Other than the economic aspects, liberalization of trade in services would enable managerial personnel from China, if not laborers, to accompany Chinese capital to Taiwan. Not necessarily motivated by purely economic incentives, China’s political objective of annexing Taiwan to the “motherland” would prompt it to try to gain leverage to this end by investing heavily in Taiwan.
Hence, more and more Taiwanese workers would have to work under Chinese bosses. Politically, this would influence Taiwanese electoral politics — if Taiwan continues to be a democratic country. The socio-political costs of the pact supersede the economic benefits. Culturally, Chinese penetration in Taiwan’s cultural and educational enterprises will Sinicize, not globalize, the nation.
Unless a convincing and legitimate rationale is made by the government, the liberalization of the service industry will push Taiwan into China’s economic orbit in the short run and into its political grasp in the long run. This brings to mind the strategy of cooking a frog in a pot of water: The frog will jump out if the water is boiling hot, but if it is heated up gradually, the frog will feel comfortable and safe until it is too late to escape.
Peter C.Y. Chow is a professor at the City University of New York, a research associate at the National Bureau of Economic Research and a contractual consultant of the World Bank.