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Kaohsiung's decline is no mystery

STATISTICS SHOW THAT Shanghai handled more than 26 million standard containers last year, 20.4 percent more than the year before, to replace Hong Kong as the world's second-largest container port. Measured in terms of cargo throughput, Shanghai, which handled 561 million tonnes of cargo last year, maintained its position as the largest port in the world for the third consecutive year.

This is surprising because Hong Kong is rated No. 1 in terms of economic freedom -- well above Shanghai at No. 126. Ships can travel freely between Hong Kong, Shanghai, Tianjin and other ports. Taiwan's pro-unification academics and media tell us that Hong Kong has the potential to be the economic center for all of greater China and the transport hub for all of East Asia. Its container throughput should increase every year, and there is no reason why Shanghai's growth should be greater than Hong Kong's.

Or consider the port of Busan in South Korea. In 2001, Busan surpassed Kaohsiung to become the third-largest container port in the world. At that time, Shanghai was the fifth-largest port. In 2003, Shanghai overtook Busan. This is also surprising because Busan ranks 41st in terms of economic freedom, making it significantly more free than Shanghai. Ships can travel freely from Busan to major ports like Shanghai, Tokyo, Osaka, Dalian and Tianjin. Busan should have been able to develop into a transport hub and a logistics center, yet it has been overtaken by Shanghai. Are officials in Busan and Hong Kong to blame for their lack of competitiveness?

Shanghai's performance should be a warning to the pan-blue camp and the pro-unification media. They should stop using ideological arguments to explain why Kaohsiung keeps sliding down the list of the world's largest ports and stop blaming others for their own mistakes. Kaohsiung's lack of competitiveness is the unavoidable outcome of Taiwan's industries migrating to China and has little to do with policies or direct routes to other ports.

The main reason for Shanghai's rise as a port is that the industry in Shanghai's hinterland is expanding rapidly. Taiwanese businesspeople are playing an important role in this development. Since 2001, when Taiwan's adopted a policy of "active opening," Shanghai's neighboring cities -- such as Suzhou, Kunshan and Wujiang -- have attracted considerable numbers of companies involved in science and technology, many run by Taiwanese. Last year, China exported US$450 billion in information technology products, accounting for 37.6 percent of its exports. Because Taiwan's industries are moving abroad, there is less cargo to be shipped through Kaohsiung. This trend cannot be helped, and it was inevitable that Shanghai's port would grow larger than those of Kaohsiung, Busan and Hong Kong.

During a recent forum in Kaohsiung, Chinese Nationalist Party (KMT) presidential candidate Ma Ying-jeou (馬英九) said that, if he was elected, he would open up direct sea routes between Taiwan and China, and loosen restrictions on China-bound investment. He said such opening would give Kaohsiung the opportunity to become a major container and cargo port, improving its competitiveness. This doesn't make sense. Abolishing the 40 percent cap on investment in China would result in even more factories in southern Taiwan relocating to China, further reducing the amount of cargo shipped through Kaohsiung harbor. Under such a scenario, who would route cargo through Kaohsiung? By the same reasoning, cargo from Shanghai is not shipped through Busan or Hong Kong -- Shanghai has simply outgrown them.

Pan-blue academics and media are responsible for the decline of Kaohsiung. For years, they have promoted loosening regulations and opening up to China with the result that many of Taiwan's industries have moved to China.

If the government caves in to the demands of the pan-blue camp for looser restrictions and more opening up to China, Taiwanese will suffer the consequences and the Kaohsiung port will inevitably fall off the list of 10 largest ports.

Huang Tien-lin is a former national policy adviser.

TRANSLATED BY ANNA STIGGELBOUT
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