The policy of China is to avoid dealing with the elected government of Taiwan, even under established "unofficial" channels. The US, in public statements, has encouraged Beijing to deal with Taiwan, but without results. Bei-jing insists on a fundamental concession before doing so. One has to question, therefore, whether China would bargain over these economic issues in any event as it probably perceives its objectives with regard to Taiwan are already developing in a positive direction.
Improving the investment environment, on the other hand, is a matter in which the government has a greater potential for success. The target is primarily domestic investment by local firms, but foreign investment can play an important role. I recently witnessed a very encouraging process of government contracting that was handled in a very transparent, by-the-book manner. For Taiwan to gain a favorable reputation on that point alone would do much to attract foreign investment. So should another initiative: the expanding project to teach English as a second language throughout the public school system. The competition for investment posed by the economy of China is formidable, but Taiwan does have, and can more easily develop, other advantages.
The special economic council may help narrow the wide number of solutions likely to be offered. Consensus on all matters is probably unlikely, but progress on any issue in that direction will be a step forward. Even implementation of those on which reasonable consensus is attained will be a very significant challenge. Given the political ferment that has had so much to do with the loss of confidence, especially by businesses in Taiwan, re-establishing that confidence in the economy will need strong leadership, and quickly. Someone with a history of strong economic leadership, but with good knowledge of domestic politics, who is seen to put the national interest above party politics, could do much to revive economic confidence and begin implementing policy decisions.
While ultimately full success will also be influenced by outside events -- reviving growth in the US, Japan and Europe, and the behavior of China in the cross-strait relationship -- it will largely result from the domestic effort in Taiwan. As one can see, even now under present conditions, Taiwan's record among East Asian countries is better than most. This is understood in the US and cited when the present economic environment in East Asia is discussed. Unfortunately, what is not cited but should be is that Taiwan, unlike its neighbors with fallback support from international organizations, is addressing its economic problems on its own.
Nat Bellocchi is the former chairman of the American Institute in Taiwan and is now a special adviser to the Liberty Times Group.The views expressed in this article are his own.
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