Fri, Sep 02, 2005 - Page 3 News List

Analysts warn against over-reliance on China

BY SHIH HSIU-CHUAN  /  STAFF REPORTER

Wary of Taiwan's growing economic dependence on the Chinese market, several analysts suggested that Taiwanese businesspeople take a closer look at the facts behind China's economic growth rate since a regime without the rule of law cannot be treated as a purely market economy.

Over the past few years, Taiwan's trade dependence on China has become a major concern. The latest tallies of cross-strait economic relations show the ties have grown closer from late last year to the first half of this year despite the political tension that resulted from China's enactment of its "Anti-Secession" Law.

According to the Bureau of Foreign Trade of the Ministry of Economic Affairs, exports to China during the first six months of this year accounted for 26.7 percent of total exports, meaning that more than one-quarter of outbound shipments went to China.

Overseas investments statistics compiled by the ministry's Investment Commission show that investments in China accounted for 70.46 percent of all overseas investments in the first four months of this year, pushing the cumulative percentage to more than 50 percent for the first time.

Wu Hui-lin (吳惠林), a research fellow in Chung-Hua Institution for Economic Research, said that while Taiwan doesn't have to worry about its economic ties with the US and Japan, two countries also having close trade relations with Taipei, it does have to be very cautious about its ties with China.

China is a society governed by the will of the powerful but not by the rule of law, Wu said.

"The open letter from Chi Mei Optoelectronics Corp founder Hsu Wen-lung's (許文龍) praising Beijing's Anti-Succession Law proved that Taiwanese businesspeople have little choice but to live with the coercion of the regime should they want to invest in China," Wu said.

Hsu, a long-term advocate of Taiwan independence, surprised everyone on April 26 when he released a statement expressing support for Beijing's law aimed at blocking Taiwan's independence.

While businesses around the world have been attracted to China because of its vast market and cheap labor, many analysts note that the inherent structural problems of the Chinese economy make it extremely fragile.

Frank Xie (謝田), an assistant professor of marketing at Drexel University's LeBow College of Business, says China's rapid economic growth is a fairy tale.

"I don't believe the Chinese government's statistics because it is a regime used to telling lies," Xie said.

"For example, while China claimed that its cumulative GDP grew by 25.6 percent from 1996 to 1999, it also said that the energy consumption decreased by 12.2 percent during the same period. As energy consumption always goes together with the growth of GDP, it is impossible for these figures to happen at the same time," he said.

Xie said that the Chinese government has always tried to attract foreign investors by making up its economic growth figures and covering up such problems such as its high unemployment rate, the high rate of nonperforming bank loans and corruption.

The ultimate goal of the Chinese government in covering up these problems is to maintain the regime's power and repress dissenters, he said. It is unwise to put money into such a corrupt country, he said.

Commenting on Taiwan's dependence on the Chinese market, Democratic Progressive Party Legislator Wang To-Far (王塗發), a former economics professor at Taipei University, said that such a strong ties will result in the subordination of Taiwan's economic development to that of China and threaten Taiwan's national security.

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