Taiwan’s richest 20 percent continues to be more than six times richer than the poorest 20 percent. The Gini coefficient hovers between 0.34 and 0.35, unemployment has broken through 6 percent and salary increases in the industrial and service sectors since 1991 has lagged significantly behind economic growth figures. Since 2000, salary growth has slowed further and even began to drop. In addition, housing prices have been increasing recently.
In addition to idle private capital and a great influx of foreign hot money, the main reason for these increases is the return of the capital of Taiwanese businesspeople. This raises the question of what would happen if astronomical sums of Chinese capital investment were to also flow into Taiwan.
The Council for Economic Planning and Development, which has realized the seriousness of the situation, called a symposium to discuss falling salaries, rising housing costs and deteriorating income distribution. A worried attendant said that if even Hong Kong with its sound legal system could be turned upside down by dirty money from China, then if Taiwan were to sign an ECFA with China without knowing what it is doing, wouldn’t those developers laugh all the way to the bank as speculation drives prices for their development plans in Taipei, Kaohsiung and Taoyuan sky-high, while Taiwan’s young people continue to suffer from the economic crisis and might never be able to afford their own house. Urban residents are certain to be the hardest hit.
So, will an ECFA be a CEPA? Will Taiwan rapidly turn into a second Hong Kong? These are issues that Taiwanese should pay close attention to.
Wu Hui-lin is a researcher at the Chung-Hua Institution for Economic Research.
TRANSLATED BY DREW CAMERON AND PERRY SVENSSON
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