Thu, Mar 01, 2018 - Page 8 News List

Expansion through protectionism

By Huang Tien-lin 黃天麟

The Directorate-General of Budget, Accounting and Statistics (DGBAS) on Feb. 13 adjusted its forecast for GDP growth this year to 2.42 percent, up 0.13 percent from its earlier projection of 2.29 percent.

“I am optimistic that the economy will continue its current course of stable expansion,” DGBAS Minister Chu Tzer-ming (朱澤民) said.

In the final two quarters of former president Ma Ying-jeou’s (馬英九) final year in office, the fourth quarter of 2015 and the first quarter of 2016, Taiwan’s GDP shrank 0.79 percent and 0.23 percent respectively.

When President Tsai Ing-wen’s (蔡英文) administration took office, it put an end to Ma’s “one China market” policy. Since then, Taiwan’s GDP has stopped shrinking and started growing.

Last year it grew by 2.86 percent, which is a remarkable political achievement for the Tsai administration.

However, the public expects more. Although opinion polls show that the satisfaction rate with the Tsai administration has bounced back to 50.4 percent, it still falls short of the ideal level.

One point that people find puzzling is GDP growth. Considering that the economy grew by 2.86 percent last year and the stock market has been thriving, people wonder why the economy is only expected to grow by 2.41 percent this year.

Does it mean that low growth rates have become the normal state of affairs? If so, why? Are there any solutions to get the nation out of this low-growth rut?

This is a question that the government needs to carefully consider.

One reason for Taiwan’s low growth rates can be seen from the controversy erupted ahead of the Lunar New Year concerning China-based Taiwanese businesspeople and students returning home for the holiday. This shows that China’s policies of using economic means to promote unification, while impoverishing Taiwan, are having an effect.

Nobody knows how many Taiwanese businesspeople and students wanted to return from China to Taiwan for the holiday. On Jan. 4, China unilaterally activated the northbound M503 flight route.

Taiwan’s protests over this move led to two Chinese airlines — China Eastern Airlines and XiamenAir — canceling 176 extra flights that they had planned for the holiday period. These cancelations reportedly affected 50,000 people and made tickets scarce and expensive.

Given that an additional 489 flights were not canceled, and assuming that there are about 150 passengers per flight, the total number of passengers carried on the regular and additional holiday flights would have been about 160,000.

If Taiwanese businesspeople who were flying to Taiwan on domestic airlines were added with those who traveled via the “small three links,” the total exceeds 300,000 people.

Not all Taiwanese businesspeople and students returned from China for the holiday, and some Taiwanese managers stayed in China to work in the period. Adding these figures together, to say that there are 1 million Taiwanese businesspeople living long-term in China would be a conservative estimate.

China has for several years been pursuing a strategy of wooing small and medium-sized Taiwanese enterprises, medium and low-income earners, residents of central and southern Taiwan as well as young people.

Last year, this strategy was updated to focus on the younger generation and to take a grassroots approach. These policies have caused the numbers of Taiwanese businesspeople and students living long-term in China to increase year-on-year. As a result, these people keep shifting their consumption from Taiwan to China, along with between 1 percent and 2 percent of Taiwan’s economic growth.

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