As Taiwan moves toward finalizing an Economic Cooperation Framework Agreement (ECFA) with China, a US Congressional commission reports a “disturbing trend” by Beijing away from the development of a free market system and toward greater government control of the economy.
“Contrary to its claim of being a market-oriented economy, Beijing continues to comprehensively plan, direct, support and control its economy,” said Carolyn Bartholomew, chairman of the US-China Economic and Security Review Commission.
Releasing the commission’s seventh annual report on Thursday, she said: “Many of China’s economic reforms over the past 30 years are, in reality, a government-directed industrial policy that seeks to promote export-led growth.
“Key industries including auto parts, machine tools, information technology, optics, photonics and clean renewable energy are targeted for government support,” she said, adding that Beijing provides massive loans from state-owned banks to industries already producing over capacity.
Bartholomew said: “This approach gives China’s exporters a substantial price advantage in international markets and disadvantages companies hoping to export to China.”
‘CHILLING’
A leading US economist, speaking on the condition that he not be named, said that Bartholomew’s words were particularly chilling for Taiwan in view of what the report itself said about an ECFA.
“There is widespread opposition to the plan [ECFA] on Taiwan,” the report said.
It added: “Some opponents of the plan, led by the Democratic Progressive Party, charge that a free-trade agreement would sell out Taiwan. Skeptics also maintain that it would be tantamount to a one-China market and eventually political reunification with the mainland.”
BEST OPTION
The report said that proponents of an ECFA, spearheaded by the administration of President Ma Ying-jeou (馬英九) and major industry associations, argued that signing the proposal with China represented Taiwan’s best near-term option for revitalizing its economy after the effects of the global economic crisis.
The report said, however, that other commentators believe that an ECFA would harm Taiwan’s economy by hollowing out its manufacturing and electronics industries, crowding out trade with the US, Japan, the EU and ASEAN nations, while increasing Taiwan’s economic dependency on China.
Rupert Hammond-Chambers, president of the US-Taiwan Business Council, said: “Ma doesn’t have support for the political/military initiatives that China will demand post-ECFA and that’s when support drops off. Not for ECFA but for those initiatives that are political and military in nature.”
“ECFA will continue to enjoy support through the process — unless its roll out is handled poorly,” he said.
Bartholomew said it was the commission’s responsibility to focus on the difficult areas of the US relationship with China and “shine some light” on areas where there were problems.
FIGHTER JETS
Asked if the commission was in favor of the US selling advanced F-16 fighters to Taiwan, Larry Wortzel, vice chairman of the Commission, said that it was very clear that the balance of air power across the Taiwan Strait was tipping in favor of China and that Taiwan’s aging air force fleet needed to be improved to address the imbalance.
He said: “It’s not our place to recommend specific weapons systems.”
Bartholomew said, however, that the commission members were going to Asia next month and would spend some time in Taiwan where they would focus their discussions on air power.
The Legislative Yuan’s Finance Committee yesterday approved proposed amendments to the Amusement Tax Act (娛樂稅法) that would abolish taxes on films, cultural activities and competitive sporting events, retaining the fee only for dance halls and golf courses. The proposed changes would set the maximum tax rate for dance halls and golf courses at 50 and 20 percent respectively, with local governments authorized to suspend the levies. Article 2 of the act says that “amusement tax shall be levied on tickets sold or fees charged by amusement places, facilities or activities” in six categories: “Cinema; professional singing, story-telling, dancing, circus, magic show, acrobatics
Tainan, Taipei and New Taipei City recorded the highest fines nationwide for illegal accommodations in the first quarter of this year, with fines issued in the three cities each exceeding NT$7 million (US$220,639), Tourism Administration data showed. Among them, Taipei had the highest number of illegal short-term rental units, with 410. There were 3,280 legally registered hotels nationwide in the first quarter, down by 14 properties, or 0.43 percent, from a year earlier, likely indicating operators exiting the market, the agency said. However, the number of unregistered properties rose to 1,174, including 314 illegal hotels and 860 illegal short-term rental
INFLATION UP? The IMF said CPI would increase to 1.5 percent this year, while the DGBAS projected it would rise to 1.68 percent, with GDP per capita of US$44,181 The IMF projected Taiwan’s real GDP would grow 5.2 percent this year, up from its 2.1 percent outlook in January, despite fears of global economic disruptions sparked by the US-Iran conflict. Taiwan’s consumer price index (CPI) is projected to increase to 1.5 percent, while unemployment would be 3.4 percent, roughly in line with estimates for Asia as a whole, the international body wrote in its Global Economic Outlook Report published in the US on Monday. The figures are comparatively better than the IMF outlook for the rest of the world, which pegged real GDP growth at 3.1 percent, down from 3.3 percent
ECONOMIC COERCION: Such actions are often inconsistently applied, sometimes resumed, and sometimes just halted, the Presidential Office spokeswoman said The government backs healthy and orderly cross-strait exchanges, but such arrangements should not be made with political conditions attached and never be used as leverage for political maneuvering or partisan agendas, Presidential Office spokeswoman Karen Kuo (郭雅慧) said yesterday. Kuo made the remarks after China earlier in the day announced 10 new “incentive measures” for Taiwan, following a landmark meeting between Chinese President Xi Jinping (習近平) and Chinese Nationalist Party (KMT) Chairwoman Cheng Li-wun (鄭麗文) in Beijing on Friday. The measures, unveiled by China’s Xinhua news agency, include plans to resume individual travel by residents of Shanghai and China’s Fujian
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