Taiwan is consumed by direct links fever, as pro-China business leaders and quite a few lawmakers are rushing to China while spewing endless nonsense on the subject. It is disturbing that much of their talk is obviously aimed at misleading the public and pressuring the government.
Formosa Plastics Group (台塑集團) chairman Wang Yung-ching (王永慶) is one of the business leaders pushing for the establishment of direct links.
"The three links are the basis for the development of [Taiwan's] economy," Wang has said. After direct links are established, Wang reasons, Taiwan will benefit from large-scale construction projects such as building new ports, while creating jobs and revitalizing Tai-wan's economy in the process.
Wang must have forgotten the cruel reality that China is 267 times bigger than Taiwan in terms of area and China's population is 60 times that of Taiwan.
Wang's remarks also remind us of the economic development in Hualien and Taitung in the 1970s. It was then that in response to demands from residents of eastern Taiwan, the government decided to build the costly North Link Railway. For a short while, eastern Taiwan's economic prospects appeared rosy and real estate prices in the area rose dramatically. Government officials and businesspeople in Hua-lien and Taitung might have forgotten the fact that Taiwan's western plain -- with Taipei as its political and economic pivot -- was several times larger than eastern Taiwan and its population was 40 times larger.
The North Link Railway was finally completed in 1980 but the fantastic dream of a prosperous eastern Taiwan was not realized. Hualien's population fell from 360,000 in 1980 to 350,000 in 2000. Why? Because, as theories of market functions warn, better transportation causes talent and capital to move away from the edge and toward the center. This is the result of the magnetic pull exerted by a massive economy on a fringe area.
Similarly, the completion of the South Link Railway in 1992 did not make Taitung prosper. In fact, Taitung's population has fallen from 260,000 to 245,000.
A case of convenient transportation pushing talent and capital from the edge to the center also occurred in Penghu. Transport between Taiwan and Penghu used to consist exclusively of ships. Now that there are air links, it takes only one hour for Penghu residents to fly to Taipei. But Penghu's population has rapidly decreased ever since, down to an estimated 80,000 -- most of whom are women, children and the elderly. Can the opening of direct links really stimulate Taiwan's economy, as Wang and the pro-China camp believe? History holds the answer to this question. It requires no discussion.
On public occasions, local businesspeople always pledge to keep their roots in Taiwan. Pressured by circumstances, however, Taiwan is undergoing a process of marginalization similar to that of Penghu and eastern Taiwan. But the public is not yet aware of it since the process has only just begun.
Ever since the government lifted its ban on investments in China in 1990, there has been a relentless trend for Taiwanese capital, technology and talent to relocate to China. The exodus of more than 60,000 companies and US$100 billion in capital to China can only be described as "bold." It has led to slower economic growth and a weak real estate market, causing many businesses remaining here to go bankrupt, while unemployment and bad loans at local banks are rising.
Why should Taiwan, once the foremost of the four Asian tigers, lose its leading position to South Korea after easing restrictions on exchanges with China? Because Taiwan came under the magnetic pull of the massive economic pivot that is China, thereby generously transferring the forces of its economic growth there. This was evident in the fact that private investment declined drastically in Taiwan last year, while investments in China rose dramatically.
I am not opposed to direct links, just as I never opposed the construction of the North Link Railway or expansion of the Makung airport. I would like to remind people, however, that without all-round economic security measures being taken to guard against China's magnetic pull, direct links will only increase the pain of Taiwan's marginalization. Even if direct links can exert a temporary stimulating effects on Taiwan's economy, such effects will dissipate very quickly.
Direct links are indeed likely to lead to savings in transportation costs, but advocates of the policy seem to have overlooked the fact that they may also lead to an increase in the number of Taiwanese visiting China, buying property or even investing in the stock market there. Convenient transportation may also encourage more Taiwanese to study in China, not to mention a further business exodus.
Inevitably, the outflow of capital and talent will result in a contraction of domestic wealth that will cost several times or perhaps even dozens of times more than the few hundred million US dollars in transportation costs to be saved by direct links each year. Taiwan's 23 million people will have to shoulder the burden of that contraction.
I also find it difficult to agree with claims that Taiwan's busi-nesses will lose their competitiveness without direct links. If that were the case, Australian, Indian, Indonesian, European and US businesses would have long lost their competitiveness since their raw materials and products take much longer and cost much more to ship to China. Taiwan can ship its materials via Hong Kong.
I can only agree that direct links would further raise Taiwan's competitiveness, which, in China, is already strong. However, the most competitive businesses in Taiwan are the ones that have not invested in China. Also, companies that have achieved the goal of global positioning have set up shop in China only recently.
Direct links would certainly benefit Taiwanese businesses which want to expand into China. The links will also increase their competitiveness with other businesses (including those staying in Taiwan). In its decision-making process, the government needs to consider these business interests and provide assistance to them. But business interests are not identical to the interests of the entire people of Taiwan. When the two come into conflict, the interests of the people should take precedence.
"Computer games can benefit one's intelligence," is the argument put forward by game arcade operators when their interests conflict with those of society at large. There may be some truth in their argument, but computer games are not the only tools for sharpening one's intellect.
Similarly, direct links may raise business competitiveness, but there are many ways to raise competitiveness that are more fundamental, effective and beneficial to the people. If direct links are not in the interests of the people and if they will increase unemployment in Taiwan, then they should not be pushed relentlessly just for the benefit of particular businesses -- at the expense of Taiwan's dignity, security or even sovereignty.
Huang Tien-lin is a national policy adviser to the president.
Translated by Eddy Chang and Francis Huang
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