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 Comedy Club on Fuxing N Road in Taipei was vandalized with paint bombs mixed with feces on May 29, allegedly because one of its performers had satirized Chinese President Xi Jinping (習近平). The incident has triggered concerns about the growing threat from China’s cross-border repression within Taiwan. On the day of the attack, a comedian surnamed Huang (黃), who is known for mocking Xi, was the headline performer. The Comedy Club founder said the assault was obviously politically motivated. China, which Freedom House said “conducts the most sophisticated, extensive and far-reaching campaign of transnational repression in the world,” has
China’s Taiwan Affairs Office spokesperson Zhu Fenglian (朱鳳蓮) at a press conference last week repeated the same, tired line, claiming that Taiwan’s future should be “decided jointly by the more than 1.4 billion Chinese people, including Taiwan compatriots.” The statement is absurd. Virtually every word is incorrect, with some parts mistaken to an astonishing degree. First, the People’s Republic of China (PRC) has never included Taiwan. When the Republic of China’s (ROC) original five-colored flag was established in 1912, Taiwan was still under Japanese rule. When the PRC was founded in 1949, Taiwan was under the control of president Chiang
Just before dawn on Jan. 17, a Chinese military drone crossed for the first time into Taiwanese airspace above a disputed coral reef in the South China Sea. The reconnaissance aircraft lingered over Pratas Island (Xisha Island, 西沙群島) for a few minutes, while Taipei issued warnings to leave over international radio frequencies. China said the flight was a “normal” training mission. Taiwan called it “provocative and irresponsible.” On the other side of the world, officials in Europe saw the maneuver as part of a long-term Chinese plan to salami-slice away Taiwanese control over its territory and, eventually, force its unification with China. EU officials
Following the outbreak of conflict in Iran, TikTok was flooded with videos targeting Taiwanese users. Many featured artificial intelligence (AI)-generated anchors posing as Taiwanese broadcasters with localized traditional Chinese subtitles. The videos warned of imminent social collapse due to liquefied natural gas shortages, blamed the Democratic Progressive Party and its alleged failed energy policies for a fabricated crisis, and used recycled footage from unrelated events to create the impression Taiwan stood on the edge of systemic breakdown. By saturating the information environment with falsehoods or selectively edited material designed to trigger emotional responses, malign actors can exploit cognitive vulnerabilities and
RSS