Since President Ma Ying-jeou (馬英九) came into office in May, the government has moved toward a more open cross-strait trade policy and attempted to further tie Taiwan’s economy to China, despite continuing financial difficulties at home. However, historical experience has shown that the more open the Taiwan-China economic and trade relationship becomes, the more people in Taiwan will suffer.
Economic and trade interactions across the Taiwan Strait began in 1990, when the Taiwanese government first opened the door to permit indirect exports to China, along with investments and technical cooperation.
Interactions between the two sides went further in 1993 with talks between former Straits Exchange Foundation chairman Koo Chen-fu (辜振甫) and former Association for Relations Across the Taiwan Strait chairman Wang Daohan (汪道涵).
But the expanded cross-strait economic ties paved the way for a substantial migration of domestic companies to China, causing Taiwan’s unemployment rate to rise.
Based on statistics compiled by the Ministry of Economic Affairs, Taiwan’s unemployment rate was below 2 percent in 1990. It went up to 2.6 percent in 1996 and rose above 4 percent for the first time in 2001.
Taiwan’s unemployment rate has further worsened after Ma took office, with the jobless rate surging to a three-year high of 4.27 percent in September.
In view of growing capital outflows to China, in 1996, former president Lee Teng-hui (李登輝) adopted the so-called “no haste, be patient” policy, hoping to slow down the pace of Taiwanese companies “heading West.”
Unfortunately, his efforts were in vain.
The exodus of Taiwanese companies to China not only resulted in rising unemployment, but has also caused salaries to stagnate.
While growth of nominal wages still posted double-digit increases in 1990, it has slowed down to between 1 percent and 2 percent in recent years, and even turned negative in 2002. If we exclude the inflation factor, real wages began showing negative growth many years ago.
Many local pundits attributed the salary stagnation to overinvestment in China, which has dragged wages down. In fact, the Directorate-General of Budget, Accounting and Statistics once expressed a similar view, saying wages in developed countries were forced to revise downward after cheap labor from developing countries joined the global market.
Given Taiwan’s proximity to China, the relocation of Taiwanese industries to China will inevitably put a cap on domestic job opportunities and payroll growth, it said.
Furthermore, the nation’s economy does not seem to have significantly benefited from the liberalization of cross-strait economic and trade relationships.
GDP, which grew at an annual rate of between 6 percent and 7 percent from 1991 to 1997, slowed down to between 4 percent and 5 percent growth from 1998 onwards.
The government’s efforts to continue to boost cross-strait economic and trade ties will undoubtedly benefit certain Taiwanese businesses. But domestic labor is faced with the specter of rising unemployment and negative growth in wages, with no turnaround in sight.
The recent domestic economic slowdown has led to an increase in the number of companies and factory closures. If the Ma administration still insists on opening cross-strait trade, the situation for domestic workers will get grimmer by the day — especially if a new wave of industry relocation occurs.
Clare Cheng is a journalist based in Taipei.
TRANSLATED BY JERRY LIN
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