It seems that the earliest warning about Taiwan's financial situation was given by Stephen Ruchi, a world-famous economist. Drawing on a variety of information, he pointed out that the overdue loan ratio of banks and other financial institutions in Taiwan is at least double that claimed by the government.
Ruchi's finding were followed up by The Economist, which not only focused on Taiwan's aggravated economic situation but made clear that the bad debts are two to three times worse than our government would have us believe.
The Economist also proclaimed that, due to shrinking capital, there will be a banking crisis in Taiwan before the Chinese New Year.
Because of The Economist's reputation around the world, its report on Taiwan's economy carried much weight.
But the report essentially revealed nothing new -- a number of domestic scholars had been giving the same advice to the government. Yet because the government has been tardy in its response, the initiative was lost, and it's likely the current economic malaise will only get worse.
Problems in Taiwan's economic and financial systems have been aggravated in recent years. Some of our economic problems -- such as the boom and bust of real estate -- are the after-effects of supply surplus from times past.
And some other problems -- such as the crises popping up in corporate enterprises -- are the result of the disintegration of old-style patronage in political and business systems. In addition to these old problems, the new government has created new problems, which have also contributed to the crisis.
Above all, the cross-strait economic relationship now seems to have deteriorated into a tug-of-war.
With China soon to enter the WTO, the US, via PNTR (Permanent Normal Trade Relations), has cleared the way to begin investing in China; a move that will give Taiwanese investors a rude shock.
Exacerbating the situation, the domestic political and economic situation is forcing local investors offshore. The trend toward "ordering in Taiwan, manufacturing in China" will likely continue.
With this in mind, the government's bullish rhetoric will no longer carry any meaning.
Exports will bear no relationship to our domestic employment as structural unemployment becomes increasingly obvious.
Further, with old and new problems popping up together, it appears our political and economic turmoil will never end.
Of course, the outflow of capital to foreign countries, stagnation of investment, and the steady decline of the stock market will become more serious.
From this year on, it's expected that the value of the total output of Taiwan's electronics industries will be surpassed by that of China.
It seems that Taiwan has ushered in an era of "jeopardy." And it's indeed doubtful whether the new government is able to put a speedy end to the crisis.
Crisis management is more difficult than a government's routine work. When the new government's current routine work is already ham-fisted, how can it bear the responsibility of tackling a crisis that is so closely tied to Taiwan's future? Moreover, the present crisis is not only domestic, but also connected with the cross-strait nexus, an issue that the new government has refused to acknowledge.
As winter approaches, it's high time Taiwan closely considered the position it now finds itself in. But the question is: after wasting so much time, on how many bargaining chips can the new government rely?
Nan Fang-shuo is publisher of The Journalist magazine.
Translated by Gatian Wang
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