Wed, Jul 03, 2013 - Page 8 News List

China and ‘economic nationalism’

By Hwan C.Lin 林環牆

Statistics show that over the past two decades, the real growth rate for wages within Taiwan’s manufacturing industry has been decreasing year by year, which eventually leads to stagnation and negative growth.

There were several fundamental factors behind this.

First, after the mid-1980s, the New Taiwan dollar experienced excessive appreciation. On top of this, China started opening up to the world and carrying out reforms, that freed up cheap labor and attracted foreign investment.

Second, Taiwanese businesses started to move to China. However, new industries with higher added-value were hard for the government to get off the ground, even with subsidies, tax breaks and such like, and this resulted in a serious lack of innovation among these new industries.

Third, the Chinese Nationalist Party (KMT) and some factions within the DPP encouraged moving economically toward China.

Fourth, the government erroneously believed that linking Taiwan economically with China would help develop Taiwan’s economy.

The combination of these factors resulted in Taiwan losing two precious decades.

The facts have already shown that the KMT’s idea of linking Taiwan to China economically or the idea of China being Taiwan’s “New Silk Road” as proposed by the DPP are both mistaken strategies.

Lin stated in his article that if we really look at things from the perspective of economic nationalism, we will discover that the main culprit behind Taiwanese businesses moving to China and stagnant wages was Chen and not Ma.

Lin has got it the wrong way around.

Hwan C. Lin is a research fellow at the Taiwan Public Policy Council and associate professor of economics at the University of North Carolina.

Translated by Drew Cameron

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