Visiting former US presidential economic advisor Lawrence Lindsey yesterday urged Taiwan to strengthen its specialization in technology and finance so as to neutralize its over-dependence on the Chinese economy.
Taiwan has the capital, rule of law, financial freedom, sophisticated financial markets and managerial expertise that China needs, Lindsey said.
"There are two natural avenues for Taiwan to specialize in, one is finance ... and the other is technology," Lindsey said in response to growing concerns that the economic interdependency between Taiwan and China may be a highly lopsided symbiosis.
Lindsey, the director of the National Economic Council at the White House until earlier this year, made the remarks at a seminar in Taipei entitled "War and Economy." The seminar was organized by the Chinese International Economic Cooperation Association (CIECA, 國合會).
Addressing a roomful of masked participants, Lindsey added that Taiwan should also continue the diversification of its business sector so as not to become overly dependent on China, whose share of the world's GDP on a cash-value basis is expected to grow from the current 4percent to only 7 percent by the year 2020.
"[Taiwan] should not become too dependent on China and exclude the other 93 percent [of world markets]," Lindsey said.
As 17 business delegations have recently canceled visits due to severe acute respiratory syndrome (SARS), Lindsey's three-day visit signified his friendship with CIECA chairman and local business leader Jeffrey Koo (
A prominent economist from Harvard University, Lindsey also served as a governor of the US Federal Reserve System from 1991 and 1997, as special assistant to the US president for domestic economic policy during the George H.W. Bush administration and as senior staff economist for tax policy at the Council of Economic Advisers during President Ronald Reagan's first term.
Lindsey gave his advice to Taiwan on attracting China-bound businesses to repatriate their earnings in response to a question raised by one of the panelists, Douglas Hsu (
"My advice is keep your [Taiwan's] tax just a little bit lower than Hong Kong, which is Taiwan's competitor," Lindsey said.
He added that a corporate-earnings tax as high as 40 percent has not only scared away the backflow of China-based business capital to Taiwan, but that it has also disadvantaged Taiwan's economy.
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