Sat, Mar 20, 2004 - Page 11 News List

Taiwan provides model for US companies

JOBS As US companies move jobs to countries with lower wages, some say it might benefit from studying how Taiwan has dealt with its manufacturing losses to China

NY TIMES NEWS SERVICE , TAIPEI

Many Americans are becoming alarmed as factories and jobs disappear to China. But by Taiwan's standards, American losses so far have been modest.

Manufacturing here has shrunk to only a quarter of the economy from half in the late 1980s, as tens of thousands of companies have shifted operations across the Taiwan Strait to China. Unemployment more than tripled, from 1.5 percent through the early 1990s to 5.2 percent in 2002. Entire industries, like the manufacture of many plastics products, largely vanished, lured by Chinese wages that are a fifth of those in Taiwan.

But while the economy here still has troubles, there are signs that Taiwan has turned the corner. The economy has grown rapidly since a SARS virus outbreak was quelled last June, and unemployment has dropped abruptly, to 4.5 percent in the last few months.

The recovery may provide lessons, economists say, for the US and the EU as they struggle to compete with China and other low-wage countries.

Many jobs have come from surging exports, especially of high-technology products. There have also been more jobs in marketing, logistics and other tasks related to managing operations in China, using expertise not yet available there. Heavy government spending to build roads, dams, rail and subway lines and other infrastructure projects in Taiwan has played a lesser but important role in increasing employment.

What is less clear is whether the early stages of the economic recovery are strong enough yet to help President Chen Shui-bian (陳水扁) as he seeks re-election.

His handling of the economy has been heavily criticized throughout his four-year term, and he has tried to turn the race into a battle over national identity -- whether residents feel more Taiwanese than Chinese.

Chinese Nationalist Party (KMT) Chairman Lien Chan (連戰)and People First Party Chairman James Soong (宋楚瑜) have campaigned on the management experience of the KMT.

"We must have a professional team which will prove to be predictable," Soong said.

The rival economic platforms are actually fairly similar. Both candidates pledge to spend US$3 billion a year on public works projects to help maintain employment.

Both vow to support an ongoing rise in research and development by the country's booming information technology industries, which dominate world markets for products like notebook personal computers and computer motherboards.

Computer chips and plastics are two of the reasons Taiwanese exports jumped 26 percent in the first two months of this year compared to the same period last year. China overtook Japan last year as the destination for the biggest share of Taiwanese exports, buying a quarter of them.

Taiwan's exports to China soared to US$35.3 billion last year, dwarfing imports, at US$11 billion. The gap is cause for some concern for government officials.

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