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Editorial: Time for less talk, more action

It has been a year since the Economic Development Advisory Conference (EDAC) -- the Chen Shui-bian (陳水扁) administration's major effort to improve the economy. The Presidential Office held a meeting on Sunday to review how the EDAC's conclusions have been implemented. Government documents show a 93 percent implementation rate. That figure suggests that most of the proposals have been implemented, but considering the state of the economy and the stock market, the general public remains skeptical of the government's efforts.

According to figures from the Directorate-General of Budget, Accounting and Statistics, Taiwan's GDP per capita for the second quarter was US$3,041 -- a 12.1 percent drop from the same period last year. Private domestic investment was NT$305.5 billion -- a 6.58 percent decline from the same period last year. Foreign investment to June has fallen dramatically, a 68 percent drop compared to last year's figures. Industrial electricity consumption is down by 4.5 percent. Unemployment in July was 5.32 percent. These figures show a decline in investment and production as well as rising unemployment.

The statistics tell us one thing -- the EDAC's prescriptions were not cure-alls. They were either incorrect, incomplete, or their effects offset each other, thereby making economic recovery difficult.

First, some factors behind this slow recovery were beyond the EDAC's control, such as global economic factors. The US economy is showing some signs of recovery, but it has been slow and lackluster, which affects Taiwan since its economy is closely linked to that of the US.

Second, as EDAC vice chairman Koo Chen-fu (辜振甫) pointed out, there should not be the slightest bit of hostility between the two sides of the Taiwan Strait, whose economies are so mutually dependent. Cross-strait relations are largely determined by political factors and China has been using such factors to block any talks on direct links. Taiwan can do all it wants to prepare for direct links, but if Beijing won't negotiate there is nothing the government can do.

Third, the political parties pay lip service to the economy but won't let it stand in the way of their political interests. The opposition parties have consistently blocked any of the DPP's initiatives. Seeking economic development without political stability is like looking for fish on a tree.

Fourth, while trying to boost domestic investment, Taiwan is also opening the doors for more capital outflow to China, thereby aiding a competitor.

The EDAC's ideas were formulated at a time when the economy was at rock bottom. Many of them were aimed at achieving quick results and obviously were not well thought out.

There was another meeting held earlier on Sunday, also hosted by Chen -- this one at the Tashee resort -- to discuss the nation's economic strategy and the inadequacies of the EDAC's conclusions. The Tashee meeting decided that the government's economic policy must shift away from the EDAC's China focus toward a more global view, including accelerating plans to establish free trade agreements with the US, Japan and ASEAN nations in order to reduce Taiwan's dependency on China's market. This is a readjustment of the strategic structure and a correction of the inherent contradictions in the EDAC's conclusions.

Once again there has been talk of building a legislative majority in order to help resolve economic difficulties and untangling the political aspects of economic issues. However, only talking about economic knots in Taiwan's complex mix of difficulties is unrealistic. The only way to resolve the problems in the political structure once and for all is to follow the example of Alexander the Great in cutting the Gordian knot in order to gain a stable legislative majority in one swoop.
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