It is clear that whoever hopes to win the presidential election next year will have to propose a sound strategy on how to deal with China: not just politically, but also economically.
The process of cross-strait economic liberalization launched in the 1980s and sustained even under the pro-independence Democratic Progressive Party from 2000 until 2008, accelerated dramatically after President Ma Ying-jeou (馬英九) of the Chinese Nationalist Party (KMT) stepped into office on May 20, 2008. With the signing of the Economic Cooperation Framework Agreement (ECFA) in June last year and various other economic pacts in recent years, the dependence of Taiwan’s economy on China has grown by leaps and bounds.
Putting the political implications of those agreements aside, we will leave it to the history books to judge whether the decision to open the gates to Chinese money was economically sound for Taiwan. A growing number of economists are claiming that China’s economic miracle is heading full speed for a brick wall. Although such predictions have been made for more than a decade, there is evidence that this time the alarmists could be right.
Should such pessimistic forecasts come to pass, the more dependent Taiwan is on China for its economic well-being, the more severe the repercussions of a downturn across the Taiwan Strait will be.
Earlier this month, renowned economist Nouriel Roubini was warning of potentially destabilizing contradictions between China’s short and medium-term economic performance. In his view, China was able to weather the global economic crisis and sustain double-digit economic growth by artificially propping up its economy with major infrastructure projects.
However, this stopgap measure cannot go on indefinitely and already the construction spree is catching up with China as evidenced by low usage of its high-speed rail systems, highways leading to nowhere and steel-and-glass ghost towns. Furthermore, a recent scandal about the safety of China’s new ultramodern high-speed rail system has highlighted the prohibitive cost of construction and operation. The rail system, which was part of Beijing’s stimulus plan for 2008, is already losing money and depends for its survival on bank loans. The Chinese Ministry of Finance last week confirmed that its debt currently stands at US$276 billion, which was almost entirely borrowed from Chinese banks.
A great share of the massive infrastructure projects that have sustained the illusion of a booming Chinese economy has been buttressed by bank loans and many of those are non-performing and will very likely never be reimbursed. Add rampant corruption, as was ostensibly the case with the underused high-speed rail, to this mix and there are the makings of an economic time bomb — the consequences of which for the Chinese economy (and the region) one can only guess at.
For Taiwan, these signs should awaken officials to the need to implement prophylactic measures in the event the Chinese economy implodes. The key to this is threefold: ensuring Chinese money in Taiwan comes from economically sound institutions; redoubling efforts to attract foreign investment from sources other than China; and diversifying export destinations (Taiwan’s exports to China plus Hong Kong last year accounted for about 42 percent of total exports. Inflation, or a major economic downturn in China, would have a serious negative impact on Taiwan’s exports).
While there is no way to avoid significant trade with the giant next door, the candidates in next year’s presidential election should clearly explain to the public how they intend to hedge against a possible rainy day in China. It’s not a question of whether Taiwan should deal with China or not, but how.
The government and local industries breathed a sigh of relief after Shin Kong Life Insurance Co last week said it would relinquish surface rights for two plots in Taipei’s Beitou District (北投) to Nvidia Corp. The US chip-design giant’s plan to expand its local presence will be crucial for Taiwan to safeguard its core role in the global artificial intelligence (AI) ecosystem and to advance the nation’s AI development. The land in dispute is owned by the Taipei City Government, which in 2021 sold the rights to develop and use the two plots of land, codenamed T17 and T18, to the
US President Donald Trump has announced his eagerness to meet North Korean leader Kim Jong-un while in South Korea for the APEC summit. That implies a possible revival of US-North Korea talks, frozen since 2019. While some would dismiss such a move as appeasement, renewed US engagement with North Korea could benefit Taiwan’s security interests. The long-standing stalemate between Washington and Pyongyang has allowed Beijing to entrench its dominance in the region, creating a myth that only China can “manage” Kim’s rogue nation. That dynamic has allowed Beijing to present itself as an indispensable power broker: extracting concessions from Washington, Seoul
Donald Trump’s return to the White House has offered Taiwan a paradoxical mix of reassurance and risk. Trump’s visceral hostility toward China could reinforce deterrence in the Taiwan Strait. Yet his disdain for alliances and penchant for transactional bargaining threaten to erode what Taiwan needs most: a reliable US commitment. Taiwan’s security depends less on US power than on US reliability, but Trump is undermining the latter. Deterrence without credibility is a hollow shield. Trump’s China policy in his second term has oscillated wildly between confrontation and conciliation. One day, he threatens Beijing with “massive” tariffs and calls China America’s “greatest geopolitical
Taiwan’s labor force participation rate among people aged 65 or older was only 9.9 percent for 2023 — far lower than in other advanced countries, Ministry of Labor data showed. The rate is 38.3 percent in South Korea, 25.7 percent in Japan and 31.5 percent in Singapore. On the surface, it might look good that more older adults in Taiwan can retire, but in reality, it reflects policies that make it difficult for elderly people to participate in the labor market. Most workplaces lack age-friendly environments, and few offer retraining programs or flexible job arrangements for employees older than 55. As
RSS