Recently, the voice of red and blue media in Taiwan have been creating a mistaken discourse that runs completely contrary to the facts, to mislead the public.
The so-called “cross-strait dividend” or the “cross straits peace dividend,” as it is sometimes known, is a case in point. There is currently a cross-strait peace wealth creation forum, sponsored by a certain media outlet, where everyone is talking about the peace dividend, but the question is: Where is this cross-strait peace dividend? Is this wealth created in China or Taiwan? The fact is that 15 years of cross-strait economic integration has proven that the majority of the dividend goes to China.
If cross-strait exchanges and integration brought dividends to Taiwan, then common sense dictates that the economy of Taiwan should be doing better than those of other nations and a lot better than it did in the past.
However, this year, even maintaining an economic growth of more than 1 percent is proving difficult, while Taiwanese youth are suffering with monthly wages of NT$22,000 (US$666.63). These show that cross-strait integration has brought absolutely no dividends to Taiwan, but has only brought what is known as negative carry. Just how much negative carry did it bring? It can be answered.
The government led the promotion of cross-strait economic integration. Starting in 2002, it was carried out under the guise of a policy of active opening, using the catchphrase “cross-strait mutual benefit.”
Then, in 2008, the administration of President Ma Ying-jeou (馬英九) opened Taiwan’s economy fully to China, including the Economic Cooperation Framework Agreement (ECFA) and the service trade agreement, which were aimed at Ma’s goal of eventual unification and baited the public using the “Golden Decade” economic plan. The result was that Taiwan’s economic growth rate in the “active opening” era fell from an average of 6.6 percent to 4.86 percent. With the advent of the ECFA, it fell even further to 2.89 percent.
If Taiwan’s economy had not been subject to the wrong-headed policies of the “active opening” policy and ECFA integration, Taiwan’s economic growth could have been ahead of the other “little dragon” economies at 6.6 percent.
In other words, last year’s GDP would have been NT$25.327 trillion, rather than the NT$16.84 trillion announced by the Directorate-General of Budget, Accounting and Statistics.
The nation’s return on employment to GDP ratio was 53.2 percent in the 1990s. This ratio had fallen to 44.15 percent in 2013, due to Taiwanese manufacturers moving their operations to China. If employment income distribution were still at the levels it had been during the 1990s, it would be NT$13.47 trillion. Considering the nation has 8.7 million employed people, then the amount per person would be NT$1.54 million.
However, last year, Taiwan’s GDP was NT$16.84 trillion, and income distribution was only NT$7.101 trillion, or an average of NT$816,200 per person. That is a difference of NT$732,800, compared with the NT$1.54 million that it really “should” be. This is the price each employed person paid last year for the national policy mistake of “peaceful cross-strait development.”
GDP should be NT$25.327 trillion, but actual GDP last year was NT$16.84 trillion, a difference of NT$9.243 billion. This is the price paid overall by Taiwan’s economy last year. Thus, the overall cost to the nation’s economy over the 15-year cumulative period of peaceful cross-strait development has been NT$59.7 trillion. Note that this is the amount of Taiwan’s GDP lost over the past 15 years, which is the amount of the cross-strait peace dividend that has simply disappeared.
If you talk about something that is non-existent for long enough, it will cause hallucinations. The public should wake up.
Cross-strait economic integration pays no dividends to Taiwan, it only benefits the larger economy, China. The benefits gained by the cross-strait political and business consortia just perpetuate Taiwan’s negative carry and China’s dividends. This exploitative market process brings great returns to Beijing, returns that, as the final analysis shows, should belong to Taiwanese.
Huang Tien-lin is former president and chairman of First Commercial Bank and a former presidential adviser.
Translated by Clare Lear
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