The unexpected announcement by Premier Liu Chao-shiuan (劉兆玄) last Tuesday that state-owned refinery CPC Corp, Taiwan (CPC, 台灣中油) would raise gasoline and other fuel prices the following day triggered harsh criticism from skeptics.
Liu has faced criticism over his handling of the matter and the potential damage this could have on the new government’s administrative credibility. However, he has defended the policy as a way of preventing stockpiling and maintaining public safety.
To mitigate growing inflation concerns and guard against a drop in consumer spending, Liu said consumers would only have to absorb 60 percent of the increases, with the government and CPC accounting for the rest in equal parts.
The problem is simple: How long can the Chinese Nationalist Party (KMT) government afford to shield consumers with such subsidies without draining the national coffers? If the Democratic Progressive Party government deserved criticism for price controls — a practice that hurt the state oil company at the expense of all taxpayers — then it is difficult to see how the KMT’s measures are any different. The take home message is that both parties have little sympathy for the user-pays principle.
The government should reconsider the benefits that would flow from a truly competitive domestic fuel market.
Such a market appears more important by the day, given that the privately owned Formosa Petrochemical Corp (FPC, 台塑石化) said that it would raise gasoline and diesel prices two days after the government’s announcement to match those of its rival.
Despite differences in financial structure and operations, CPC and FPC have allegedly colluded in a market that has become a duopoly since the withdrawal of ExxonMobil Corp from Taiwan in 2003.
FPC’s latest price hikes remind us that the two refiners are almost certainly engaging in a protracted game of price-fixing, and this will continue indefinitely if there is no reform.
One reason CPC can absorb 20 percent of the price increases is because the government agreed to lower the commodity tax on gasoline and diesel — by 19 percent and 35 percent respectively — for a period of six months to compensate the state refiner so that it could pass on lower increases to consumers.
What makes informed consumers really angry is that the tax cut also applies to the profitable FPC, which already enjoys a handsome profit from fuel exports, at a time when the national coffers are estimated to be suffering losses of NT$9.6 billion (US$315.7 million) in tax revenue for this six-month period.
Higher domestic gasoline and diesel prices are inevitable at this time, and the government must rely on tax cuts and other subsidies to cushion inflationary pressures in the short term.
But the government’s role is different to that of private citizens and companies. Its goal is to maintain balanced development in the allocation of resources, wealth distribution and economic growth over the long term rather than getting bogged down in daily price adjustments.
Creating a more competitive market is vital at times of privation, and requires the removal of barriers to petroleum imports, including high tariffs, as well as unpredictable — even nonsensical — government intervention.
Recently, China launched another diplomatic offensive against Taiwan, improperly linking its “one China principle” with UN General Assembly Resolution 2758 to constrain Taiwan’s diplomatic space. After Taiwan’s presidential election on Jan. 13, China persuaded Nauru to sever diplomatic ties with Taiwan. Nauru cited Resolution 2758 in its declaration of the diplomatic break. Subsequently, during the WHO Executive Board meeting that month, Beijing rallied countries including Venezuela, Zimbabwe, Belarus, Egypt, Nicaragua, Sri Lanka, Laos, Russia, Syria and Pakistan to reiterate the “one China principle” in their statements, and assert that “Resolution 2758 has settled the status of Taiwan” to hinder Taiwan’s
Singaporean Prime Minister Lee Hsien Loong’s (李顯龍) decision to step down after 19 years and hand power to his deputy, Lawrence Wong (黃循財), on May 15 was expected — though, perhaps, not so soon. Most political analysts had been eyeing an end-of-year handover, to ensure more time for Wong to study and shadow the role, ahead of general elections that must be called by November next year. Wong — who is currently both deputy prime minister and minister of finance — would need a combination of fresh ideas, wisdom and experience as he writes the nation’s next chapter. The world that
Can US dialogue and cooperation with the communist dictatorship in Beijing help avert a Taiwan Strait crisis? Or is US President Joe Biden playing into Chinese President Xi Jinping’s (習近平) hands? With America preoccupied with the wars in Europe and the Middle East, Biden is seeking better relations with Xi’s regime. The goal is to responsibly manage US-China competition and prevent unintended conflict, thereby hoping to create greater space for the two countries to work together in areas where their interests align. The existing wars have already stretched US military resources thin, and the last thing Biden wants is yet another war.
Since the Russian invasion of Ukraine in February 2022, people have been asking if Taiwan is the next Ukraine. At a G7 meeting of national leaders in January, Japanese Prime Minister Fumio Kishida warned that Taiwan “could be the next Ukraine” if Chinese aggression is not checked. NATO Secretary-General Jens Stoltenberg has said that if Russia is not defeated, then “today, it’s Ukraine, tomorrow it can be Taiwan.” China does not like this rhetoric. Its diplomats ask people to stop saying “Ukraine today, Taiwan tomorrow.” However, the rhetoric and stated ambition of Chinese President Xi Jinping (習近平) on Taiwan shows strong parallels with