By Ellson Quismorio
BEIJING, China — Perhaps the Philippines could use other currencies aside from the American dollar – most notably the Chinese currency RMB or Renminbi — to relieve itself of its inflation woes.
The chief economist of think tank China Center for International Economic Exchanges (CCIEE), Director Chen Wenling, proposed this after the Philippine inflation was brought up during a recent friendly exchange with visiting Manila-based journalists here.
“Countries like China, France, and Germany have already signed agreements so to discuss, we can use RMB or other kind of currency to exchange instead of US dollars,” said Chen through a translator in response to a question on how she would go about addressing the situation in the Philippines.
Inflation in the Philippines hit a nine-year high of 6.7 percent last September even as complaints over the rising cost of basic goods like rice and fuel grow among the public. The previous nine-year high was 6.4 percent, reached only during the previous month of August.
Chen did not hide her disdain for USD-based or dependent economies.
“We know that a lot of countries have faced financial crisis. We put blame on the monetary policies of the United States. This is a global issue not only in the Philippines, other countries face the same problem,” she noted.
The CCIEE director advised the Philippine government to “have more RMB reserves.”
According to her, a good opportunity to do this would be under Beijing’s ambitious “One Road, One Belt” series of projects.
“Through the One Road, One Belt initiative, I would like to suggest to cooperate more with China. So through these projects, we can start to use Philippine [peso] to exchange with RMB,” Chen said.
First announced by Chinese President Xi Jinping in 2013, the Belt Road Initiative (BRI) aims to improve China’s connectivity with the rest of the world a hundred fold by creating both a physical and a maritime road for economic cooperation.
These traverse land routes through Central Asia to Europe; to the Middle East and Southeast Asia; and sea routes connecting Chinese ports to Europe and to the South Pacific.
Chen shared how the Philippines could easily reduce its importations costs: look to countries which have cheaper products.
“We can choose countries like Indonesia, Malaysia, India, where their labor force is quite cheap. That can reduce the cost of those products.”
The Philippine government, she reckoned, should also consider stepping in when it comes to rising cost of goods, which is closely associated with the inflation problem.
“The government should interfere to control the prices. So we have made some sort of standards to control the inflation,” she said, adding that it should also “raise the interest rate along with inflation to make sure that people have enough money.”