On Wednesday last week, the Institute of Economics at Academia Sinica adjusted its economic growth forecast for this year downward to 1.94 percent, from its previous forecast of 3.8 percent. The new forecast is reasonable, because for the first half of the year economic growth fell to minus-0.5 percent and export growth fell to minus-4.74 percent, making Taiwan the only country among our trading partners to experience a drop. Especially worthy of note is the fact that exports to China decreased by 8.82 percent, almost twice as much as for total exports. This is indeed very strange: How can this happen after we were blessed with the great Economic Cooperation Framework Agreement (ECFA)?
The answer to this question is common sense. All we need do is ask how there can be any exports left at all given that every link in the supply chain — downsteam, mid-stream and upstream — has moved to China. This is the same reason why throughput at Greater Kaohsiung Port has fallen each year for the past decade.
It is only natural that the government feels duty-bound to defend its policy mistakes. It has tried to blame them on the European debt crisis, slowing economic growth in China and the weak US economy. However, the real question is why Taiwan’s economy is slowing so much more than other countries? Over the past four years, whether in terms of economic growth or the stock market, Taiwan has failed to do as well as other countries when things are going well and has done much worse when things have been going badly.
The government’s explanation is that exports are too focused on China and industrial development is preoccupied with the high-tech industry and that this has resulted in an imbalance. If this was true, why did Taiwan’s economy not perform better in the past few years when China’s economy enjoyed double-digit growth? And why did the Taiwanese economy do worse than others in the 2000s, the glory years of the technology industry boom?
Such explanations are clearly excuses. The real reason, and this is something to which the government will never admit, is the mistaken focus of the nation’s leaders on China when it comes to economic development.
Taiwan’s failure to perform as well as other countries is a sign of the nation’s economic marginalization and an inevitable result of linking too closely to the Chinese economy. Not even the ECFA concessions that Beijing has promised can make up for the downside of the increasingly close relationship with China.
Pro-unification media do not agree that integration with China will result in Taiwan’s economic marginalization and they refute these arguments by saying that none of the other countries clamoring to develop relations with China have been marginalized.
However, for countries like South Korea and Japan, China is a foreign country with a different language and culture. That is not true for Taiwan, as there are no linguistic or major cultural differences between us and China. There is also a huge difference in size and geographical proximity. The big markets in China therefore have a much stronger pull on Taiwan than on other countries. As testament to this fact, Taiwanese businesspeople have pumped about US$500 billion in investments into China and about 1 million Taiwanese work there.
Excessive investment in China and the rapid linking of the two nations’ economies have caused a major drop in domestic investment. This has slowed down industrial upgrading and is ultimately responsible for a Taiwan’s loss of global competitiveness.
If the nation’s leaders refuse to admit integration with China is wrong because of their biased understanding and therefore fail to adopt corrective policies as soon as possible, Taiwan’s situation is only going to get worse.
Huang Tien-lin is a former presidential adviser.
Translated by Drew Cameron
The Executive Yuan recently revised a page of its Web site on ethnic groups in Taiwan, replacing the term “Han” (漢族) with “the rest of the population.” The page, which was updated on March 24, describes the composition of Taiwan’s registered households as indigenous (2.5 percent), foreign origin (1.2 percent) and the rest of the population (96.2 percent). The change was picked up by a social media user and amplified by local media, sparking heated discussion over the weekend. The pan-blue and pro-China camp called it a politically motivated desinicization attempt to obscure the Han Chinese ethnicity of most Taiwanese.
On Wednesday last week, the Rossiyskaya Gazeta published an article by Chinese President Xi Jinping (習近平) asserting the People’s Republic of China’s (PRC) territorial claim over Taiwan effective 1945, predicated upon instruments such as the 1943 Cairo Declaration and the 1945 Potsdam Proclamation. The article further contended that this de jure and de facto status was subsequently reaffirmed by UN General Assembly Resolution 2758 of 1971. The Ministry of Foreign Affairs promptly issued a statement categorically repudiating these assertions. In addition to the reasons put forward by the ministry, I believe that China’s assertions are open to questions in international
The Legislative Yuan passed an amendment on Friday last week to add four national holidays and make Workers’ Day a national holiday for all sectors — a move referred to as “four plus one.” The Chinese Nationalist Party (KMT) and the Taiwan People’s Party (TPP), who used their combined legislative majority to push the bill through its third reading, claim the holidays were chosen based on their inherent significance and social relevance. However, in passing the amendment, they have stuck to the traditional mindset of taking a holiday just for the sake of it, failing to make good use of
As strategic tensions escalate across the vast Indo-Pacific region, Taiwan has emerged as more than a potential flashpoint. It is the fulcrum upon which the credibility of the evolving American-led strategy of integrated deterrence now rests. How the US and regional powers like Japan respond to Taiwan’s defense, and how credible the deterrent against Chinese aggression proves to be, will profoundly shape the Indo-Pacific security architecture for years to come. A successful defense of Taiwan through strengthened deterrence in the Indo-Pacific would enhance the credibility of the US-led alliance system and underpin America’s global preeminence, while a failure of integrated deterrence would
RSS