Thu, Feb 03, 2005 - Page 8 News List

Taiwan, be prepared for some tough times ahead

By Chen Po-chih陳博志

I am extremely concerned about Taiwan's economic situation this year.

The three most worrisome variables are whether or not there will be social turmoil in China, the possible impact of the proposed anti-secession law, and whether or not the opposition will continue to boycott every proposal made by the government.

These variables have the potential to adversely affect Taiwan's economic situation. Therefore, the government must have strategies so that it can respond.

Reports forecasting GDP growth for this year have been published one after another, with its value is predicted to be within the range of 4.5 percent to 5 percent.

Based on the current situation, it appears that these figures are more than likely to be overestimated.

Why am I so pessimistic?

First, the probability of social turmoil in China has never been greater than this coming year.

Factors such as the unequal distribution of income in that society, the continuous widening of the gap between rich and poor, and unequal development of China's provinces, have all resulted in an increased potential for social upheaval, which is by all appearances already at an explosive stage.

On top of that, China's economy this year will certainly experience a downturn, which will act as a catalyst to popular unrest.

In addition, Taiwan's excessive concentration of exports in China makes its [domestic] situation more vulnerable to the situation there.

The second variable, the proposed anti-secession law, is relevant, too.

How much pressure will China put on Taiwan?

To what length will it go in its discrimination and degradation of Taiwan in the international community?

These issues have the potential to influence Taiwan's economy in a fairly short period of time.

It is especially unfortunate to learn that certain people in Taiwan are echoing China's demands and causing other Taiwanese to suffer a heavy blow to their confidence, doubling the effect of the anti-secession bill.

The third variable involves domestic politics: will the opposition continue to boycott the government's policies?

Despite the political slogans pronouncing "inter-party reconciliation" after last year's legislative elections, I am still not optimistic that this will actually happen.

After reviewing the lawmakers' budget review in the last legislative session on Jan. 21, we could see no substantial manifestation of "inter-party reconciliation."

The opposition parties remain as unreasonable as ever, joining together to slash the government budget.

People cannot help being worried that newly elected legislators may adopt an even more extreme "scorched-earth policy" to show off their power, opposing the DPP administration at every turn.

It is safe to predict that Taiwan's economy will almost definitely suffer in terms of market confidence.

Simply put, these three variables may lead to a worsening of Taiwan's economy in the coming year.

I believe the economy will be worse than the expected outlook forecast by both domestic and international agencies.

The government must be prepared for the impact these crises will cause, and efficiently implement practical and feasible countermeasures.

Chen Po-chih is chairman of Taiwan Thinktank.


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