Whenever economic prospects are bleak and the growth of major economies slows, competing exporting countries tend to engage in competitive currency devaluation, sometimes known as "beggar-thy-neighbor competition." It is a vicious competition that provides short-term relief, but is harmful to the entire region in the long-run.
Competition of this sort is currently developing in the Asia-Pacific region. Currency depreciation in East Asian countries, such as Thailand, Indonesia, the Philippines, Korea and Taiwan, has intensified -- in some instances after deliberate measures on the part of governments -- in response to a downturn in the US economy, the region's perceived shaky recovery from the Asian financial crisis and hesitation on the part of foreign investors to invest in the region. Singapore has also joined the fray.
As the prosperity and confidence indicators fall, the stock market continues to dive in Taiwan and the outflow of capital to foreign countries and the unemployment problem only aggravate the situation. Then, in contradictory moves, the Ministry of Economy Affairs (MOEA) scapegoated the shortening of the workweek, while at the same time moving to open offshore economic zones and introduce cheap foreign labor, to whom the restrictions of the Labor Standards Law (
This is Taiwan's own version of "one country, two systems."
Despite its sugar coated slogan, "keep one's roots in Taiwan" (
Instead of actively enhancing Taiwan's competitiveness, MOEA is resorting to a "one country, two systems" model. Isn't this essentially a beggar-thy-neighbor economic policy? Under such logic, maybe one day Taiwan will reach the point of being in competition with Thailand and the Philippines.
This innovative "one country, two systems" arrangement gives a bad impression to the international community, and is not feasible at all. As China and Vietnam have already joined competition in traditional processing industries, it is doubtful whether Taiwan's off-shore islands would attract investors at all. "Keep one's roots in Taiwan," with factories on off-shore islands, low wages and substandard working conditions, will eventually prove to be nothing more than a dream, or a nightmare, to be more precise.
If we trace the source of Taiwan's current problems, we will discover that cross-strait relations are still key. As long as we face the "one China" issue with a sincere and honest attitude, rather than switching between different masks, cross-strait relations will certainly improve, and the stock market will certainly improve. Then the government could use its energy on something other than damage control. Instead, it could carefully plan upgrades of traditional industries, incrementally lifting the the "no haste, be patient" policy and opening up the "three direct links" in an orderly fashion.
When cross-strait relations improve, Taiwanese workers will be much happier. Things will be much better than now. When hostilities escalate across the Taiwan Strait, Taiwanese workers in China are caught in the cross-fire. When cross-strait relations develop in a positive direction, most of Taiwan's problems will be solved without a hitch.
To solve a problem is to get to the heart of the matter. Otherwise all efforts will be in vain. It is better, therefore, to work harder on cross-strait relations than to join in the competition for the last place. Cross-strait relations are the goal for which the MOEA should strive.
Nan Fang-shuo is the publisher of The Journalist.
transanslated by Gatian Wang
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