`Economist' says Taiwan's media missed the point

The Economist magazine condemned Taiwan's press for using one of its articles, which sent the financial markets in a tailspin on Monday, to score political points against the new government.

The influential magazine said in its latest issue that the lackluster stock market and slowing semiconductor sector may take their toll on Taiwan's banking system, which may culminate in a liquidity crisis during the Lunar New Year.

"The Chinese-language press seems to have misinterpreted the article as blaming the present government for its shambles," said John Peet, business affairs editor at the Economist in London, who edited the report. "But the problems have their roots in cronyism which clearly predated the present government."

"What we are talking about is the liquidity crisis in the banking system," said Andreas Kluth, the magazine's Asian business affairs correspondent who wrote the article.

In the Chinese-language press, however, "banking crisis" is often translated as "financial crisis," which in turn is equated with the recent Southeast Asian-style currency crisis -- an entirely different matter.

The magazine denied yesterday that the controversial report is "political," as many officials have suggested, or serves as a vote of no confidence by the international media on the new DPP government.

Peet, who edited the article, said that underlying weaknesses in the banking system meant "that there are actually a lot of things Taiwan has in common" with some other Asian countries.

Given the long-standing nature of the banking woes, analysts are indeed taken aback by the magnitude of the impact the article has had on Taiwan's financial markets. The magazine "often creates a stir in the country concerned," said Peet, adding that, "we write what we think."

The report, which caused a chain reaction in the local press, has now raised a new debate in Taiwan's official circles on the accuracy of reporting by international journalists and the impact they could have on the domestic financial markets.

Kluth believes that the new government has "inherited a mess" and the report is not intended to imply "bad leadership, but exactly the opposite."

Minister of Finance Yen Ching-chang (顏慶章), quoted in the original story, was the former vice finance minister before he took over last month when his predecessor Shea Jia-dong (許嘉棟) resigned to take responsibility for the stock market's woes.

While the magazine said that it had analyzed the conditions as "objectively and as analytically as possible," "linguistic" problems may have sent the domestic papers on a spree of negative reporting.

The subsequent official rebuttal of the report included a reiteration of Taiwan's strengths -- strong exports, foreign exchange reserves, little foreign debt -- as proof against a potential currency crisis.

Little was said, however, about the burgeoning overdue loans problem which was the actual subject of the article in The Economist.

But the Taiwanese government has remained relatively tolerant toward the international media so far, although officials this time did wag their finger with a "foreigners-never-understand-the-situation" attitude.

Other Asian governments have not been so benevolent.

Singapore has earned a reputation for banning unfavorable foreign publications, which included a lawsuit filed against Christopher Lingle -- now a regular contributor to the Taipei Times -- for an article in the International Herald Tribune. And last year, the Malaysian government imprisoned Murray Hiebert, the Kuala Lumpur correspondent of the Far Eastern Economic Review, for what it called an "unfair report" on the nation's judicial system.