President Chen Shui-bian (陳水扁) came up with a new slogan yesterday during a meeting with foreign guests -- "Investment first, economy first, Taiwan first." With a sluggish economy, unemployment on the rise and capital flowing to other countries, Chen finally appears to have realized that one cannot govern by ideology alone and that the only way out is for Taiwan to build-up its economy.
But a new slogan doesn't count for much unless it is backed up by concrete government policies. Hopefully, "Invest in Taiwan" will become a real priority for the government. The realization something has to be done may have come a little late, after precious time and resources have been wasted. But it is better to get on the right path late than remain in a torpor, expending energy only on internal power struggles.
The government is facing an uphill economic battle with China, which is luring investors by dangling cheap labor, raw materials and land prices as well as potential post-WTO accession market opportunities. Even Minister of Economic Affairs Lin Hsin-yi (林信義) has admitted that "China has an irresistible, magnetic pull." The "no haste, be patient" policy hardly put a dent in the capital outflow across the Taiwan Strait. The Mainland Affairs Council is set to modify that policy to "proactive openness, effective management." The government also plans to gradually allow Taiwanese businesses to set up notebook PC, six-inch wafer, PVC and other petrochemical plants in China. Taiwan's business migration will only escalate after the trade and economic doors between the two sides are flung wide open.
In the government's policy framework, effective management means balancing the capital flow by allowing Chinese investment in Taiwan and establishing a system that encourages capital to flow back here. But the idea of wooing Chinese investment is a Damoclean sword. To offset the capital outflow, Taiwan will need up to US$6 billion (NT$192 billion) in Chinese capital every year. But if that amount were to actually materialize, Taiwan would find itself facing Hong Kong's predicament -- its economy completely in Beijing's grip.
The idea of a capital redirection mechanism isn't bad. But even the Chi Mei group, one of the most Taiwan-conscious conglomerates, has invested a total of NT$1.5 billion in China. Shi Guangsheng (石廣生), China's minister of foreign trade and economic cooperation, has said that Chi Mei is making good money in China. But we have yet to see the company send any of its profits back to Taiwan.
Ministry of Finance statistics show Taiwanese businesses had remitted a total of NT$122.8 billion to China by the end of the third quarter of last year -- a number that stands in stark contrast to the NT$700 million that had been sent back to Taiwan. The ministry's figures are only the tip of the iceberg. According to estimates by the Central Bank of China, more than US$75 billion (NT$2.48 trillion) has been remitted through private channels -- an indication that most Taiwanese businesses take advantage of legal loopholes to remit their money. The key to the success of the capital redirection system will be whether it can prevent businesses from evading the regulations.
If the government truly wants to combat the addictive allure of the China market, it should focus on improving Taiwan's investment environment. It could, for example, speed up the establishment of export processing zones, help businesses with land acquisition, improve the infrastructure and provide incentives for businesses to stay. Taiwan could also try to work out a division of labor with China and become a business, R&D and financial center while letting China take up the manufacturing and processing functions. This is the only real way to keep businesses in Taiwan -- by being proactive, not by organizing yet another task force or conference to review policy, or devising yet another slogan.
Because much of what former US president Donald Trump says is unhinged and histrionic, it is tempting to dismiss all of it as bunk. Yet the potential future president has a populist knack for sounding alarums that resonate with the zeitgeist — for example, with growing anxiety about World War III and nuclear Armageddon. “We’re a failing nation,” Trump ranted during his US presidential debate against US Vice President Kamala Harris in one particularly meandering answer (the one that also recycled urban myths about immigrants eating cats). “And what, what’s going on here, you’re going to end up in World War
Earlier this month in Newsweek, President William Lai (賴清德) challenged the People’s Republic of China (PRC) to retake the territories lost to Russia in the 19th century rather than invade Taiwan. He stated: “If it is for the sake of territorial integrity, why doesn’t [the PRC] take back the lands occupied by Russia that were signed over in the treaty of Aigun?” This was a brilliant political move to finally state openly what many Chinese in both China and Taiwan have long been thinking about the lost territories in the Russian far east: The Russian far east should be “theirs.” Granted, Lai issued
On Tuesday, President William Lai (賴清德) met with a delegation from the Hoover Institution, a think tank based at Stanford University in California, to discuss strengthening US-Taiwan relations and enhancing peace and stability in the region. The delegation was led by James Ellis Jr, co-chair of the institution’s Taiwan in the Indo-Pacific Region project and former commander of the US Strategic Command. It also included former Australian minister for foreign affairs Marise Payne, influential US academics and other former policymakers. Think tank diplomacy is an important component of Taiwan’s efforts to maintain high-level dialogue with other nations with which it does
On Sept. 2, Elbridge Colby, former deputy assistant secretary of defense for strategy and force development, wrote an article for the Wall Street Journal called “The US and Taiwan Must Change Course” that defends his position that the US and Taiwan are not doing enough to deter the People’s Republic of China (PRC) from taking Taiwan. Colby is correct, of course: the US and Taiwan need to do a lot more or the PRC will invade Taiwan like Russia did against Ukraine. The US and Taiwan have failed to prepare properly to deter war. The blame must fall on politicians and policymakers
RSS