The Taiwanese government is unprepared to deal with the financial crisis, Ma Kai (馬凱), a renowned economist and chief editorial writer at the Chinese-language Economic Daily News, said at an economic seminar yesterday.
Ma said the global economy had created many bubbles in various asset classes since the 1980s and that right now it was simply readjusting, causing severe pain.
At a seminar organized by the Chinese National Association of Industry and Commerce (工商協進會), Ma said he was uncertain when the global economy would rebound, adding he was sure “inflation will worsen as oil and grain prices continue to rise because of a growing supply and demand imbalance.”
Ma, a former researcher at the Chunghua Institute for Economic Research (中華經濟研究院), said the nation’s economy had been able to maintain growth at 3 percent to 4 percent by capitalizing on cheap labor in China.
With China’s new Labor Contract Law (勞動合同法), Taiwanese businesses could be forced to migrate to other Asia Pacific countries for their labor needs, he said.
At the same time, manufacturing companies in China have caught up with local expertise in middle to upper stream manufacturing, which has altered Taiwan’s competitiveness, he said.
“To this day, the government is still unaware of what is ailing the domestic economy. They use propaganda and brainwash the public into believing that the next quarter or next year will be better, without showing any concrete evidence,” he said.
Ma said the economic slowdown in Taiwan had begun well before the US subprime crisis and would last much longer, even after the global financial sector returns to normal.
Christina Liu (劉憶如), chief economic adviser at the Daiwa Institute of Research Ltd (大和總研), agreed with Ma, pointing to the IMF’s latest GDP growth forecast of 2.1 percent for the four Asian Tigers.
“GDP numbers in and of themselves don’t mean much to ordinary workers, but they represent a country’s unemployment picture,” Liu said at the seminar.
A major fall in GDP growth would mean that many workers would be laid off and unable to meet their obligations to financial institutions.
As a result, banks would decrease credit lending to corporations, creating a vicious circle, Liu said.
Liu said that as global economies are intricately linked, policies that limit themselves to domestic issues were bound to fail. Officials must implement measures that address the entire food chain, she said.
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