If we believe the Chinese Nationalist Party (KMT), President Ma Ying-jeou (馬英九) and his government’s distorted view of the world, having a “closed-door” policy means not dealing with China.
If this is the case, former presidents Chiang Kai-shek (蔣介石) and his son, Chiang Ching-kuo (蔣經國), have to be the two heads-of-state who adopted the strongest closed-door policies over the 60 years the “Republic of China” has been here on Taiwan. Before former KMT soldiers were allowed to go back to China and visit their relatives at the end of 1987, Taiwan experienced 38 years of governance under the two Chiangs that was truly representative of the “closed-door” policy Ma is now so fond of accusing the opposition of advocating.
Since taking office, Ma has said time and again that Taiwan will be marginalized if it adopts a “closed-door” policy and avoids dealing with China. Ma has also likened this “closed-door” mentality with the regimes of the two Chiangs and the way they dealt with China. However, with the indirect and transit trade that was opened in 1985 being extremely limited, it wouldn’t have made sense for Taiwan to have made China its focus for economic development.
Under Chiang Kai-shek’s administration in 1971, Taiwan posted economic growth of 12.45 percent, while under Chiang Ching-kuo, it recorded growth of 11 percent in 1986. Back then, the government often reminded itself that Taiwan should not become overly reliant on trade with the US and Japan and that Taiwan had to open up a wider range of markets in order to diversify the risk. It also never felt satisfied with, or prided itself on, its achievements, unlike the Ma administration.
After the government promulgated the Act Governing Relations between the Peoples of the Taiwan Area and the Mainland Area (兩岸人民關係條例) in 1992, a permit system was adopted to allow Taiwanese businesspeople to invest in China. This system has now been in use for 18 years.
The KMT is fond of talking about the “lost two decades” under former presidents Lee Teng-hui (李登輝) and Chen Shui-bian (陳水扁), as well as the “lost eight years” when the Democratic Progressive Party (DPP) was in power. Lately, Ma has also been making comments about the “decade of closed-door policy,” referring to the final two years of Lee’s rule and Chen’s presidency.
These references, however, are nothing but meaningless political rhetoric aimed at smearing former leaders. These comments not only contradict the truth, they are also misleading and totally unhelpful when analyzing the challenges Taiwan now faces.
Let us briefly look at some statistics. If we just look at the filed information from the Investment Commission of the Ministry of Economic Affairs, the liberalization policies of the KMT introduced under Lee saw Taiwanese investments in China increase from US$110 million in 1993 to US$160 million in 1997. After the “no haste, be patient” policy was introduced, this figure gradually fell to US$120 million in 1999.
After Chen and the DPP came into power, the government adopted a policy of “proactive liberalization and effective management.” Investments in China increased from US$260 million in 2000 and hit US$990 million by 2007.
After the Ma government took office in 2008, this figure increased to more than US$1 billion and while this figure dropped to US$710 million last year as a result of the global financial crisis, in the first quarter of this year, it has already reached US$260 million.
Given this constant increase in investment, China accounts for more and more of Taiwan’s GDP in a way that is not true for other nations such as the US, Japan and South Korea. This shows that Taiwan is getting too close to China instead of embarking on a path of globalization that would involve diversifying investments and risks around the globe.
At the same time, Taiwan’s domestic investment rate has been plummeting, especially since 2001, when there was a significant increase in Taiwanese investment in China.
In fact, Taiwan’s domestic investment has been the lowest among the Four Asian Tigers for a long time now. Decreases in the domestic investment rate, of course, have direct effects on employment levels that are closely linked to the livelihood of the nation’s citizens.
According to statistics from the Directorate-General of Budget, Accounting and Statistics, the unemployment rate increased from 1.5 percent in 1993 to 2.99 percent in 2000 and reached 5.17 percent in 2002. Great lengths were taken after this to lower it to 3.91 percent in 2007.
After the Ma government came into power in 2008, the unemployment rate bounced back to 4.14 percent, and last year recorded an all time high of 5.85 percent. As of April, even with the recovery from the global economic crisis underway, the unemployment rate was at 5.63 percent, showing that it has been stuck at a high level for a long time now.
These high figures seem even worse if we put them alongside the differences in income between households and the rapidly increasing gap between the rich and poor. The risky, excessive investment in China has put Taiwan on a track that will be very hard to reverse.
If we look at the real changes in these statistics, it is easy to see that the “lost two decades” the KMT keeps talking about actually refers to the 20 years where Taiwan has kept increasing investment in China, the “lost eight years” refers to the period in which there were huge increases in investment in China and “the decade of closed-door policy” refers to a decade where Taiwan is totally locked within China’s domain.
Despite this, the Ma government has gone even further down this road.
For it, having 70 percent of Taiwanese investment tied up in China is not enough. It is now encouraging even greater amounts of investment in China and the extent to which Taiwan is locked onto China is clearly much greater and more dangerous than the last eight, 10 or 20 years.
A report released by the Chung-Hua Institution for Economic Research some time ago said that after Taiwan signs an economic cooperation framework agreement (ECFA) with China, Chinese imports would increase. It also said that an ECFA would shut out Taiwan’s exports to other nations, especially to Japan, four ASEAN nations (Thailand, Malaysia, the Philippines and Indonesia), the US and the EU. This will not only make Taiwan more reliant on Chinese goods, but the increase in imports from China will constitute almost 60 percent of Taiwan’s overall imports.
If Taiwan is unsuccessful in signing free-trade agreements with large countries like the US and Japan, we will become even more locked onto and locked in by China.
It thus seems the effects of Ma’s “closed-door” policy will be the creation of a “golden decade” for China and a time of destruction for Taiwan. Even if Ma steps down, it will be a huge task to rebuild Taiwan after the huge calamity he will cause with the inking of an ECFA with China.
TRANSLATED BY DREW CAMERON
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