Last year, a friend told me that the reason for the low public support for President Ma Ying-jeou (馬英九) and his administration’s cross-strait policies in opinion polls was that cross-strait talks — in particular the Economic Cooperation Framework Agreement (ECFA) — have not brought the expected benefits, and, as a result, all the Democratic Progressive Party (DPP) has had to do is let things run their course, without offering any active response.
However, this view could underestimate the doubts that most Taiwanese have when it comes to the DPP’s ability to handle the cross-strait issue, while at the same time making light of the serious challenges that international economic competition poses.
The ECFA has been ineffective, and the public has not felt any direct benefits of the agreement. The nation’s share of the Chinese import market has continued to drop, from 8.3 percent in 2010 to 6.6 percent in the first half of last year, and foreign direct investment in Taiwan continues to be low and even fall: Last year, it stood at US$4.7 billion, 7 percent less than the year before.
Net foreign investment, including direct investment and investment in securities, continues to hit new lows: In 2011, net outflow hit US$50.4 billion, and last year, the figure dropped to US$52.3 billion, a record low.
Two years ago, Taiwan attracted the second-lowest net foreign direct investment in the world and the lowest of all Asian countries. The nation is losing every qualification it needs to call itself one of the four “Asian Tigers,” and its international competitors are now Thailand, Indonesia and Vietnam, all countries that have attracted more foreign direct investment than Taiwan over the past few years.
Although the ECFA has not brought the expected benefits, it has brought some, one of which might be to provide a way to break through to East Asian economic integration.
The DPP may criticize Ma for not achieving his promised targets, but what the public wants is to see how the DPP, after a return to government, would maintain and develop cross-strait relations and break through Taiwan’s international economic isolation.
The public is of course unhappy with Ma, since the ECFA has not brought the benefits the government promised, but that does not mean that they will vote for the DPP.
During the presidential election campaign last year, most voters were displeased with the Chinese Nationalist Party’s (KMT) performance, but the cross-strait factor made 5.75 percent of voters vote for Ma’s re-election, of which 4.25 percent did so because of the cross-strait economic issue.
Many people did not feel at ease with the DPP’s policies and felt they had to continue to vote for Ma.
Over the past five years, the Taiwanese and Chinese governments have continued to push for the facilitation of cross-strait economic relations, liberalization and systematization, including direct flights, trade, investment and movement.
The government continues to be cautious in its deregulation of cross-strait relations. This caution includes trade liberalization and opening up to Chinese investment, and is one reason why the benefits have been less than expected.
The public may be unhappy with the Ma administrations performance, but they are also unwilling to backtrack.
Prior to deregulation, issues like cross-strait direct flights and allowing Chinese investment in Taiwan were considered matters of national security, but as real risk has gradually receded after deregulation, the public has become unwilling to close the opened door.
Regardless of which party holds power, Taiwan’s economic development is facing a tough challenge.
Last year, the economy grew by 1.26 percent, and investment stood at 16 percent, the lowest since 1980.
Although the Directorate-General of Budget, Accounting and Statistics (DGBAS) is forecasting economic growth of 3.59 percent for this year, the investment rate will remain at 16.2 percent, the second-lowest ever. This shows that the private sector is lacking in vitality and a willingness to invest, and this puts a damper on any optimism for Taiwan’s economy.
Many of the problems facing the nation’s development are structural, including the bureaucracy’s lack of vitality, the rigidity of the economic system and the relatively closed service industry.
How to change the constitutional system and improve the bureaucracy, and to initiate economic liberalization and deregulation are structural issues that require cooperation between the government and the opposition.
If that cannot be done, the DPP will continue to face the same problems if it returns to power, in addition to interference by the KMT in the legislature that will make government operations and policy implementation increasingly difficult.
The DPP should not place its hopes for winning the 2016 presidential election in public dissatisfaction with the Ma administration. Not only does the DPP need to establish stable and developing cross-strait relations, it must also propose a blueprint for developing Taiwan’s economy and propose ways to prevent international isolation.
Ignoring these issues will make it impossible for the party to translate public dissatisfaction with the KMT into support for the DPP.
Tung Chen-yuan is a professor in National Chengchi University’s Graduate Institute of Development Studies.
Translated by Perry Svensson
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