On Thursday, the Taiwan Economic News reported that Taiwan’s export growth in the second quarter of this year was the highest of “Asia’s Four Dragons.” With year-on-year export growth at 46.2 percent for the quarter, along with 12.5 percent overall economic growth and a 1.1 percent inflation rate, Taiwan’s economic recovery seems certain.
Of course this will be used by President Ma Ying-jeou’s (馬英九) administration to demonstrate the government’s “correct” economic policies.
However, there is just one problem with the Ma government claiming victory in this situation: They insisted that Taiwan could not compete in Asia without signing the Economic Cooperation Framework Agreement (ECFA) with China. With the second quarter ending on June 30 of this year, just one day after the signing of the ECFA, one has to question the validity of these claims.
Trade numbers with China have also continued to soar. The Mainland Affairs Council’s Preliminary Statistic of Cross-Strait Economic Relations showed that both exports to and imports from China from Jan. 1 to May 30 this year were up more than 60 percent. Keep in mind that these data were collected well before the signing of the ECFA.
However, these numbers are nothing new. Besides the economic downturn in late 2008 and last year, which happened on Ma’s watch, trade growth and economic dynamism have been the rule, not the exception, for Taiwan. True, Taiwan’s relatively small domestic market, coupled with its dependence on trade, make it especially susceptible to global economic downturns, but then again, “Asia’s Four Dragons” are certainly no different.
In the end, these numbers should not surprise us, but yet they do, at least in some ways. Why? Well, by listening to and reading information coming from the Presidential Office over the past year or so, one would have been led to believe that Taiwan’s economy — even Taiwan itself — was on the verge of collapse. The Ma government consistently made statements arguing that without the ECFA, Taiwan and Taiwanese businesses would not survive financially. However, late last year and early this year, Taiwan not only survived in both the international and China markets, it thrived.
The China-ASEAN Free Trade Agreement (FTA), which was completed in January, was also supposed to negatively affect Taiwan’s competitiveness in the region. Given both the totals from January to May of this year and the second quarter information from the Taiwan Economic News, the FTA appeared to have no ill effects on Taiwan’s trade.
So what gives? The Ma administration must have been looking at different numbers. What else could explain such an enormous difference in information? The numbers certainly don’t lie, and even though they have yet to lead to a drop in unemployment, Taiwan businesses are certainly in no pain financially.
Could it be that the Ma administration was hoping that Taiwan businesses would no longer be competitive? This may certainly be a possibility, given the continuous push for the ECFA. It appears as though the Chinese Nationalist Party (KMT)-led government was hoping against hope for a financial failure in order to justify the agreement with Beijing.
With no failure, what options do the KMT leaders have?
They can only claim that they led Taiwan through the recent financial storm. They can only claim that because of the ECFA, Taiwan survived the rough economic waters. And they can only claim that their actions have proven “correct.”