President Ma Ying-jeou (馬英九) says that an economic cooperation framework agreement (ECFA) with China would not involve political issues of sovereignty and the “one China” principle. He says that after a free trade agreement between China and ASEAN comes into effect next year, Taiwanese products will lose their price competitiveness against products from ASEAN nations because of increased tariffs. Worse yet, Taiwan will be marginalized, domestic companies will move abroad and the nation will stand to lose 114,000 jobs. This economic discourse contains many fallacies.
This is not the first time the government has made such outlandish statements. In the past, the government claimed that more China-based Taiwanese businesspeople would return and invest in Taiwan following the opening of direct cross-strait transportation links. However, official statistics show that between September and January, they only invested about NT$10 billion (US$290 million) in Taiwan, while domestic companies invested more than NT$140 billion in China.
Moreover, a survey conducted at the end of last year on the willingness of Taiwanese businesspeople in China to invest in Taiwan following the opening of direct links showed that 63 percent of respondents said they would not change their investments, 28 percent said they would double their investments in China and only 9 percent said they would reduce their investments in China.
Ma has once again made a spurious assertion, only this time the subject has changed from direct transportation links to signing an ECFA with China.
The Ma administration has also suggested that if the two sides of the Taiwan Strait were to sign an ECFA, domestic companies would not move to China. This statement does not hold true. Were Taiwan to sign an economic pact with China, factor-price equalization theory tells us that manufacturing activities move to areas that have lower costs. In other words, an ECFA with China would only accelerate the relocation of domestic businesses to China and increase unemployment.
Ma says Taiwan is facing losing 114,000 jobs if it does not ink an economic agreement with China. The presumption of the study he cited does not tally with the real situation. Not only does it fail to take into consideration the differences between nominal and actual tariff rates, but the subjects of the study were ASEAN Plus Three — China, Japan and South Korea — rather than ASEAN Plus One — China. Therefore, the figures the government quoted may very well be exaggerated 24 times.
The Ma administration also says Taiwan will be marginalized by the launch of ASEAN Plus Three if the nation does not ink an economic pact with China. However, a study showed that the damage would amount to less than 0.2 percent of the nation’s GDP and that it would not inflict severe damage on Taiwan’s economy. Ma has exaggerated the adverse impact of ASEAN Plus Three on the nation, and besides, signing an ECFA with China does not automatically lead to Taiwan joining the ASEAN market. Unless China promises that, the government should not talk of big pie in the sky to fool the public.
The Taiwanese economy should rely on signing economic pacts with economies with higher national incomes, such as the US, Japan and the EU. Only then can we improve our manufacturing technologies and raise the profitability of our exports.
In the spirit of democratic participation, such a highly contentious policy as the ECFA should be put to the public for discussion and then decided by means of a referendum. Only then can we produce a strategy toward China that prevents the nation from being torn apart.
Cheng Li-chiun is chief executive of Taiwan Thinktank.
TRANSLATED BY TED YANG
The recent passing of Taiwanese actress Barbie Hsu (徐熙媛), known to many as “Big S,” due to influenza-induced pneumonia at just 48 years old is a devastating reminder that the flu is not just a seasonal nuisance — it is a serious and potentially fatal illness. Hsu, a beloved actress and cultural icon who shaped the memories of many growing up in Taiwan, should not have died from a preventable disease. Yet her death is part of a larger trend that Taiwan has ignored for too long — our collective underestimation of the flu and our low uptake of the
For Taipei, last year was a particularly dangerous period, with China stepping up coercive pressures on Taiwan amid signs of US President Joe Biden’s cognitive decline, which eventually led his Democratic Party to force him to abandon his re-election campaign. The political drift in the US bred uncertainty in Taiwan and elsewhere in the Indo-Pacific region about American strategic commitment and resolve. With America deeply involved in the wars in Ukraine and the Middle East, the last thing Washington wanted was a Taiwan Strait contingency, which is why Biden invested in personal diplomacy with China’s dictator Xi Jinping (習近平). The return of
Actress Barbie Hsu (徐熙媛), known affectionately as “Big S,” recently passed away from pneumonia caused by the flu. The Mandarin word for the flu — which translates to “epidemic cold” in English — is misleading. Although the flu tends to spread rapidly and shares similar symptoms with the common cold, its name easily leads people to underestimate its dangers and delay seeking medical treatment. The flu is an acute viral respiratory illness, and there are vaccines to prevent its spread and strengthen immunity. This being the case, the Mandarin word for “influenza” used in Taiwan should be renamed from the misleading
Following a YouTuber’s warning that tens of thousands of Taiwanese have Chinese IDs, the government launched a nationwide probe and announced that it has revoked the Republic of China (Taiwan) citizenship of three Taiwanese who have Chinese IDs. Taiwanese rapper Pa Chiung (八炯) and YouTuber Chen Po-yuan (陳柏源) in December last year released a documentary showing conversations with Chinese “united front” related agency members and warned that there were 100,000 Taiwanese holding Chinese IDs. In the video, a Taiwanese named Lin Jincheng (林金城), who is wanted for fraud in Taiwan and has become the head of the Taiwan Youth Entrepreneurship Park