Sat, Sep 09, 2006 - Page 8 News List

EU model cannot be applied to Taiwan

By Huang Tien-lin 黃天麟

Pro-China commentators who hold up the economies of Hong Kong and Singapore as examples of why the government should further open up to China have found a new theme in Ireland, Finland and the Netherlands, and their histories of success are constantly plugged in the pro-unification media.

The comparison seems appropriate at first. The three countries are not city-state economies like Hong Kong and Singapore. Those advocating closer cross-strait economic ties argue that since these developed states, whose size and population are similar to those of Taiwan, can succeed, why can't Taiwan succeed too?

Following this logic, Premier Su Tseng-chang (蘇貞昌) offered the experiences of the three countries as a theoretical foundation for opening up to China during the recent Conference on Sustaining Taiwan's Economic Development. But anyone who knows anything about the EU knows that the circumstances of those countries have no parallel in Taiwan.

Why? First, the prerequisite for joining the EU is that a member state must be independent and recognized and respected by all others. However, Taiwan's sovereignty is still disputed by China.

Second, the EU can allow countries big and small to co-exist because bigger countries such as Germany, Italy, France and Spain counterbalance each other so that smaller countries can exert influence. In terms of size, there is a wide discrepancy between Taiwan and China. If they do not stand on an equal footing, bigger countries will only swallow up smaller ones, with the smaller economies either marginalized or becoming satellites of the bigger economy.

Third, Ireland, Finland and the Netherlands have a strong national identity. Their citizens would not easily accept their country being marginalized for the sake of business interests. In Taiwan, the question of national identity remains unresolved, and this is one reason for its rapid marginalization by China.

Fourth, Ireland, Finland and the Netherlands have different languages and religious beliefs, thus permitting a natural distance from one another and insulating them from economic attraction. Taiwan does not have this natural shield to insulate it from China.

Clearly, the experiences of the Netherlands, Ireland and Finland do not apply to Taiwan because of the current state of the cross-strait relationship. It is understandable that pro-China media would promote this concept, but I do not understand why Su is following suit. Perhaps his knowledge of macroeconomics is limited, or perhaps he is being pushed. The latter is more likely.

Taiwan's accumulated China-bound investment -- currently worth US$300 billion -- was 86 percent of the nation's GDP last year, while South Korea's and Japan's China-bound investment accounted for a mere 1.7 percent and 1 percent of GDP respectively.

China's influence over local business interests is growing. Fortunately, the assets of Taiwanese banks are not under Chinese control. If the banks are allowed to move to China, the situation will be unsalvageable.

This is what William Kirby, a professor at Harvard University, meant when he said that Taiwan is already under Beijing's control, and one of the few things that Taiwan is still able to decide is the manner in which it wants to open itself up to China.

Taiwan's dependence on China grows every year, while its growth rate continues to decrease. It seems there is no way to stop the flow of capital and manpower to China. The government seems to be unable to stop the trend, so it is not a question of when or how Taiwan will become dependent on China; the process has started, and the pace is increasing.

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