Tue, Jan 11, 2011 - Page 3 News List

Economic policy is flawed: think tank

DEVELOPMENT DILEMMAS:Taiwan Brain Trust said the government’s policies have left it vulnerable to Beijing and focused too much on growth and too little on jobs

By Ko Shu-ling  /  Staff reporter

Taiwan Brain Trust chairman Wu Rong-i, second right, chairs a conference in Taipei -yesterday on Taiwan’s economic development. Speakers included Taiwan Brain Trust members Chen Jin-ji, first left, and Tsaur Tien-wang, second left.

PHOTO: WANG YI-SUNG, TAIPEI TIMES

Taiwan Brain Trust yesterday said it would not oppose the Economic Cooperation Framework Agreement (ECFA) as long as Beijing did not prevent Taiwan from signing free-trade agreements (FTA) with other major trading partners. However, it criticized the government’s economic policy — and its reliance on China — as flawed and misguided.

The trust’s chairman, former vice premier Wu Rong-i (吳榮義), said China represented about 70 percent of the nation’s total overseas investment, while 42 percent of Taiwan’s exports went to China and Hong Kong, making Taiwan economically vulnerable via-a-vis China.

“We must rethink our global economic strategy. In particular, we must strengthen the cooperative relationship with advanced countries,” he told a conference on ways to address Taiwan’s economic development dilemma.

Wu said the administration’s had three myths about economic policy: it thought China was the only option for repairing Taiwan’s economy; it thought economic growth was everything and failed to realize that economic growth did not necessarily improve the quality of life or narrow the wealth gap; and it thought big businesses deserved preferential tax cuts, while ignoring the economically disadvantaged, small and medium-sized businesses and residents of central and southern Taiwan, where resources were inadequate compared with what is allocated to the north.

Wu said the administration should increase its cooperation with developed countries, emphasize creating jobs rather than economic growth, improve the investment environment, restructure finances and reform the tax system, allocate national resources more reasonably and commit to sustainable development.

“The purpose of a government’s existence is to let its people live a good life,” he said. “Being happy is not only about making more money or [achieving] higher economic growth. It is also about guaranteeing their jobs, quality of life, physical and mental health, confidence and dignity, social harmony and national security.”

Chen Jinji (陳錦稷), a research fellow at the trust, said the administration’s economic policy was seriously mistaken because of the three myths mentioned by Wu.

“The government’s economic policy not only fails to solve problems, it makes things worse,” he said. “When a government gets the problem wrong and prescribes the wrong medicine, the result is a government that is ineffectual.”

Tsaur Tien-wang (曹添旺), convener of the trust’s economics department, said he was concerned about the ECFA’s negative impact, saying that when a smaller economy integrates with a bigger one, it is easier for the smaller one to become marginalized in terms of employment, investment and income.

The only way out is for the smaller economy to develop economic ties with other countries and sign FTAs, he said.

This applies to Taiwan, he said, -adding that Taiwan’s future would be -limited if China continues to block its efforts to sign FTAs with Taiwan’s major economic partners.

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