As Taiwan’s economy relies heavily on exports, it should be vigilant against a possible domino effect caused by the escalating Greek debt crisis, as crumbling talks with its European creditors over the weekend pushed Greece to the brink of bankruptcy, which could have substantial repercussions.
Greece was expected to default on a 1.6 billion euro loan repayment to the IMF yesterday, with international creditors refusing yet another loan extension due to a lack of substantial economic reform measures.
Greece on Monday announced the closure of banks for one week and imposed capital controls after Greek bank deposits fell to an 11-year low. Greek Prime Minister Alexis Tsipras’ announcement that its European lenders’ fresh bailout measures would be put before voters in a referendum brings the nation one step closer to exiting the euro.
Taiwanese markets suffered from the intensifying Greek debt crisis as the latest developments left investors fretting that a Greek exit from the euro would destabilize economic recovery in the eurozone and even affect the global economy.
The TAIEX took a nosedive on Monday to 9,236.1, below the monthly average of 9,300, as investors scrambled to sell equities. Foreign investors sold a net total of NT$7.1 billion (US$228.52 million) of local shares on Monday. Among Asian markets, which were the first to trade in the wake of the weekend’s developments in Greece, the Nikkei 225 stock average in Tokyo plunged 2.9 percent, while the Shanghai Composite Index tumbled 3.3 percent and Hong Kong’s Hang Seng sank 2.6 percent.
As the Greek drama played out, the Dow Jones Industrial Average and S&P dipped 1.95 percent and 2.09 percent overnight respectively, while the FTSE 100 in London fell 1.97 percent and the DAX in Frankfurt, Germany, plunged 3.56 percent.
For Taiwan, the Greek debt crisis might seem somewhat irrelevant given that as of April, the nation’s 37 lenders’ combined exposure to Greece totaled NT$35 million, and local insurance companies and fund brokerages do not hold any position in Greek securities, according to the Financial Supervisory Commission.
Despite the TAIEX yesterday bouncing back 0.94 percent, Taiwan should be wary, as the repercussions of the Greek debt crisis are likely to result in a weakened euro and have an impact on single-currency economies, translating into slower consumer spending and less private investment. Such a scenario would result in weakened demand for electronics. As Europe is one of the major overseas markets for Taiwan’s machine tool suppliers and electronics brands, such as Acer Inc, Asustek Computer Inc and HTC Corp, a faltering European economy and a decline in private consumption would impact negatively on local exports.
Europe is the fourth-largest export destination for Taiwanese manufacturers, accounting for 8.8 percent of exports in the first five months of this year, according to the latest statistics released by the Ministry of Finance. Exports to Europe contracted at an annual rate of 12 percent to US$10.49 billion in the first quarter, while total exports fell 5.7 percent year-on-year, marking the sixth consecutive month of annual decline, ministry data showed. Electronic products were the biggest export item, accounting for nearly 33 percent during the same period.
The statistics did not include goods exported to China and then re-exported to Europe. Including re-exported goods, Europe was the second-largest market, after China, accounting for 18 percent of Taiwan’s exports, surpassing ASEAN and the US, which accounted for 18 percent and 12 percent respectively.
Due to the effects of globalization, adverse economic conditions can affect the global economy. As Taiwan is a small economy, vulnerable to market volatility, it must prepare for major economic changes.
A Chinese diplomat’s violent threat against Japanese Prime Minister Sanae Takaichi following her remarks on defending Taiwan marks a dangerous escalation in East Asian tensions, revealing Beijing’s growing intolerance for dissent and the fragility of regional diplomacy. Chinese Consul General in Osaka Xue Jian (薛劍) on Saturday posted a chilling message on X: “the dirty neck that sticks itself in must be cut off,” in reference to Takaichi’s remark to Japanese lawmakers that an attack on Taiwan could threaten Japan’s survival. The post, which was later deleted, was not an isolated outburst. Xue has also amplified other incendiary messages, including one suggesting
Chinese Consul General in Osaka Xue Jian (薛劍) on Saturday last week shared a news article on social media about Japanese Prime Minister Sanae Takaichi’s remarks on Taiwan, adding that “the dirty neck that sticks itself in must be cut off.” The previous day in the Japanese House of Representatives, Takaichi said that a Chinese attack on Taiwan could constitute “a situation threatening Japan’s survival,” a reference to a legal legal term introduced in 2015 that allows the prime minister to deploy the Japan Self-Defense Forces. The violent nature of Xue’s comments is notable in that it came from a diplomat,
Before 1945, the most widely spoken language in Taiwan was Tai-gi (also known as Taiwanese, Taiwanese Hokkien or Hoklo). However, due to almost a century of language repression policies, many Taiwanese believe that Tai-gi is at risk of disappearing. To understand this crisis, I interviewed academics and activists about Taiwan’s history of language repression, the major challenges of revitalizing Tai-gi and their policy recommendations. Although Taiwanese were pressured to speak Japanese when Taiwan became a Japanese colony in 1895, most managed to keep their heritage languages alive in their homes. However, starting in 1949, when the Chinese Nationalist Party (KMT) enacted martial law
“Si ambulat loquitur tetrissitatque sicut anas, anas est” is, in customary international law, the three-part test of anatine ambulation, articulation and tetrissitation. And it is essential to Taiwan’s existence. Apocryphally, it can be traced as far back as Suetonius (蘇埃托尼烏斯) in late first-century Rome. Alas, Suetonius was only talking about ducks (anas). But this self-evident principle was codified as a four-part test at the Montevideo Convention in 1934, to which the United States is a party. Article One: “The state as a person of international law should possess the following qualifications: a) a permanent population; b) a defined territory; c) government;
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