted in 1688: A Global History written by British historian John E. Wills Jr. It had been 123 years since the first galleon made its voyage from Luzon Islands across the Pacific Ocean to the Port of Acapulco in Mexico in 1565. At that time, the Philippines was the regional center of international trade. Every June, famous big sailing ships went northwards from Manila before the southwest monsoon, moving eastwards along Kuroshio in the northern Pacific Ocean until their arrival in the Port of Acapulco. It would take 6 months or so for travelling more than 10,000 miles. For its return trip of direct route along ocean current, it would only take 3 months to arrive in Manila. A large amount of commodities like silk, porcelain, lacquer, cotton cloth, ivory, blanket and tea from China, India, Persia, and Japan were transported from Manila to Acapulco, and then were sold in Spanish colonies in Mexico and Central and South America. After that those commodities were resold in Spain itself. On the return trip, Spanish silver dollars, copper, cocoa and so on were brought back and sold in China. Almost half of silver dollars in trade would flow back into China.

Based on trade with China and involving voyages via the Philippines, galleon trade was monopolized by Spain for more than two and a half centuries, which created a trade miracle on the sea. In 1815, galleon trade was phased out after the Spanish king issued an imperial edict to abolish galleon trade due to the impact of independent movements in Latin America and free trade in Britain and America. During the time of galleon trade, every year thousands of Chinese ships, loaded with China-made silk, porcelain and other consumer goods, set off for Manila from Macao and the Yue Port in Zhangzhou. And then these galleons would make their oceangoing voyages to Mexico by following the Maritime Silk Road. After arrival at the harbor, about 75,000 donkeys would send these Chinese commodities to some areas in Mexico and Latin America. The silver dollars from Mexico and Latin America would continuously flow back to China, which actually was a convection current of “silver and silk” across the Pacific Ocean. Over two hundred years, Chinese commodities and emigrants on the galleons were arriving in Latin America across the Pacific Ocean via the Philippines. Those local special crops in Latin America like maize, sweet potato, tomato, pumpkin, and chili were brought back to China. They grew and bore fruit in China, gradually becoming the staple food for the Chinese people. During this period, the two sea routes – the eastern Pacific route of galleon trade and the traditional Maritime Silk Road which passed by Quanzhou, Southeast Asia, the Indian Ocean, the Persian Gulf and the Arabic sea – joined in the Philippines and in the South China Sea. Regular and lasting connections across the Pacific Ocean were set up among the four continents of Asia, Africa, Europe and America, making possible the exchange of capital, commodities and talents and communication between cultures on a global scale, and achieving interconnection in a true sense.

As time went on, galleon trade declined and disappeared in the end, but trade and cultural exchange among China, the Philippines and Latin America have never stopped. The Philippines has maintained close cooperation with China. According to statistics from the Chinese side, as the second largest long-term trading partner and largest import origin of the Philippines, China had a total trade volume of USD 47.21 billion with the Philippines in 2016, 13 times of the figure of USD 3.57 billion upon China’s entry into the WTO in 2001. The two countries’ two-way investment amounts to nearly USD 50 billion. There are as many as 159 round-trip flights between China and the Philippines every week. In 2016 alone, a total of 680,000 Chinese tourists traveled to the Philippines, representing a sharp annual increase of 38%. China has become the third largest origin of foreign tourists to the Philippines. The projects with typical China-made features such as power plants, highways and water conservancy facilities could be spotted all over Luzon, Visayas and Mindanao. Some fast-food chains like Hong Zhuangyuan and Yonghe King purchased by Jollibee Corporation can be seen everywhere in China. SM shopping malls have settled in Xiamen, Chengdu, and Tianjin, and the brand of Oishi has been widely known in China. China-made smartphones, HDTVs and locomotives have gradually entered the market of the Philippines.

Ever since last October when President Xi Jinping and President Rodrigo Duterte made the strategic decision to bring China-Philippines relations back to the track of friendship and good neighborliness, the two countries have been more closely-related. Institutional collaboration in the fields of economy, trade, agriculture and so on has fully recovered. Two-way trade has grown more and more rapidly. In the first quarter of this year, China became the largest trading partner of the Philippines. The amount of tropical fruits imported from the Philippines shot up in China, with a year-on-year increase of 200 percent in papaya, 100 percent in pineapple and 50 percent in banana. Investing in the Philippines is becoming a hot trend among Chinese enterprises. The number of Chinese tourists to the Philippines continues to increase. In early March of this year, Chinese Minister of Commerce Zhong Shan took the Philippines as the first country for his official visit after assuming the post. The 28th Conference of the Joint Committee on Sino-Philippine Economic and Trade Relations was successfully held in Manila, restarting the bilateral institutional collaboration in trade and economy which had been suspended for six years. The two sides reached an extensive consensus on such issues as the connection between the “Belt and Road” Initiative and “Vision 2040,” and the establishment of a Chinese industrial park in the Philippines. In the middle of March this year, Chinese Vice Premier Wang Yang paid an official visit to the Philippines and signed a 6-year developmental plan for Chinese-Philippines cooperation in trade and economy, giving another strong boost to  Chinese-Philippines relations in terms of investment, infrastructure, agriculture and tourism.

At present, the “Belt and Road” Initiative which was originally put forward by China and shared by the entire world is being updated from Version 1.0 to Version 2.0. It is no longer confined to the “Belt” and “Road” regions, but seeks to establish a more expansive global platform for development. As an important hub along the “21st Century Maritime Silk Road,” the Philippines holds a strategic position. On one hand, China and the Philippines are connected in geography and closely-related in economy, so we should well cooperate with each other and set an example for other countries along the 21st Century Maritime Silk Road in such aspects as exchange of policies, connection of facilities, promotion of trade, free flow of capital and communication of talents. On the other hand, China can be the model and key point for the Philippines through full recovery of trade and culture exchange among China, the Philippines and Latin America. The initiative of the “21st Century Maritime Silk Road” of Version 2.0 should be introduced to Latin America, which corresponds to that of Version 1.0 in the oriental areas along the Maritime Silk Road. It really shapes the global opening pattern and realizes the communication and connection between all parts of the world.

On May 9th 2017, before attending the Belt and Road Forum for International Cooperation in Beijing, President Duterte said in an interview that the “Belt and Road” Initiative highly matches with the infrastructure development planning of the Philippine government and thus there is big room for the two countries to cooperate with each other. He believed that this initiative would broaden the trade and economic cooperation between China and the Philippines and benefit the two peoples. Due to this, the two countries should grasp the historical opportunities brought about by the “Belt and Road” Initiative of Version 2.0, strengthen direct investment, international industrial capacity cooperation, infrastructure connectivity, consociation of emerging high-tech industries, update trade relations from complementation to symbiosis, and strengthen cooperation in politics, culture, and so on. The South China Sea that separates China from the Philippines should become a “bridge” of friendship and cooperation between them, and the glory of galleon trade would be regained.

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(Jin Yuan is the Economic and Commercial Counselor of the Embassy of the People’s Republic of China.)