Shi Guangsheng (
Though Taiwan has had a trade surplus with China for many years, Taiwanese exports to China consist mainly of raw materials, semi-finished products and capital assets. This has aided the development of China's food processing and labor intensive manufacturing industries, which in turn has generated large amounts of foreign exchange from exports to Europe, the US and Japan. This kind of triangular trade relationship has turned China into a magnet for international capital and technology. There is no reason to suspect this will change any time soon. Taiwan therefore needs to better understand cross-strait economic and trade exchanges within the WTO framework so it get position itself better for negotiations with China. Otherwise, Taiwan's economy will become marginalized and "provincialized."
Unfortunately, Taiwan has a longstanding and growing deficit with China in agricultural products. Largely as a result of smuggling, agricultural and foodstuffs markets in Taiwan are full of Chinese products, which is endangering the livelihood of Taiwan's farmers. Taiwan is also threatened with the plant and animal diseases that pervade China's farming sector. The most obvious example is foot and mouth disease.
China is a vast land with an abundance of natural resources and cheap labor. Its agricultural products are therefore cheap, giving China a competitive advantage. If Chinese agricultural products cannot be legally imported, they will be smuggled into Taiwan. There are estimates that plant diseases and insect pests introduced to Taiwan over the past decade have already caused damage worth tens of billions of NT dollars in Taiwan. Epidemics of animal diseases have caused losses of at least NT$100 billion. The government should relax the restrictions on Chinese agricultural imports and strengthen plant and animal quarantine measures to deal with these problems. And if it allows the import of cheap raw materials to export processing zones for processing into high-quality foodstuffs for export to China and developed countries, the losses from diseases entering the country could be offset and employment opportunities created.
Moreover, China's economy has grown considerably over the past few years, sharply increasing the purchasing power of people is places such as Shanghai, Guangzhou and Beijing. There are now more than 100 million high-end consumers in China, or almost four times the population of Taiwan. There is great demand for agricultural products such as high-quality fruit, vegetables, rice, flowers and fresh fish products. Taiwan should increase its output of such products for urban areas to raise the demand for Taiwanese exports, thereby reducing the agricultural trade deficit with China and increasing the use of agricultural land in Taiwan.
There is a long history of agricultural exchanges between China and Taiwan. But most companies investing in China do so independently, and fail to grow in the face of cut-throat competition. In future, Taiwanese investments in China should be made under the leadership of industrialists to unify operations and generate economies of scale. Taiwanese agricultural production should be organized and specialized, with growing schedules arranged to cater to the Chinese market. Special zones should be established where local specialities such as high-quality fruit can be grown on a large scale. This fruit should then be exported to China, once again bringing life to agriculture in Taiwan.
Peng Tso-kwei is a former chairman of the Cabinet-level Council of Agriculture and professor in the Department of Agricultural Economics at National Chung-hsing University.
Translated by Perry Svensson
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