The fog of the US-China trade war

Wars are often nasty and harsh. The Great War, the Cold War, the Second World War, the Battle of Winterfell, the Drug War – I don’t think there’s an exception. 

Perhaps only a war between lovers could be good, and only because of the kiss and make up that comes after. 

In real life, however, wars are all the same – ruthless and grim. Nations lose, people suffer, and neighboring countries are affected.

The US-China trade war is no different and there’s reason to worry the Philippines will be caught in the fog of war, if we aren’t already there yet. 

If President Trump isn’t bluffing and proceeds with a threat to raise tariffs on all of China exports to the US, $200 billion worth of Chinese goods will be caught in a bind and the world’s second largest economy will experience a slowdown.

The Philippines, which relies heavily on exports, will be severely affected.

Our latest trade data already showed that exports from the Philippines declined for a fifth consecutive month in March, no thanks to a fall in shipments of electronics. 

Exports dropped to $5.88 billion, down 2.5 percent and deeper than February’s 0.9 percent decline. Exports to the US contracted by 3.1 percent, while exports to China fell 2.2 percent.

 I asked my favorite economist Jun Neri of BPI about this and he said there are even more reasons to fear, stressing that the trade war can drag emerging markets. 

In the long run, everybody loses if China’s economy is dragged down by an escalation of the trade war, he warned.

A mere slowdown in China’s economy can be disastrous. 

For one, he said, the risk of a currency market overreaction to a China slowdown is pretty high, and economies whose foreign reserves are smaller than imports and external debt and those vulnerable to higher oil prices are likely to be hit the hardest.

What to do then?

He agrees with my push that there is a need to rebuild the country’s international reserves. 

It’s been going up, but rebuilding the dollar reserves back to a 100 percent cover is better, he said. 

“The credit rating upgrade, combined with the attractiveness of the Bangko Sentral’s 4.75 percent policy rate to portfolio investors, gives the BSP enough space to bring our GIR to a new record high of $100 billion,” he said.

I agree and he is right in saying that it is better to overdo the reserves build-up than fall short when an emergency strikes.

For sure, the US-China trade war will not be easy, so we better be prepared. For now, I don’t think the two countries will kiss and make-up anytime soon.

Victory for press freedom

Speaking of war, I join journalists all over the world in celebrating the release of Reuters reporters Wa Lone and Kyaw Soe Oo last Tuesday, May 7. 

It’s the kind of story that tugged at my heart. How can it not? It’s the best news I’ve heard in a long time in this age of living in blurry realities and a Netflix existence. 

The story weighed more because I had the chance to meet Wa Lone in Myanmar way back in 2013 when I was there for a brief journalism fellowship on regional integration given by Deutsche Welle.

They are now free after spending more than 500 days in prison after they published a story on Myanmar’s atrocities. 

This story is no doubt a victory for press freedom. As journalists, we have reasons to celebrate.

Press freedom is so much under threat. I commend the many international organizations and governments that continue to support us. 

The British government is one example. This year, it is leading a global campaign in support of media freedom. 

British Ambassador to the Philippines Daniel Pruce said journalists around the world are being threatened often under the thin veneer of due process.

“A free media is an essential ingredient to a well-functioning democracy and the rules-based international system. Without it there is no accountability. A free press is bound up with good governance, democracy, equality and poverty reduction,” he said during a dinner for journalists at his residence early this year.

The British ambassador is right in saying that journalism is, indeed, under threat.

I’ve met many individuals – government officials and billion dollar sources included – who despise journalists.

But let me tell you this. You can hate us for who we are. Sure, we’re hawkish, arrogant, stupid at times, and often seemingly just a bunch of individuals with complicated lives and messianic delusions. 

But don’t hate us for what we report. We’re not the enemies. We’re here because we believe in journalism. We chase stories and it’s not easy. Sometimes, we lose families and our relationships end. We forget holidays and we miss birthdays and sometimes, we have to drive ourselves to emergency rooms. 

And sometimes, like Wa Lone and Kyaw Soe Oo, journalists end up in jail. This should never be the case. A free press is essential to democracy and all of us, journalists or not, should fight for it. Our freedom to report the truth is yours too. 

Iris Gonzales’ email address is [email protected]. Follow her on Twitter @eyesgonzales.