A rather peculiar atmosphere is looming over the political landscape. On one hand, there is Yuanta-Polaris Research Institute chairman Liang Kuo-yuan (梁國源), who said that Taiwan has fallen into a state of “suspended growth,” as he compared the nation’s economy to a house built on liquefied soil, with a high risk of collapsing. On the other, president-elect Tsai Ing-wen (蔡英文), when interviewed by a pro-China media outlet, said she hoped China would express more goodwill before May 20, the date of her inauguration. Some media outlets have reported that the cross-strait service trade agreement might be sent directly to legislative review. Although these reports were immediately refuted, there is no shortage of similarly confusing news, stirring doubts in the public’s mind about the direction of the incoming government.
After Tsai was elected, she named five major targets for innovation and development — green energy, biotechnology, national defense, smart machinery and the Internet of Things — and visited several representative companies to demonstrate her intention to revive the nation’s economic momentum, reduce unemployment and boost salaries. The five industries are clearly centered around the nation’s manufacturing sector, which can consolidate the strengths of different regions to enhance connections between industries and make full use of this synergy to boost the nation’s flagging economy. Although promoting the five industries is extremely challenging, it is the solution to reviving the economy.
However, the key to industrial independence lies in the nation’s ability to overcome its addiction to China. For example, 40 percent of Taiwanese exports go to China, more than 50 percent of Taiwan’s overseas manufacturing bases are in China and tourism policies mainly cater to Chinese visitors. It is only by overcoming this addiction that Taiwan’s full productive potential can be realized.
Politically, Tsai has opted to maintain the cross-strait “status quo.” However, while Tsai recognizes the fact that the 1992 meeting did take place, she did not in any way or form acknowledged the so-called “1992 consensus.” Although maintaining the “status quo” might not contribute to the consolidation of Taiwan’s sovereignty, some members of the public can live with it in the face of the military threat across the Strait.
However, the question is whether the Tsai administration would be able to resist the mistaken notion that the cross-strait trade in services and goods agreements are good for the economy and thus walk straight into the trap set by China. It is understandable that given the depth of cross-strait economic and trade links, they must be regulated and guaranteed by laws and agreements. However, Taiwan’s economy already leans too much on China and the government must adopt diversification to reduce this economic dependence. Furthermore, China’s economy is showing signs of a decline, and the deeper Taiwan depends on China, the greater the damage it would incur.
Free trade is considered to be an irresistible trend by many, who think it is the only way for a country to make the best use of its comparative advantages and the only way to make each participating economy a winner. However, free trade is not a panacea; with the easing of regulations and tariff barriers, stronger countries are in a better position to capitalize on their competitiveness, as they have more advantages.