The disastrous effects of the Economic Cooperation Framework Agreement (ECFA) appear to be spreading. Taiwan’s overall economic indicator in August flashed a yellow-blue light, signifying a slowdown, for the first time in two years. Despite this, President Ma Ying-jeou (馬英九) and his government continue to tell us that the ECFA is beneficial to the economy and that the post-ECFA period will be a “golden decade” for Taiwan.
However, the figures suggest that, precisely because of the ECFA and the Ma administration’s policy of tying Taiwan’s economy to that of China, the nation is headed for a long period of stagnation. People are going to have a hard time and the misery is likely to be prolonged.
There are some aspects of this issue worthy of reflection.
The first point is that the rate of export growth has fallen for several years now. In order to get the ECFA signed as quickly as possible, Ma’s administration decided to act in concert with one of the key aspects of China’s 12th five-year plan, which is to seek a breakthrough in emerging strategic industries. To that end, it has permitted Taiwan’s cutting-edge technology companies to invest in China, along with entrepreneurs who have access to advanced farming know-how. As a result, Taiwan’s exports to China are slowing as products made in China gradually take their place.
Exports to China in August were only 7.9 percent up on the same month last year. This compares very poorly with South Korea, whose exports to China grew by 21.2 percent over the same period. If Ma’s China policy continues unchanged, Taiwan’s share of China’s import market will fall further and job opportunities in Taiwan are certain to diminish accordingly. With too many hands available to do too little work, real wages are bound to fall and the only thing to go up will be the misery index.
The second thing to worry about is the outflow of agricultural know-how, which is causing farmers’ incomes to fall. On the face of it, the ECFA “early harvest” list of goods and services eligible for immediate tariff concessions or exemptions appeared to involve China conceding benefits to Taiwan, but actually the benefits nowhere near make up for the massive losses arising from the outflow of farming know-how. Competition from the “Taiwanese farmers’ enterprise parks” that have been set up in various parts of China has already led to a big fall in Taiwan’s agricultural and fisheries exports to Japan, and to a growing cross-strait trade deficit in farm produce.
The average income for farmers last year was NT$884,000 (US$29,100), which is NT$70,000 less than three years ago. If that trend continues, the agricultural sector could go bust, at great cost to society as a whole.
The third point is that financial resources keep flowing out of Taiwan and into China. The post-ECFA financial sector rush continues apace. One result is that financial institutions have recently been vying to raise capital, but their fund-raising projects keep running aground. This is a sign that Taiwan’s financial resources are ebbing away.
Although NT$93.8 billion has already been raised through Taiwan depository receipts to fund Ma’s dream project of an Asia-Pacific capital-raising center, only 15 percent of that has remained in Taiwan.
This trend is becoming so serious that before long the westward march of Taiwanese banks is going to make it harder for small and medium-size enterprises in Taiwan to get the loans they need, and those who suffer the most will be blue-collar workers, as usual.
Given the Ma administration’s habit of blaming other people for anything that goes wrong, you can be sure that officials will attribute the economic slowdown to global factors. Don’t be fooled. None of the trends described above have anything to do with debt troubles in the eurozone.
Export growth is falling faster than that of our peers. Farmers are suffering more and our jobless rate is higher. These facts are undisputable. Are we going to just accept this downturn? Are we just going to kneel down and wait for the axe to fall?
The only way out for Taiwan is to dump Ma’s policy of locking our economy on to that of China.
Huang Tien-lin is a former national policy adviser to the president.
Translated by Julian Clegg
A failure by the Chinese Communist Party (CCP) to respond to Israel’s brilliant 12-day (June 12-23) bombing and special operations war against Iran, topped by US President Donald Trump’s ordering the June 21 bombing of Iranian deep underground nuclear weapons fuel processing sites, has been noted by some as demonstrating a profound lack of resolve, even “impotence,” by China. However, this would be a dangerous underestimation of CCP ambitions and its broader and more profound military response to the Trump Administration — a challenge that includes an acceleration of its strategies to assist nuclear proxy states, and developing a wide array
Twenty-four Chinese Nationalist Party (KMT) lawmakers are facing recall votes on Saturday, prompting nearly all KMT officials and lawmakers to rally their supporters over the past weekend, urging them to vote “no” in a bid to retain their seats and preserve the KMT’s majority in the Legislative Yuan. The Democratic Progressive Party (DPP), which had largely kept its distance from the civic recall campaigns, earlier this month instructed its officials and staff to support the recall groups in a final push to protect the nation. The justification for the recalls has increasingly been framed as a “resistance” movement against China and
Jaw Shaw-kong (趙少康), former chairman of Broadcasting Corp of China and leader of the “blue fighters,” recently announced that he had canned his trip to east Africa, and he would stay in Taiwan for the recall vote on Saturday. He added that he hoped “his friends in the blue camp would follow his lead.” His statement is quite interesting for a few reasons. Jaw had been criticized following media reports that he would be traveling in east Africa during the recall vote. While he decided to stay in Taiwan after drawing a lot of flak, his hesitation says it all: If
Saturday is the day of the first batch of recall votes primarily targeting lawmakers of the Chinese Nationalist Party (KMT). The scale of the recall drive far outstrips the expectations from when the idea was mooted in January by Democratic Progressive Party (DPP) caucus whip Ker Chien-ming (柯建銘). The mass recall effort is reminiscent of the Sunflower movement protests against the then-KMT government’s non-transparent attempts to push through a controversial cross-strait service trade agreement in 2014. That movement, initiated by students, civic groups and non-governmental organizations, included student-led protesters occupying the main legislative chamber for three weeks. The two movements are linked