Mon, Jun 27, 2016 - Page 3 News List

INTERVIEW: Transfer of technologies to China seen as threat

In an interview with the Chinese-language ‘Liberty Times’ (sister newspaper of the ‘Taipei Times’), Academia Sinica Institute of Economics corresponding research fellow Hu Sheng-cheng told staff reporter Cheng Chi-fang that the government must prevent the transfer of Taiwan’s crucial semiconductor technologies to Chinese-controlled entities

Academia Sinica Institute of Economics corresponding research fellow Hu Sheng-cheng speaks during an interview in Taipei on June 17.

Photo: Huang Yao-cheng, Taipei Times

Liberty Times (LT): Taiwan’s economic performance has been weak in recent years and even if annual economic growth can be kept at 1 percent this year, it would still be lower than the global average by a considerable margin. What accounts for the nation’s tepid economic growth?

Hu Sheng-cheng (胡勝正): Part of the problem is the global economy, which is unlikely to improve in the near future. Many research institutes have made downward adjustments to their global economic growth estimates for this year and next year.

As a result, Taiwan’s economy is unlikely to grow next year. While a decline in export volumes is contracting, it might not contract fast enough.

Unfortunately, domestic demand is also weak... Investment has fallen from between 18 percent and 19 percent 10 years ago to between 16 percent and 17 percent, with negative investment growth across the board, including the private and public sectors and state-owned enterprises.

Unless President Tsai Ing-wen’s (蔡英文) administration takes action to boost domestic demand, GDP growth next year is unlikely to improve.

The Tsai administration said it would not concentrate on GDP growth, but while the administration can ignore the issue, voters will not. [Former president] Ma Ying-jeou’s (馬英九) administration managed an average of 2.8 percent annual GDP growth over eight years; the Tsai administration must do better or face huge political repercussions.

Since it is impossible to raise GDP growth to 2.8 percent this year or next year, annual GDP growth of 4 percent must be achieved in the second half of her term.

LT: How can the government stimulate the economy?

Hu: Infrastructure is relatively weak and the government needs to spur the economy by engaging in public construction projects. Take runway construction at Taiwan Taoyuan International Airport for example: How would the government be able promote tourism if it cannot manage building runways? The failure is a crying shame.

Take trains as another example. When traveling abroad, most people book their hotel rooms and airplane and train tickets at the same time, but in Taiwan that is not possible, especially in eastern regions. Plane tickets and hotel reservations must be made months in advance, but train tickets can only be purchased two weeks in advance and travelers have to get up at 6am to buy tickets before they are sold out. International travelers cannot be expected to do that.

Power supply is another major issue. It has been said that shortages are the result of this year’s abnormal climate conditions, but do people expect climate conditions to be normal next year? Climate extremes are likely to worsen and it is absurd that the nation has power shortages when annual GDP growth is at 1 percent. What if annual GDP growth is 3 percent?

The issues must be addressed immediately, whether by activating a second national budget reserve fund or other means. The “five innovative industries” cannot become just another slogan; capital investments must be made and necessary infrastructure must be built. The government must lead the effort to convince the public that it is being serious; it must take action to inspire confidence in consumers and investors.

LT: Export volumes have been falling for the longest period in history. In addition to slow global economic growth, would you say excessive reliance on a single type of product and on a single market are to blame? What is the impact of the so-called “red supply chain?”

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