Taiwan’s domestic market is quite small and the economy relies on exports. The export figures for last moth showed a drop of 3.8 percent. A month-by-month comparison with the same period last year shows that the figures have dropped for four successive months.
The New Taiwan dollar has actually appreciated compared with the yen and the won. This is one of the reasons for the drop in exports, but what other factors are there? Taiwan has transgressed one of the golden rules of economics: Do not place all of your eggs in one basket.
By equating “international” with “China” in terms of economic trading partners, not only has the nation placed all its chips on China, it has failed to clearly define whether China is to be considered a cooperative partner or a competitor.
Five years on from the signing of the Economic Cooperation Framework Agreement (ECFA), the agreement has proved to be a bit of a slap in the face for Taiwanese businesspeople in China.
The ECFA held all sorts of promises, from the “concessions” to the “early harvest list.” The brutal truth is that Taiwan was groomed like a naive investor into putting its money into a stock before the unscrupulous agent dumps it.
Evidence of this is the rearing of grouper and abalone, or the cultivation of wax apples and mangoes. During the honeymoon period, Taiwan put out the technology, while Beijing put up the land, labor and policies, and the future was said to be to be rosy.
Then, when all of the hard-won and long-researched exclusive technologies developed in Taiwan had been taken to China, Taiwanese were caught, trapped like a turtle in a jar.
Then, Taiwan’s “partner” took its time to pick apart the technology, incrementally copying, plagiarizing, tweaking, improving and using its own cheaper land and labor advantage until Taiwan was left with nothing. The nation is still expected to keep working, to pay obeisance to Beijing, while most of the money goes straight into the pockets of corrupt officials.
With China as a trading partner, there are no concessions on offer: It is waiting to feast upon Taiwan.
In addition to this, cheap Chinese labor has been gradually disappearing as wages increase. China is becoming less attractive as the world’s sweatshop and its economic growth rate has fallen as a result. Zhu Haibin (朱海斌), chief China economist at JPMorgan Chase in Hong Kong, has warned that China might struggle to achieve growth in trade of 6 percent this year.
If China cannot maintain its own growth rate, what is to become of Taiwan if it insists on tying itself to this clay idol?
Chang Kuo-tsai is a retired National Hsinchu University of Education associate professor and a former deputy secretary-general of the Taiwan Association of University Professors.
Translated by Paul Cooper
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