Opposition must face up to reality

PFP Legislator Liu Yi-ju (劉憶如) pointed out last week that it is very dangerous for the economic growth of our country to be over-dependent on the trade surplus with China. She further indicated that China faces the risks of the yuan's depreciation and a decline in economic growth. After China opens up its banking sector in 2006, the problems associated with excessive loan extensions will surely surface.

However, at the same time, Liu also criticized the government for lacking any policy in response and even being helpless in the face of such problems. The government's new cross-strait economic and trade policies should indeed be examined more closely in many respects. However, the pan-blue camp made even more serious mistakes in relevant policies, hindering the government's ability to adopt the correct measures.

To objectively come up with accurate policies, we must first understand the objective facts surrounding the issues. Some say that economic growth requires four things -- a trade surplus, private consumption, private investment and government expenditure -- yet the government puts the focus of its efforts to create economic growth into generating a surplus, which distorts the structure of the economy. Saying this does not reflect objective theory or reality.

Although the gross income or economic growth are often broken down into the above four categories, having a trade surplus is actually not an independent category at all. Rather, it equals exports minus imports, and imports on the other hand are dependent on domestic consumption, private investments, government expenditure and the amount and nature of exports.

Therefore, accusing the government of focusing too much on generating a trade surplus does not seem right. It is of course the right thing to do for the government to promote exports.

As for the slowing down of various expenditures domestically, which in turn caused an increase in the trade surplus, this is not the government's original intention. In fact, the government's policies on promoting increased domestic expenditure, to some degree due to the passive resistance of the opposition parties, have been incapable of helping economic growth.

As for the trade surplus with China, it should definitely not be seen as China's economy feeding Taiwan's economic growth. The surplus is in large part due to investments in China and an exodus of industries there. The reasons behind the surplus are not only harmful to us, this kind of surplus will not last long either.

For the past two years, Taiwan's notebook-computer industry has been massively emigrating to China. Therefore, some domestically manufactured components had to be exported to China for assembling, increasing the trade surplus. On the other hand, some components typically imported from overseas to Taiwan are now imported to China, where they are assembled. This is not helping Taiwan's economy to grow. Rather, it is taking away our industries.

As a result of the relocation of the factories and the export of notebook computers to China, Taiwan's production, export and trade surplus totals have declined. Many people do not understand this, and actually believe that exports to China and the increase in the trade surplus are helping Taiwan. People who do not know better cannot offer the correct solutions for decreasing dependence on China. Before government officials draft policies, they must fully realize this point.

The government has not done enough, especially when it comes to the inadequacy of public infrastructure, which has made our investment environment less attractive than that of other countries, making it difficult to attract private investments and professional talent. The government's policy to improve the construction of public infrastructure was countered by opposition parties, based on their confused reasoning that we should leave behind massive debts for future generations.

Financial institutions' excessive loan extensions have caused limited growth in loan extensions to the private sector over the past five years, as well as the restrictions on growth in private consumption and investments. The government had planned to improve the situation of financial institutions with a financial restructuring fund, but the idea was similarly countered by the opposition, who used a variety of excuses.

As one can see, while the government's efforts to revive the economy do leave room for criticism, they are not entirely aimless. It is just that their direction has often been blocked by the opposition.

Based on the above, the pan-blue camp's stance of leaning toward China is the wrong way to go. Pan-blue politicians and scholars strongly advocate further opening up investments in China and launching direct cross-strait links.

However, the example of the notebook-computer industry demonstrates that, although opening up investments will lead to an increase in the trade surplus and boost exports to China in the short term, it will also reduce domestic production, employment and economic growth. This will only make Taiwan's economy more dependent on Chinese policies. This is what lies at the core of pan-blue policies. Now that they can see the risks which dependency on China's economy entails, they should change their views.

The government must be even more on guard during discussions about cross-strait policies, to avoid falling into the trap of a "opening-up race."

Too bad that the pan-blue camp is still holding on to the policy of supporting direct links with China. Don't they know that after such links have been established, a lot of the domestic consumption, including traveling and even shopping, will move to China? This indicates that its criticism that the government lacks direction in trying to revive the economy actually better applies to the pan-blue camp itself.

They know only too well that Taiwan's economy is over-dependent on China as it is, yet they still actively support direct links. They know very well how China is soliciting Taiwanese investments using very unfair tactics, yet they still praise Chinese enthusiasm in this regard. They know government expenditure and public infrastructure are inadequate, yet they still oppose expanding the construction of public infrastructure. They know that domestic consumption and investment expenditure have fallen behind, and that the finance industry has long accumulated problems, yet they block restructuring of the finance industry which could rejuvenate the industry and alleviate the potential crises.

The pan-blue camp's contradictory and aimless policies have two primary causes -- one is insisting on the "one China" ideology even if it means sacrificing Taiwan's interests, and the second is the tendency to oppose for the sake of opposing. If these were not the real reasons, then they must not really know where the problems lie.

Among members of the pan-blue camp, Liu is relatively more professional. We hope that she can have the courage to suggest to the pan-blue camp that it should change its erroneous cross-strait trade and economic policies.

As for the government, it should realize the need to demonstrate immunity and resistance to pressure in policy implementation and taking on political accountability. Do not be misled by erroneous beliefs. Choose policies that are in the interests of Taiwan's people.