Despite the efforts of Taiwan’s central bank to limit the New Taiwan dollar’s appreciation, it has recently risen beyond the defensive line of NT$31 to the US dollar, in the wake of the currency exchange war between the US and China.
This development has recently been a hot topic in the media. Unfortunately, a closer look at the arguments being put forward reveals the worrying degree to which thinking in Taiwan has apparently been subsumed by a China-centric value system.
Arguments based on Western liberalism are rarely heard these days. This tells us that Taiwan has already passed the phase of assimilation into a single Chinese economy and is now being absorbed into a single Chinese ideology.
A common thread in these arguments is that they point to the US as the villain behind the currency war.
For example, the United Daily News’ Oct. 14 editorial said: “One of the root causes of the global currency war is the extremely lax monetary policy initiated by the US.”
Yet this editorial made no mention of the real villain — China and its undervaluation of its currency, the yuan. Another feature of their arguments is their dogmatism.
For example, an editorial in the Commercial Times on Oct. 11 spoke of responding to “America’s and Europe’s policies that shift their troubles onto others.”
These pundits never forget to complain on China’s behalf and place the blame elsewhere.
For example, the China Times’ editorial of Oct. 14 said: “The yuan is the easiest scapegoat for the US economy’s failure to recover.”
A professor from a prestigious institution writing in Want Daily on Oct. 13 said: “What China resents is that the US limits exports of high-technology products to China, so the US won’t sell China the things it really wants.”
The implication is that US “isolationism” is the reason for the trade deficit with China.
Is lax monetary policy in the US and Europe the real villain behind the exchange rate war? In reality, it is the result, not the reason. As a result of China’s undervalued yuan, manufacturing in Europe and the US has moved overseas, pushing their economies into decline and forcing them to take action.
Clearly quantitative easing in the US and Europe is allowing hot money to flow around too freely. However, that is a problem of ensuring such money is not used for speculation under the guise of liberalization and globalization. That is one of the responsibilities of all central banks, so the efforts of Taiwan’s central bank to limit the rise of the New Taiwan dollar are justified.
In fact, China is the one trying to shift its problems onto others by undervaluing the yuan. Between 1980 and 1995, China devalued its currency from 1.49 yuan to the US dollar in 1980 to 8.7 yuan to the US dollar in 1995. Then, for the next 11 years, the yuan was pegged at 8.27 yuan. That policy enabled China to attract more than US$800 billion in manufacturing investment from around the world, seriously distorting the international division of labor and creating grave trade imbalances. The US$2.65 trillion in foreign currency reserves that China holds shows just how distorted the world economy has become.
It is high time that China took on the responsibilities of a major power. At the same time, the public should be made aware just how much Taiwanese academics and media outlets are sympathetic to China’s viewpoint.
Given this ideological background, off-the-wall ideas floated by the administration of President Ma Ying-jeou (馬英九), like proceeding to political negotiations with China, should come as no surprise.
Huang Tien-lin is a former national policy adviser to the president.
TRANSLATED BY JULIAN CLEGG
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