On Nov. 10, US President Donald Trump ended his visit to China. He might have received a big “gift” of US$253.5 billion there, but as soon as he arrived in Da Nang, Vietnam, he said that the US would no longer tolerate dumping, currency manipulation, government subsidies and other chronic trade abuses, and that it is necessary to restore fair competition to distorted markets.
Trump is the first global leader to question globalization. Before the 1980s, nations had an unshakable belief in globalization. Trade volumes grew and poorer nations could also share in the wealth, thanks to investments by developed nations.
When China joined the free market, this belief in globalization as a trading system that would benefit the entire world began to falter, because China is an autocracy that used all of its might in the pursuit of global economic dominance.
The effectiveness of free trade, barter and division of labor can only come to fruition if global trade is in a general state of equilibrium.
Japan also experienced a gigantic trade surplus, but it still was not more than US$40 billion to US$50 billion, and following global condemnation, it allowed the yen to appreciate.
China’s approach has been different: To be able to enjoy the benefits of globalization, Beijing depreciated the yuan from 1.5 yuan to the US dollar in 1980 to 8.5 yuan in 1995, and it did so without experiencing coups, upheavals or inflation.
The move suppressed labor costs to levels between one-20th and one-40th of the cost in developed nations and China used that to attract foreign capital, steal technology and build its position as the world’s factory.
China’s trade surplus stands at US$500 billion annually, 10 times the size of Japan’s highest surplus. Can the global trade system really withstand the effects of a trade deficit of US$500 billion with China every year?
China’s exchange-rate manipulation and dumping have given it a foreign-exchange reserve of more than US$4 trillion. It uses this surplus to buy up advanced technology companies and concentrate the power of global economic growth in its hands, maintaining annual economic growth of 7 percent.
This is the result of sacrificing other nations’ economic growth.
Taiwan is the biggest victim of China’s policy. Taiwanese businesses are moving to China in droves, causing Chinese incomes and economic growth to rise, while Taiwanese incomes have dropped and economic growth has fallen to between 1 and 2 percent.
Japan and the US have also sacrificed growth. In the US, this has caused a backlash among blue-collar workers, resulting in Trump’s election as president.
Bizarrely, some academics and media outlets in Taiwan still see China as Taiwan’s savior and think of China’s US$30 billion trade deficit with Taiwan [Ministry of Finance data showed a trade deficit of US$63.03 billion for the first 10 months of the year] as a sign of goodwill.
However, this deficit is the result of Taiwanese businesses relocating their production to China, which is benefiting China and negatively affecting Taiwan.
Taking a pragmatic look at the situation, it is difficult to see businesses that have moved nearly all their production — perhaps about 80 percent — to China as Taiwanese businesses. From a fiscal and management point of view, the government should treat these “Taiwanese” businesses differently to bring operations for companies grounded in Taiwan back to reasonable levels.
At least Trump keeps saying that he will put the US first and restore fair competition to the distorted market.
Could Taiwan do the same? It is just a matter of determination.
Huang Tien-lin is a national policy adviser and former managing director and chairman of First Commercial Bank.
Translated by Perry Svensson
Saudi Arabian largesse is flooding Egypt’s cultural scene, but the reception is mixed. Some welcome new “cooperation” between two regional powerhouses, while others fear a hostile takeover by Riyadh. In Cairo, historically the cultural capital of the Arab world, Egyptian Minister of Culture Nevine al-Kilany recently hosted Saudi Arabian General Entertainment Authority chairman Turki al-Sheikh. The deep-pocketed al-Sheikh has emerged as a Medici-like patron for Egypt’s cultural elite, courted by Cairo’s top talent to produce a slew of forthcoming films. A new three-way agreement between al-Sheikh, Kilany and United Media Services — a multi-media conglomerate linked to state intelligence that owns much of
The US and other countries should take concrete steps to confront the threats from Beijing to avoid war, US Representative Mario Diaz-Balart said in an interview with Voice of America on March 13. The US should use “every diplomatic economic tool at our disposal to treat China as what it is... to avoid war,” Diaz-Balart said. Giving an example of what the US could do, he said that it has to be more aggressive in its military sales to Taiwan. Actions by cross-party US lawmakers in the past few years such as meeting with Taiwanese officials in Washington and Taipei, and
Denmark’s “one China” policy more and more resembles Beijing’s “one China” principle. At least, this is how things appear. In recent interactions with the Danish state, such as applying for residency permits, a Taiwanese’s nationality would be listed as “China.” That designation occurs for a Taiwanese student coming to Denmark or a Danish citizen arriving in Denmark with, for example, their Taiwanese partner. Details of this were published on Sunday in an article in the Danish daily Berlingske written by Alexander Sjoberg and Tobias Reinwald. The pretext for this new practice is that Denmark does not recognize Taiwan as a state under
The Republic of China (ROC) on Taiwan has no official diplomatic allies in the EU. With the exception of the Vatican, it has no official allies in Europe at all. This does not prevent the ROC — Taiwan — from having close relations with EU member states and other European countries. The exact nature of the relationship does bear revisiting, if only to clarify what is a very complicated and sensitive idea, the details of which leave considerable room for misunderstanding, misrepresentation and disagreement. Only this week, President Tsai Ing-wen (蔡英文) received members of the European Parliament’s Delegation for Relations