As important as the economic problems in Taiwan are, they get little coverage in the media in the US except as a part of a broader commentary on Asia's economic problems. One reason is that Taiwan's problems are based on such a confusing mix of international economics, it's domestic economy and its politics, that reporting tends to confuse more than enlighten any reader. Still, foreign accounts of the problem are probably more balanced, though the injustice of Taiwan's international predicament compared to that of others in East Asia is a subject that never seems to get attention.
Even in academic discussions, the attention most economists give to Taiwan focuses on its growing economic interchange with China. US experts seem to develop scenarios either of enormous opportunities in China on the one hand, or of various serious risks and problems that lie ahead on the other. What effect either of these two extremes would have on Taiwan is generally left unsaid. Conventional wisdom is that it is a good trend, as it makes military conflict less likely. Its political, social and even economic impact on Taiwan is left for others to study.
It is understandable why Taiwan's economic situation and its prospects for the future are difficult to explain abroad. In a country of very active popular sovereignty, politics becomes all-pervasive, and the media has a robust market for its product -- opinion. Politics is perceived to be involved in even the most mundane issue, and the domestic media feeds this expectation by continuous and usually very biased speculation. It is picked up by the international news ser-vices and that, clothed in objective reporting, informs public opinion abroad.
Not all of Taiwan's economic problems, of course, are entirely under its control. As a political message, however, that is not a useful fact, so it is not highlighted in domestic reporting. The US economic slowdown is another critical factor in Taiwan's prob-lem, but it has had a negative impact on most countries in East Asia, not just on Taiwan. Then, in conjunction with this media atmosphere, there have been the incentives China is offering for foreign direct investment. Reduced costs for land, labor and taxes attract investment there from worldwide sources. Businesses, of course, are attracted by these conditions, but other countries in the region, in need of foreign and domestic investment themselves, are also badly hurt. Taiwan, with its special concern with the China relationship, has a particular problem coping with this situation.
Then on this issue there is the domestic political factor as well. The cross-strait relationship is an element of almost any issue confronting Taiwan. That includes domestic economic problems, which, almost by definition, be-come packaged with the domestic political dimension of the "one China" issue. The sensitivity and deep divisions between political parties on this matter distort the economic problems, and should call for a special set of rules or at least the development of a tradition on how to manage legitimate internal debate when handling a sensitive external problem. Given China's policies on cross-strait relations, solutions to Taiwan's economic problems are more likely to be found in domestic initiatives in any event.
Taiwan's government has laid out a list of economic problems that it is proposing be addressed by a special economic council. This list includes competitive-ness, the investment environ-ment, financial problems, unemployment and improving economic and trade relations with China. The latter inevitably attracts the most attention, is the most politically controversial and is the one least likely to gain resolution.
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