Last year, Taiwan and China entered a cold peace after Beijing described President Tsai Ing-wen’s (蔡英文) inauguration speech as an “incomplete test paper.”
Taiwanese might not have felt it, but the numbers tell the story: 2016 was the year when the economy took a turn for the better after the negative economic growth during former president Ma Ying-jeou’s (馬英九) presidency and it was the year when Taiwan outperformed every other Asian nation.
In the fourth quarter of 2015, economic growth had fallen to minus-0.89 percent, but by the third quarter last year it had increased to 2.06 percent and by the fourth quarter 2.38 percent. In July last year, exports once again turned positive, seeing an 1.1 percent increase. That month also saw the end to 17 consecutive months of contraction and 16 months of decreasing export orders.
In November last year, exports increased by 7 percent. Economic monitoring indicators flashed “green” for five consecutive months and the composite manufacturing indicator stood at 11.8 percent, the highest in 23 months.
The stock exchange, which offers a window on the economy, is doing even better. The TAIEX closed the year at 9,252 points, having increased by 915 points, or 11 percent, during the year, and total market capitalization stood at NT$27.2 trillion (US$847 billion), another new high.
It is worth mentioning that South Korea’s KOSPI, Hong Kong’s Hang Seng Index and Singapore’s Straits Times Index only increased by 3.32 percent, 0.4 percent and 0.06 percent respectively.
It could be said that Taiwan reclaimed its place at the head of the Four Asian Tigers. The New Taiwan dollar appreciated last year by 2.4 percent, compared with the yuan, the won and the Singaporean dollar, which depreciated by 6.65 percent, 2.91 percent and 2.42 percent respectively. This all but nullified the impact of Beijing’s decision to reduce the number of Chinese visiting Taiwan.
Why has the Tsai administration performed so well economically during its first year in office?
Credit should be given to the cross-strait exchange “cold peace effect” that is the result of the Tsai administration’s insistence on not recognizing the so-called “1992 consensus.” As early as the government’s first 100 days in office, I said that maintaining the cold peace boom that followed the transfer of power would depend on whether the “1992 consensus” policy of integrating Taiwan into China was reined in. Fortunately, Tsai insisted on not giving in to Beijing’s pressure, threats and intimidation, and this perseverance is why Taiwan’s economy is looking up.
First, cold peace is making people care about Taiwan. Although Taiwan over the past year has seen the implementation of the five-day workweek, protests for and against same-sex marriage, and debate over pension system reform, this is all an expression of the public’s concern for Taiwan. The disputes have resulted in a stronger Taiwanese identity.
Second, cold peace has cooled down “China fever” among the public and businesses, and the manufacturing industry in particular has been more restrained in its China-bound investments, which has helped build domestic economic momentum.
Third, officials are no longer distracted by cross-strait affairs and they can concentrate on addressing domestic matters and look toward the international community. Although the Tsai administration still relies on the assistance of Chinese Nationalist Party (KMT) officials, and although they are not working as hard for the economy as the public wants, things are a lot better than when the Ma administration worked to sign 18 agreements with China, promoting its negative economic policies.