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How local industry is undermined

So far, this year has been a good one for the pro-unification camp. At the beginning, it pushed for passenger charter flights between Taiwan and China for the Lunar New Year holiday. When the Chinese Communist Party (CCP) saw the Taiwanese media and airports' enthusiasm, as if they were celebrating the "restoration" of the island to Beijing's control, the CCP seized the opportunity to promote the legislation of the Anti-Secession Law (反分裂國家法).

After the law was passed in March, the Taiwanese people reacted with massive demonstrations -- and then they resumed their normal lives. The passage of the law even led to pro-China politicians making a series of trips to China. Beijing's next goal is to undermine President Chen Shui-bian's (陳水扁) vows not to open direct links without effective management, and pull back to the former position of "active opening and ineffective management."

To achieve this, the pro-unification camp and the Taiwanese who have invested in China have taken several steps. First, they asked the Gallup Organization to conduct a survey on "the normalization of cross-strait passenger and cargo charter flights," phrased in such a way as to mislead the public, and then "leaked" the survey results to the media on Aug. 28. The press coverage was considerable. Even the pro-independence Taiwan Daily ran the story on the front page of its business section, with a headline: "Seventy percent of the public approve the normalization of charter flights." The newspaper also quoted Council for Industrial and Commercial Development chairman Gou Tai-chiang (郭台強) as saying that charter flights would resolve the problems of businesspeople's extramarital affairs in China and the downturn of Taiwan's economy.

After anesthetizing the public and the government with this lie, the pro-unification media launched another attack the following day, Aug. 29. Large reports ran on the front and second pages of newspapers with sensational headlines such as: "Boeing 747 cargo flights from the Chiang Kai-Shek International Airport have decreased by 30 trips a month" [compared to five years ago], "The cargo volume at both the CKS Airport and the Port of Kaohsiung has seen an unprecedented decline in the first seven months of the year" and "Several foreign air freight carriers have decommissioned [their] Taiwan routes."

These stories blamed the government for not turning Taiwan into an "Asian-Pacific regional operations center" because of the "no haste, be patient" policy -- proposed by former president Lee Teng-hui (李登輝) in 1996. They claimed that it was a miracle that the nation's sea and air freight industry has survived at all. They blamed the reduced volume at Kaohsiung harbor on the government's isolationist policy. The goal of these stories was to brainwash the people.

The next step was to continue to pressure the government. Two days later, several editorials called on the public to support the opening of direct links to save the ailing economy -- saying that it there was a breakthrough on this issue, Taiwan's economic downturn would be halted immediately and people could lead happy lives. They also warned that the nation would lose its advantages if the government continues to refuse that semiconductor and panel industries invest in China. The goal of these stories is self-evident.

So is what they say really true? Of course not. The fact that the sea and air-transport sector is experiencing a downturn and that the number of containers loaded and unloaded locally is falling, is because Taiwan's manufacturing industry has moved to China. Without manufacturing, there are no goods, and without goods, fewer container ships need to arrive, since they will go where the goods are -- China.

Why doesn't the amount of goods transported through Busan in South Korea dry up? Because South Korean manufacturers haven't moved the bulk of their production lines to China. This point is easily proven by showing that total South Korean investments in China still haven't reached one-tenth of total Taiwanese investments there.

So will opportunities disappear in the absence of deregulation? The fact is that what will disappear are the industries that are deregulated, and what will remain are the industries that have not been allowed to move to China.

In the early 1990s, before the government adopted that policy, Taiwan's traditional big exporters all vanished to China in just five short years, between 1989 and 1994. In 2001, the government's deregulation policy allowed manufacturers of desktop and notebook computers and handsets to move to China. In 2001, 89 percent of notebook computers manufactured by Taiwanese companies were manufactured in Taiwan; 4 percent were made in China. Last year, 81 percent were manufactured in China, and only 16 percent in Taiwan. So did deregulation mean that opportunities remained in Taiwan?

The attraction of China and the unificationist push means that few industries remain in Taiwan today. Semiconductor manufacturers, thin film transistor-monitor screens, advanced integrated-chip testing and packaging, naphtha cracker plants and steel manufacturing are about the only ones left.

Unless we are careful, the undermining of Taiwan's industry and the marginalization of its economy will only accelerate. The government should hold on to the final line of defense -- unless we are capable of effective management, we should not deregulate further.

The government also must stop giving in to the unificationists' use of private business to force the government's hand. This is the only way to maintain a variety of job opportunities in this country. The public must do more to supervise the government and support its efforts at effective management.

Huang Tien-lin is a national policy adviser to the president.

Translated by Eddy Chang and Perry Svensson
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