On Oct. 16, Chinese Vice Premier Qian Qichen (錢其琛) privately suggested defining direct links between Taiwan and China as cross-strait in nature, rather than domestic. Since direct links are defined as economic and civil exchanges, the main point of contention seems to have been removed from the issue. Many in Taiwan immediately started dancing along with Beijing's tune. It is not a clear-cut issue, however, and the government must carefully evaluate advantages and disadvantages while preparing for negotiations.
Qian expressed this new attitude at a private gathering with Taiwanese legislators and journalists. Since the Chinese government still has to formally declare its stance on the matter, Taipei shouldn't rush to express its attitude. Moreover, China has entered a power transition period due to culminate in the Chinese Communist Party's upcoming 16th National Congress. Qian will definitely step down, and Chinese President Jiang Zemin (江澤民) may also surrender his power. Since the new power structure has yet to take shape, promises by current leaders don't necessarily count. Taiwan should listen to China and observe its moves. It will not be too late to negotiate direct links after the completion of China's power transition.
Direct-link advocates believe that links will allow Taiwan's manufacturing industry, already deeply rooted in China, to substantially cut transfer, transportation and management costs, and that the exchanges of labor between Taiwan and China will upgrade Taiwanese industry and turn the island into an R&D and operations center. After the opening, however, many Taiwanese manufacturers will migrate to China, lock, stock and barrel. Taiwan will inevitably undergo a painful transition period of industrial "cavitization" and increasing unemployment rates.
A reality check shows that Taiwan has been unable to provide the fundamental conditions required for realizing such exchanges of labor and the resulting upgrading of Taiwan's industry and economy. R&D expenditure in Taiwanese industry as a part of gross national income has long lagged far behind advanced countries, and, in recent years, also behind South Korea. Taiwan masters a limited number of key technologies, and is no match for Hong Kong or Singapore when it comes to the language skills and international finance, transportation and information services needed to become a logistics center. Taiwan is still unprepared to take advantage of the economic gains that may result from direct links, but the dangers will be covered up and this will sustain further negative effects.
Statistics show that 500,000 Taiwanese are currently working in China on a long-term basis, and that these numbers continue to increase. As a result of Taiwan's slowing economy, very talented people are turning to China in search of a second market, or to study or obtain specialized professional licenses. Following an opening of direct links, it may become possible to make day trips to China, geographical barriers will be eliminated, and there will be constant exchanges across the strait. Politics, economy, culture and life in Taiwan and China will become integrated. But, such a situation is not compatible with China's current belligerence and continued deployment of missiles against Taiwan.
Taiwan's economy has for a long time grown together with the world's economies. Taiwan is now following the declining European and US economies into a period of unprecedented economic stagnation. The Chinese economy, however, is experiencing rarely seen expansion and prosperity, placing Taiwan in the difficult dilemma of deciding whether to look for internationalization or "China-lization." While direct links is no cure-all for the ills in Taiwan's economic development process, the issue must be given serious thought. Japan and Hong Kong's experience of direct links with China has not made their economies rise from the ashes to experience a new dawn. Instead, their respective situations have taken a turn for the worst because capital, talent and technology were attracted to China. Taiwan should take a careful look at Japan and Hong Kong before swallowing the China pill.
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