President Chen Shui-bian's (
First, China's economy is dominated by state-owned enterprises, and its foreign trade and foreign exchange markets remain under strict government control.
Also, given that there is a wide disparity in terms of population and amount of territory between Taiwan and China, if cheap goods from China's state-owned factories are allowed to flood Taiwan, this will cause great damage to Taiwan's economy.
Even the US, which is so much bigger than Taiwan, has felt the results of China's unfair trade practices. The US trade deficit with China hit a record US$200 billion last year, a figure that has concerned both the government and opposition parties.
This has happened despite the fact that US foreign trade accounts for only 16 percent of its economy.
This is not the case for other global powers like Japan, whose foreign trade comprises one quarter of its economy, and China, where the figure is more than 75 percent.
These figures indicate that China's economy depends more heavily on the US than the other way around.
Second, China has clearly shown its intention to promote a "united front" agenda via business channels. The purpose of Beijing's ongoing advocacy of the "mini three links" is to control Taiwan through trade and the economy, because in this way it can realize its ultimate goal of annexing Taiwan.
If Taiwan continues to allow a situation in which there is considerable capital outflow, this will give China a stick with which to pressure Taiwan in any future negotiations.
Pro-independence Taiwanese businessman Hsu Wen-lung (
Their examples show that China's "united front" tactics have yielded concrete results. The more capital Taiwanese businesspeople invest in China, the more leverage they give Beijing to force Taipei to accept its political agenda.
This is clearly a very dangerous situation.
Finally, it only requires a crisis in China's economy to entangle Taiwan in severe financial difficulties.
According to World Bank figures, the volume of bad debt in Chinese banks has reached US$600 billion, a quarter of China's GDP.
This worsening of this crisis is only being held in check by China's high level of savings. Chinese save around 45 percent of income, the world's highest rate, because they have little confidence in the future.
As soon as there is a financial crisis, these savings will be withdrawn, and this could trigger an economic collapse.
In the US, confidence reigns, so the savings rate is in negative figures (minus 0.5 percent). According to figures from Time magazine, the average savings ratio in the US from 1929 is a mere 7.6 percent.
Japan last year initiated "active management" policies in regard to its outward investment. It has shifted its investment focus from China to India, contributing to a 42 percent increase in the Indian stock market.
Taiwan must also diversify its investments. With the incorporation of diversification into its own "active management" policy, this will protect the development of the economy and serve as an important plank in its security.
Cao Changqing is a writer based in the US.
Translated by Lin Ya-ti and Ian Bartholomew
Could Asia be on the verge of a new wave of nuclear proliferation? A look back at the early history of the North Atlantic Treaty Organization (NATO), which recently celebrated its 75th anniversary, illuminates some reasons for concern in the Indo-Pacific today. US Secretary of Defense Lloyd Austin recently described NATO as “the most powerful and successful alliance in history,” but the organization’s early years were not without challenges. At its inception, the signing of the North Atlantic Treaty marked a sea change in American strategic thinking. The United States had been intent on withdrawing from Europe in the years following
My wife and I spent the week in the interior of Taiwan where Shuyuan spent her childhood. In that town there is a street that functions as an open farmer’s market. Walk along that street, as Shuyuan did yesterday, and it is next to impossible to come home empty-handed. Some mangoes that looked vaguely like others we had seen around here ended up on our table. Shuyuan told how she had bought them from a little old farmer woman from the countryside who said the mangoes were from a very old tree she had on her property. The big surprise
The issue of China’s overcapacity has drawn greater global attention recently, with US Secretary of the Treasury Janet Yellen urging Beijing to address its excess production in key industries during her visit to China last week. Meanwhile in Brussels, European Commission President Ursula von der Leyen last week said that Europe must have a tough talk with China on its perceived overcapacity and unfair trade practices. The remarks by Yellen and Von der Leyen come as China’s economy is undergoing a painful transition. Beijing is trying to steer the world’s second-largest economy out of a COVID-19 slump, the property crisis and
As former president Ma Ying-jeou (馬英九) wrapped up his visit to the People’s Republic of China, he received his share of attention. Certainly, the trip must be seen within the full context of Ma’s life, that is, his eight-year presidency, the Sunflower movement and his failed Economic Cooperation Framework Agreement, as well as his eight years as Taipei mayor with its posturing, accusations of money laundering, and ups and downs. Through all that, basic questions stand out: “What drives Ma? What is his end game?” Having observed and commented on Ma for decades, it is all ironically reminiscent of former US president Harry