Mainland Affairs Council Chairwoman Tsai Ing-wen (
Tsai's remarks are quite reasonable. However, many people neglect this unbalanced situation. Nor do they understand the harm that this is doing to Taiwan. It is worrying that the government's policies fail to address the problems.
Lifting the ban on investing in eight-inch wafer manufacturing in China is one example of the government ignoring the dangers and acting in the interests of liberalization. In fact, a unilateral flow of resources and people from Taiwan to China has put the nation in an unfavorable bargaining position regarding cross-strait economic competition. Moreover, Taiwan's industrial development and employment opportunities could be seriously affected.
The fundamental imbalance between Taiwan and China lies in the different levels of their economic development. Market forces and businesspeople's incentives to make money will drive products to flow from low-cost areas to high-cost areas and attract resources to flow from the places with low investment returns to those with high returns. This way, prices and incomes in different places will gradually even out.
People's incomes in Taiwan are much higher than those in China. Taiwan's capital and technology are relatively richer and cheaper compared to China's. Driven by the forces of a free market, many of Taiwan's products will gradually be replaced by those from China or other low-income countries. Meanwhile, a large portion of Taiwan's capital and technology will be transferred to places with high investment returns.
In the process, if Taiwan fails to develop new industries and technologies as well as accumulate more capital, its income and economic development will be dragged down by China and other backward countries.
China's population is more than 60 times greater than Taiwan's. Its demographics have become a magnet to Taiwanese businesspeople, threatening to dilute Taiwan's income levels. Think about it: if we average the scores among one student who gets 90 points and 60 others who get nine points each, the result will be far closer to nine points than 90. It means one student's score of 90 will be dragged down by enormous asymmetrical power.
Economically, the huge gap between China and Taiwan will lead to a rapid outflow of industries and resources. This in turn would make it harder for Taiwan to make up for the drain of resources by developing new industries and technologies through saving and investment. It would also be harder for Taiwan to avoid the rising unemployment and falling incomes.
Over the past decade, Taiwan has made progress in upgrading industries and developing new ones. People's savings and the inflow of foreign investment are also impressive. We are still faced with many difficulties, however. One major reason is that this cross-strait imbalance has led to mass industrial migration to China, seriously affecting Taiwan's overall economic development.
More serious than the fundamental cross-strait imbalance are the many man-made imbalances. In terms of policies, Chinese customs taxes are high, while Taiwan's are low. China requires import permits and imposes non-tariff trade barriers and high taxes. Land and loans -- which also can be freely used by administrative authorities -- are awarded through public construction, administrative procedures and other industrial policies. China can also use purchases by the government and state-owned enterprise to support or suppress specific industries or manufacturers. Economically liberalized and democratized Taiwan, however, cannot implement such policies. China can then use these unfair policy methods to attract Taiwanese resources and industries, causing an imbalance in economic exchanges between the two sides of the Strait.
In the case of the eight-inch wafer foundries, China uses large investments and other benefits to attract Taiwanese manufacturers and talent. It also uses subsidies to support low prices and dumping, thus forcing the main Taiwanese manufacturers to invest there. If such unfair, unbalanced policies cannot be abolished, we will let these manufacturers fall into another trap of imbalances if we let them invest in China. In an act of wishful thinking, the government hopes that these manufacturers will be able to keep their core technologies in Taiwan after they have invested in China, and that they will be able to ensure their lead in international markets. But once these main manufacturers have invested large amounts in China, China is certain to create problems while supporting its own companies.
What's more, industries rela-ted to wafer foundries, such as packaging and testing, are already saying that they will have to follow the move to China and the IC design industry says that it is following as well. These are all issues that were overlooked when the government first said that it was going to allow eight-inch wafer foundries to invest in China. If government officials and enterprises persist in allowing eight-inch wafer foundries to invest in China instead of reining in their horses at the edge of the precipice by adopting countermeasures, Taiwanese industry and employment will be further hollowed out by China.
Information and media imbalances are the two main reasons why the Taiwanese people for so long have ignored the policy imbalances on each side of the Strait. Chinese media and academics are government tools. They are all taking China's side. In Taiwan, many media, academics and even government officials are promoting China. They exaggerate China's development and opportunities, talk down the risks, ignore all the imbalances and promote China-biased policies by using erroneous extrapolations according to their own personal interests. On the other hand, they deride care for the unemployed and public interest as populism, call "Taiwan first" advocacy ideological and say measures to alleviate the harm caused by imbalances in cross-strait exchanges are policies that will isolate Taiwan and are in violation of the principles of a free economy. With so many people specialized in making non-existent things look real, it is not strange that cross-strait imbalances are growing more serious and that many companies and people lack an awareness of the dangers.
We bear no hostility toward China and repeatedly call for equitable bilateral negotiations to resolve problems caused by exchanges. However, China aims missiles and other weapons at us, creating more ripples in our country's economy and threatening our lives and property. China also obstructs our country's participation in international organizations.
Undoubtedly, this limits our country's economic and trade activities. As a result, some people believe, mistakenly, that only by sacrificing sovereignty and acquiescing to the "one China" principle can Taiwan find a way out for its economy. In no way should these man-made factors of imbalance coming from China be viewed as unimportant and ignored as we consider cross-strait economic and trade issues.
Facing these fundamental and man-made factors of imbalance, the government absolutely cannot ignore the possibility of causing further imbalance and unfairness as it makes important policies such as the three direct links and chip foundry investments. The government cannot base its policies on the static pros and cons under the current circumstances -- factors that are difficult to estimate. We believe that the government's policy now should be focused on lowering and eliminating the various imbalances and threats, instead of echoing other people's calls for openness or direct links. In particular, it cannot take the proposed eight-inch wafer foundry investments in China, which will worsen Taiwan's economic crisis, as if it were a recipe for boosting Taiwan's economy. China remains hostile to Taiwan and its economic war against Taiwan is becoming more intensive. Allowing eight-inch wafer foundry investments into China will have a dreadful domino effect on Taiwan's already weak economy. There are things that a government can and cannot do, and now everyone expects it to show resolve and determination, resist pressures that run counter to Taiwan's interests and safeguard the lifeline of Taiwan's economy.
Translated by Jackie Lin, Perry Svensson and Francis Huang
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