Heavy investment in China by Taiwanese businesspeople will have many negative effects on Taiwan in the long run. I will limit my discussion to just two.
First, large amounts of investment in China by Taiwanese means that less money is invested in Taiwan, and this slows down the rate of domestic industrial upgrade. Since the majority of Taiwanese businesspeople can use their existing technologies to manufacture products in China, they have no need to conduct research and development or to invest in Taiwan, nor do they face any immediate pressure to improve the quality of their business operations, which means industrial upgrades here have slowed and will continue to do so.
The second problem is the risk that Taiwan’s exports will be replaced by Chinese exports. When Taiwanese invest in China they strengthen the competitiveness of Chinese products on the international market, and this poses a huge threat to Taiwan’s export sector. This began happening a long time ago and the way in which Taiwan is being disadvantaged and China is benefiting from this situation is already very clear.
Studies by the Taiwan Institute of Economic Research show that in 2004, the export replacement percentage for products made by Taiwan’s manufacturing sector that were replaced by Chinese products in the US and Japanese markets was 13.21 percent and 8.49 percent respectively. Taiwanese technology-intensive products were the item most frequently replaced by Chinese products.
In the US market in 2004, 19.26 percent of Taiwan’s exports of technology-intensive products were replaced by Chinese products, while 8.56 percent and 7.33 percent of less and moderately technology-intensive products were replaced by Chinese products.
In the Japanese market in 2003, 13.22 percent of technology-intensive Taiwanese products were replaced by Chinese products, while 7.35 percent and 10.87 percent of Taiwanese less and moderately technology-intensive products were replaced by Chinese products.
It is worth noting that the Taiwanese-made items most frequently replaced by Chinese products in the US and Japanese markets were the moderately and technology-intensive products, and that the export replacement percentage has been continuously increasing since 2000.
It is now obvious that the substitution effect has started to overtake the complementarity and mutual benefit that is supposed to exist as a result of division of labor in trade conducted between Taiwan and China.
Taiwan’s trade with China so far has seen Taiwanese invest huge amounts in China, which has caused a decrease in investment in Taiwan and had a severe impact on our economy.
If President Ma Ying-jeou’s (馬英九) government ignores the trade issues I have mentioned and signs an economic cooperation framework agreement with China, Taiwan will become increasingly isolated as it is Sinicized, and we will face economic and financial crises that will be very hard to fix.
Wang To-far is a professor of economics at National Taipei University.
TRANSLATED BY DREW CAMERON
In the past month, two important developments are poised to equip Taiwan with expanded capabilities to play foreign policy offense in an age where Taiwan’s diplomatic space is seriously constricted by a hegemonic Beijing. Taiwan Foreign Minister Lin Chia-lung (林佳龍) led a delegation of Taiwan and US companies to the Philippines to promote trilateral economic cooperation between the three countries. Additionally, in the past two weeks, Taiwan has placed chip export controls on South Africa in an escalating standoff over the placing of its diplomatic mission in Pretoria, causing the South Africans to pause and ask for consultations to resolve
An altercation involving a 73-year-old woman and a younger person broke out on a Taipei MRT train last week, with videos of the incident going viral online, sparking wide discussions about the controversial priority seats and social norms. In the video, the elderly woman, surnamed Tseng (曾), approached a passenger in a priority seat and demanded that she get up, and after she refused, she swung her bag, hitting her on the knees and calves several times. In return, the commuter asked a nearby passenger to hold her bag, stood up and kicked Tseng, causing her to fall backward and
In December 1937, Japanese troops captured Nanjing and unleashed one of the darkest chapters of the 20th century. Over six weeks, hundreds of thousands were slaughtered and women were raped on a scale that still defies comprehension. Across Asia, the Japanese occupation left deep scars. Singapore, Malaya, the Philippines and much of China endured terror, forced labor and massacres. My own grandfather was tortured by the Japanese in Singapore. His wife, traumatized beyond recovery, lived the rest of her life in silence and breakdown. These stories are real, not abstract history. Here is the irony: Mao Zedong (毛澤東) himself once told visiting
When I reminded my 83-year-old mother on Wednesday that it was the 76th anniversary of the founding of the People’s Republic of China, she replied: “Yes, it was the day when my family was broken.” That answer captures the paradox of modern China. To most Chinese in mainland China, Oct. 1 is a day of pride — a celebration of national strength, prosperity and global stature. However, on a deeper level, it is also a reminder to many of the families shattered, the freedoms extinguished and the lives sacrificed on the road here. Seventy-six years ago, Chinese Communist leader Mao Zedong (毛澤東)
RSS