As the global economy grinds ever slower, will China turn out to be Asia's economic savior? Or will it be a burden that drags the rest of the region down? This might be a life or death question for Taiwan.
Japanese management guru Kenichi Ohmae believes cheap labor has turned China into the world's biggest factory -- like post-World War II Japan, the US in the early 20th Century, or Britain following the Industrial Revolution. Ohmae also believes this trend will intensify after China joins the WTO.
But Huang Tien-lin (
With WTO entry, both Taiwan and China will be facing substantial adjustments. Taiwan's privatization of state-owned enterprises has been difficult, but there has been steady progress. In contrast, appallingly inefficient state-owned enterprises still hog almost every industrial sector in China and remain a major stumbling block to economic transformation. In Taiwan, unemployment has risen to more than 5 percent but social security mechanisms remain relatively healthy. In China, unemployment has created serious social problems, including the massive "blind flow" of migrant workers. After China's WTO entry, the country's agriculture sector will churn out more crowds of unemployed. Meanwhile, the economic gap between the coastal and inland provinces will continue to widen.
Non-performing loans are a serious problem at Taiwan's banks, but the government is taking a hands-on approach to financial reforms. In contrast, illegal or shady loans obtained through political connections are still widespread in China's banks on top of those banks' politically directed lending to unprofitable state enterprises from which this money can never be recovered. Inefficient local banks are also ill-equip-ped to compete with foreign banks. Meanwhile, China's stock market bubbles appear close to bursting. A financial crisis in China may well become the eye of the next regional financial disaster.
Taiwan's economy is posting negative growth this year, while China maintains 5 percent growth. This has led many to adopt a rather negative outlook on Taiwan and rush to China for investment opportunities. This situation is likely to change after both sides enter the WTO. Taiwan is making solid preparations for an industrial transformation, while much of the basic readjustment work is still non-existent in China.
The Economist has suggested that other Asian countries should not intervene in trade with China out of fear of the China threat. Instead, it suggested, they should utilize the China market, effectively re-allocate resources and lift economic restrictions. This recipe may work well for other countries, but as Richard Koo (辜朝明), chief economist at Japan's Nomura Research Institute, noted recently, Taiwan and China are still in a state of enmity. Before Beijing renounces the use of force against Taiwan and shows some genuine respect for human rights, Taiwanese investors should not invest too much in China, he said. They should instead develop a global strategy and disperse their business risk. The Economist may have suggested an aspirin to ease the economic pains, but Koo's recipe is tailored for Taiwan's problems.
That even Taiwan's "god of management" Formosa Group founder Wang Yung-ching (
In their recent op-ed “Trump Should Rein In Taiwan” in Foreign Policy magazine, Christopher Chivvis and Stephen Wertheim argued that the US should pressure President William Lai (賴清德) to “tone it down” to de-escalate tensions in the Taiwan Strait — as if Taiwan’s words are more of a threat to peace than Beijing’s actions. It is an old argument dressed up in new concern: that Washington must rein in Taipei to avoid war. However, this narrative gets it backward. Taiwan is not the problem; China is. Calls for a so-called “grand bargain” with Beijing — where the US pressures Taiwan into concessions
The term “assassin’s mace” originates from Chinese folklore, describing a concealed weapon used by a weaker hero to defeat a stronger adversary with an unexpected strike. In more general military parlance, the concept refers to an asymmetric capability that targets a critical vulnerability of an adversary. China has found its modern equivalent of the assassin’s mace with its high-altitude electromagnetic pulse (HEMP) weapons, which are nuclear warheads detonated at a high altitude, emitting intense electromagnetic radiation capable of disabling and destroying electronics. An assassin’s mace weapon possesses two essential characteristics: strategic surprise and the ability to neutralize a core dependency.
Chinese President and Chinese Communist Party (CCP) Chairman Xi Jinping (習近平) said in a politburo speech late last month that his party must protect the “bottom line” to prevent systemic threats. The tone of his address was grave, revealing deep anxieties about China’s current state of affairs. Essentially, what he worries most about is systemic threats to China’s normal development as a country. The US-China trade war has turned white hot: China’s export orders have plummeted, Chinese firms and enterprises are shutting up shop, and local debt risks are mounting daily, causing China’s economy to flag externally and hemorrhage internally. China’s
During the “426 rally” organized by the Chinese Nationalist Party (KMT) and the Taiwan People’s Party under the slogan “fight green communism, resist dictatorship,” leaders from the two opposition parties framed it as a battle against an allegedly authoritarian administration led by President William Lai (賴清德). While criticism of the government can be a healthy expression of a vibrant, pluralistic society, and protests are quite common in Taiwan, the discourse of the 426 rally nonetheless betrayed troubling signs of collective amnesia. Specifically, the KMT, which imposed 38 years of martial law in Taiwan from 1949 to 1987, has never fully faced its
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