Tue, Jan 17, 2006 - Page 8 News List

Links no panacea for Kaohsiung

By Huang Tien-lin 黃天麟

The pro-China media in Taiwan have over the past few days taken up the issue of how Kaohsiung Harbor has slipped in global rankings in terms of the annual container volume handled there. As always, they have blamed the government for this, claiming it to be the result of a failure to allow direct links with China and trying to force the government's hand through pressure from business interests.

Emblazoned on the Jan. 5 edition of a certain newspaper was a headline in especially large font that read "Kaohsiung Harbor warning, lowest container traffic recorded in 14 years."

The story quoted the director of the Kaohsiung Harbor Bureau as saying, "If we are to increase the container volume handled by the harbor, we have to open up the three links between Taiwan and China, in the quickest and most efficient way, to increase the number of operators using the harbor as a transfer hub." The official concluded that "otherwise, Taiwan will become more and more marginalized in terms of handling freight."

There is nothing new in Taiwan about turning the truth on its head to suit one's argument. That said, blaming the slipping global ranking of Kaohsiung Harbor on the lack of direct transport links with China does take us to new levels of stupidity. There is a very simple explanation behind Kaohsiung Port's jump from obscurity to being the second-busiest container port in the world, and that is the huge growth seen in the manufacture of goods -- such as clothing, umbrellas, electrical equipment, kitchen appliances, bicycles, footwear, headwear, steel, toys and plastics, and then computers and computer components -- in the major cities in the nation's south.

Naturally, with worldwide demand for these products, the amount of goods passing through Kaohsiung Harbor grew to the point that by 1993 the annual volume exceeded 4.6 billion twenty-foot equivalent units (TEUs, the standard measure of container volume), making it one of the busiest ports in the world.

This situation, however, was only temporary, and in the 1990s, after the nation's industry started moving to China, the number of goods produced by traditional industries declined rapidly, just as South Korean and Chinese output was on the rise. In 2000, the volume of goods coming out of Busan in South Korea exceeded exports from Kaohsiung. Later we saw a rise in the global rankings of Shanghai and Shenzhen as China's productive capacities increased, pushing Busan and Kaohsiung to fifth and sixth place. With the exception of Singapore, which enjoys its strategic location in the Malacca Straits, the ranking of the ports of any given country is related closely to the volume of its exports.

The main culprit behind Kaohsiung Harbor's drop in the rankings is the migration of Taiwanese businesses to China. Direct links with China will do little to increase the supply of goods handled by Kaohsiung, and will even make it easier for Taiwan's manufacturing base to migrate, exacerbating the port's decline.

I do not dismiss out of hand the theory that the instigation of direct links with China will improve Kaohsiung Harbor's status as a transfer hub. However, this can only happen if there is a constant volume of exports, and this means a constant volume of goods manufactured in the port's hinterland.

Economic activity is complex, and to have direct links without "investment in Taiwan first" and "active management," will only accelerate the migration of Taiwanese manufacturing to China's seaboard, where the facilities are inferior to those in Taiwan. With goods produced in the hinterland of Shanghai's Yangshan Deep Water Port, currently under construction, who is going to use Kaohsiung Harbor as a transfer hub?

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