Former World Bank president Paul Wolfowitz said on Monday the spectacular growth of the Chinese economy provided both “danger and opportunity for Taiwan.”
Introducing Council for Economic Planning and Development Minister Christina Liu (劉憶如) at an American Enterprise Institute discussion on investment in Taiwan, Wolfowitz said: “It is an uncomfortable situation to be the neighbor of a colossus with whom your relations are at best tense.”
However, he told the meeting in Washington there was an “enormous opportunity” for Taiwan to expand not only its economy but also its international space.
Taiwan could be the “gateway” to China’s economy, he said.
“In Taiwan’s unusual and difficult circumstances, its economic relations with the outside world are perhaps the strongest part of Taiwan’s position,” he said.
Liu said that while Taiwan’s 10 percent economic growth over the past year was “very impressive,” it was the composition of that growth that was most important.
About 70 percent of that growth was “domestic led,” sparked by an increase in domestic investment and consumption, she said.
“We have decided that economic growth should be co-driven by domestic and external demand. It will bring benefits for employment, wage-growth and more even income distribution,” Liu said.
“Our future policy direction should prioritize measures that boost domestic demand and contribute to the development of the service sector,” she said, adding that this amounted to “a major change” and was her main message during her visit to the US.
“Priority for future policy should be to place emphasis on private consumption and investment in Taiwan,” Liu said.
In the coming decade investors will see a “dramatic change.”
Wolfowitz then asked: “I know there are people in Taiwan who are nervous that [the Economic Cooperation Framework Agreement] ECFA is bringing too much of a mainland presence to Taiwan. How are you going to keep your identity in the future? What will happen if there is a change of government in Taiwan? Are people going to pull back? How much of a consensus do you feel there is around the broad direction of policy and where do you think there might be points of controversy in the political sphere?”
Liu said that if the ECFA was the right policy and the markets showed economic benefits, there would be no pulling back.
Asked if the ECFA could continue if Taiwan moved toward independence, Liu said that if the majority in Taiwan were to pursue independence “then the whole thing will be totally different.”
If independence became a central theme and central belief for Taiwanese, then “everything would change,” she said.
“I don’t think that is the consensus for Taiwan. We have done many surveys and the majority of people in Taiwan are hoping to keep the ‘status quo.’ I don’t think that independence will be an issue,” Liu said.