Mon, Oct 30, 2006 - Page 8 News List

China will not sidelinethe nation's economy

By Lin Cho-shui 林濁水

Since the turn of the 21st century, Hong Kong and Taiwan have both worried about becoming economically marginalized.

In fact, marginalization worries have a long history in Hong Kong and Taiwan, although such worries previously centered on becoming culturally marginalized.

Around the turn of the century, China's booming economy helped the nation rise on the world scene, and in the late 1990s, Beijing started actively to push for the formulation of the ASEAN-plus-one free trade zone.

This idea was then expounded in many of Taiwan's mainstream economic policies.

At present, ASEAN cooperation is primarily focused on economic matters and the organization hopes to establish an independent economy.

However, ASEAN has faced considerable difficulty in implementing this idea as a result of the restrictions that are imposed by the global division of labor.

In 2003, intra-ASEAN trade was valued at US$176 billion, accounting for 22.2 percent of ASEAN's total foreign trade -- a total basically unchanged since 1997.

ASEAN trade with China only accounted for 7 percent of total ASEAN external trade, while the bloc's trade with Japan was 14.2 percent, the EU 13 percent, the US 9.5 percent and Taiwan 4.4 percent.

Looking at ASEAN-bound investment, the EU has been the biggest contributor, investing a total of US$6 billion in 2003, followed by the US with US$2.2 billion and Japan with US$1.3 billion, while China merely invested US$10 million.

Taiwan invested US$300 million in ASEAN, 30 times more than China, while South Korea invested US$250 million.

These statistics present the following image: From a global perspective, the EU and Japan are ASEAN's most important sources of capital, trade and technology.

In East Asia, Japan and Taiwan take the lead and South Korea and ASEAN pull up the flanks, while China brings up the rear.

This structure implies that whether upstream, midstream or dowstream, Japan, Taiwan, ASEAN and possibly even South Korea's industries are becoming more integrated, while ASEAN and China and possibly even individual ASEAN member states are competitors.

Since this is the case, Taiwan and ASEAN's industries enjoy a complementary relationship as do China and Taiwan's industries.

Replacement of Taiwanese products is therefore not a very serious problem.

Compare this to the internal situations in ASEAN and China. Each member state of ASEAN is obliged to join an intra-regional free trade agreement, which is no easy task.

In China, regional and provincial "fiefdom economies" persist, such that domestic integration is patchy at best.

Taiwan's mainstream policy position -- as represented by former premier Vincent Siew (蕭萬長) -- holds that Taiwan's economy would become marginalized if China and ASEAN were to more tightly integrate their economies.

I find such an idea really odd. Taiwan is indeed suffering from a "marginalization fear complex," but what we should really be worrying about more is marginalization in the diplomatic and political spheres.

It is only normal to struggle and compete in the process of economic development, but fears of economic estrangement are both unfounded and also unnecessary.

That could lead to a loss of confidence, and that's when we really need to start worrying about being marginalized.

Lin Cho-shui is a Democratic Progressive Party legislator.

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