Taiwan has been beset in recent years by the outflow of both capital and business to China. But Taiwan is not the only victim of China fever. Japanese capital and enterprises started moving to China much earlier than those of Taiwan and the size of the exodus has been much more serious. The hollowing out of local industries and the hemorrhaging of capital have contributed to Japan's decade-long economic slump.
Taiwan and Japan are both victims of China's economic magnetism. Both have long been wary of their communist neighbor -- Taiwan for political reasons, Japan because it views China as a potential rival for regional economic leadership and capital, even though it also covets China's vast market, cheap labor and raw materials.
Economically, Taiwan and Japan have common interests and a common enemy. This is the basis upon which Taiwan's representative to Japan, Lo Fu-chuan (
Lo's suggestion is based on the establishment of a Taiwan-Japan-US free trade area. By strengthening cooperation through a free trade area, the three countries could form a common market and internationalize -- rather than Sinicize -- their business activities. Such a common market could form the basis for a regional security framework incorporating politics, defense and economics. This is something worthwhile for Taiwan to work toward. Taiwan's ambassador-at-large Jeffrey Koo (
Despite its position as Asia's economic leader, Japan has failed to respond deftly to the global trend toward free trade areas. It initially turned down an ASEAN invitation to join its free trade area, thereby allowing China to slip in and finalize a deal with the association. Japan and South Korea later agreed to join such a pact -- under the "ASEAN plus three" framework. But Japan lost its chance to take a leadership role in the free trade agreement by coming in late.
China also wants to set up a mainland-Hong Kong-Macau free trade zone. Such agreements, combined with China's efforts to establish its regional leadership role through its Bo'ao forum, will increase Beijing's economic influence in Southeast Asia.
Beijing has long tried to use economic growth to downplay the specter of a "China threat." It has used its large population, raw materials and vast market to cloak its ambitions for expansion and its deployment of missiles aimed at other countries. China's missile deployments are increasing, as is the threat it poses of suffocating neighboring economies. All the talk about China's economic growth raises US security concerns, anxiety in Taiwan and Japan about China's economic magnetism and feelings of insecurity in ASEAN nations about competition from Chinese products.
Japan can either choose to become a member of "ASEAN plus three," let China be the big brother and continue to let China suck its economic blood, or it can walk in the other direction by working toward the establishment of a US-Japan-Taiwan free trade zone.
Taiwan has medium and high-end technology and marketing capabilities in the high-tech industries, while Japan has medium and high-end research and development capabilities. The US has the top-notch research and development technology and a vast market. The three nations could help one another by setting up a high-tech, high-added-value free trade area. Such an alliance would be different from a free trade area that would include China, which would center around elementary-level technologies and products. Such a strategy would help Japan and Taiwan move out from under China's growing shadow.
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