The proliferation of regional trading arrangements in East Asia offers challenges and opportunities for several countries in the region, including Taiwan.
Because of different levels of development, asymmetrical GDP size and divergent economic structures in East Asia, the emergence of trading blocs — be they ASEAN plus China or ASEAN plus China, Japan and South Korea — would generate a domino effect in favor of the largest countries.
As Nobel laureate Paul Krugman predicted, a free-trade area between large and small economies results in all factors of production, except land, transferring to the larger country, and thus the “hub and spoke” scenario.
Richard Baldwin has argued that a bicycle model of East Asian integration “with two natural hubs and many overlapping spokes” will emerge in the region. Essentially, there would be a Japan-centric versus China-centric hub, surrounded by many spokes across the region.
One can locate the divergence between the hubs: The Japan-centric hub would be driven by market forces through trade, investment and technology flow, whereas the China-centric hub would be largely motivated by foreign policy. Also, the Japan-centric hub is dominated by the nation’s industrial democracy — a leader of East Asian industrialization and well endowed with “oceanic civilization.”
On the other hand, China has been and still is an authoritarian regime, and is traditionally tied with “continental civilization.” The China-centric hub is, in addition to its political leverage over Hong Kong and Macau, manipulated by Beijing’s “good neighborhood” policy relating to Southeast Asian countries, as well as its overtures toward Taiwan.
From a global perspective, the China-centric hub would be technologically inferior to the Japan-centric hub. Unlike Japanese investments overseas, China’s outward foreign direct investment aims to exploit natural resources and obtain strategic supplies with little or no possibility of technology transfer to host countries. Moreover, China remains an emerging market economy at an earlier stage of development and industrialization relative to Japan.
What are the options for Taiwan? Since the Dutch arrived in the 17th century, Taiwan has belonged to an oceanic civilization. In its postwar development, Taiwan has been following the Japanese trajectory since its economy took off in the 1960s. By the measures of economic development and degree of industrialization, Taiwan is more similar to Japan than to China.
Therefore, if Taiwan signs an economic cooperation framework agreement (ECFA) with China without also signing individual free-trade agreements with the US, Japan and other ASEAN countries, then it will become one of the many spokes (or peripheries) of the China-centric hub. By integrating itself with a Greater China Economic Zone, Taiwan would become vulnerable to a clash between the oceanic and continental cavitations, as Samuel Huntington’s thesis dictates.
As long as unification is Beijing’s goal, economics cannot be separated from politics. Once Taiwan signs an ECFA with China, it will become part of Greater China economically — and eventually join China’s orbit politically.
Those who proclaim that trade pacts do not affect sovereignty are either naive or putting their heads in the sand. While Hong Kong has had no choice but to sign its trade pact with China, Taiwan still has autonomy — and vital alternatives in the process of globalization.
Taiwan must adopt a cosmopolitan perspective for the sake of its future. Globalization is not the same as Sinicization.
Peter C.Y. Chow is professor of economics at the City University of New York and a research associate at the National Bureau of Economic Research.
There is much evidence that the Chinese Communist Party (CCP) is sending soldiers from the People’s Liberation Army (PLA) to support Russia’s invasion of Ukraine — and is learning lessons for a future war against Taiwan. Until now, the CCP has claimed that they have not sent PLA personnel to support Russian aggression. On 18 April, Ukrainian President Volodymyr Zelinskiy announced that the CCP is supplying war supplies such as gunpowder, artillery, and weapons subcomponents to Russia. When Zelinskiy announced on 9 April that the Ukrainian Army had captured two Chinese nationals fighting with Russians on the front line with details
On a quiet lane in Taipei’s central Daan District (大安), an otherwise unremarkable high-rise is marked by a police guard and a tawdry A4 printout from the Ministry of Foreign Affairs indicating an “embassy area.” Keen observers would see the emblem of the Holy See, one of Taiwan’s 12 so-called “diplomatic allies.” Unlike Taipei’s other embassies and quasi-consulates, no national flag flies there, nor is there a plaque indicating what country’s embassy this is. Visitors hoping to sign a condolence book for the late Pope Francis would instead have to visit the Italian Trade Office, adjacent to Taipei 101. The death of
The Chinese Nationalist Party (KMT), joined by the Taiwan People’s Party (TPP), held a protest on Saturday on Ketagalan Boulevard in Taipei. They were essentially standing for the Chinese Communist Party (CCP), which is anxious about the mass recall campaign against KMT legislators. President William Lai (賴清德) said that if the opposition parties truly wanted to fight dictatorship, they should do so in Tiananmen Square — and at the very least, refrain from groveling to Chinese officials during their visits to China, alluding to meetings between KMT members and Chinese authorities. Now that China has been defined as a foreign hostile force,
On April 19, former president Chen Shui-bian (陳水扁) gave a public speech, his first in about 17 years. During the address at the Ketagalan Institute in Taipei, Chen’s words were vague and his tone was sour. He said that democracy should not be used as an echo chamber for a single politician, that people must be tolerant of other views, that the president should not act as a dictator and that the judiciary should not get involved in politics. He then went on to say that others with different opinions should not be criticized as “XX fellow travelers,” in reference to