It remains unclear whether the case of former Mainland Affairs Council deputy minister Chang Hsien-yao (張顯耀) is really about him spying for China or more a matter of political infighting, but the case has inspired civic groups to renew their calls for an end to closed-door cross-strait negotiations.
Indifferent to the requests, President Ma Ying-jeou’s (馬英九) administration has decided to restart negotiations on the planned cross-strait trade in goods agreement tomorrow. The government is also strongly promoting the cross-strait service trade agreement, which the Sunflower movement prevented from being rushed through the legislature, and the controversial plan to set up free economic pilot zones. If the measures that Ma’s administration proposes do not get through the first time, it is sure to stubbornly press on regardless.
The negative effects on the nation’s economy of tying it to China are already showing. Agriculture and manufacturing have been transferred to China, where they are fostering China’s farming and manufacturing sectors. At the same time, China’s continued efforts to snatch orders from Taiwanese producers, undermine them and utilize their technology are pushing the nation into a crisis of survival.
When it promotes its China-friendly policies, the Ma administration always claims that they will not hurt Taiwanese producers. It promises not to allow imports of Chinese farm products and says that its policies will prevent the nation from becoming further marginalized as well as touting economic benefits.
The experiences of the past four years since the signing of the first economic agreement between Taiwan and China — the Economic Cooperation Framework Agreement (ECFA) — suggest otherwise. The economic benefits have fallen short of what was promised. Furthermore, the agreement has not stopped China from hindering Taiwan’s participation in regional economic integration processes. The nation has made little or no progress toward signing free-trade agreements with other countries.
Contrary to what the government promised, the nation has suffered as a result of the ECFA. China has used the terms of the agreement to get its hands on Taiwan’s production technology, talented personnel and experienced management, and it has used these elements to cultivate its own farming and manufacturing sectors. Aided by state capital investment and enjoying the advantages of low production costs, Chinese firms have become the prime competitors for Taiwanese producers, and are even set to take their place.
Critics say that the proposed free economic pilot zones will open the door for Chinese agricultural products, which have hitherto not been allowed to be imported into Taiwan. They say that these farm products will be imported for processing via the zones and then exported by Taiwanese brands or sold in the nation.
Such concerns are not unfounded. The current debate in the Chinese-language magazine Business Today focuses on a far-reaching investigation into Taiwan’s agricultural crisis of survival. The report says that when the government signed the ECFA, it promised that it would only allow imports of Chinese agricultural products that the nation does not produce itself, so the agreement would not harm farmers.
However, according to a report published by the Chung-Hua Institution for Economic Research, of more than 3,000 kinds of farm products that Taiwan produces, more than 2,000 have been taken over to China via various channels. In addition, China has set up 29 Taiwan farmers’ enterprise parks with a total area 8.6 times the size of Taiwan, and is rewarding talented Taiwanese farmers and retired officials to take their expertise and crop varieties to China and replicate the nation’s production processes — a policy which has already had considerable success.
As a result, all farm products included in the ECFA early harvest list that can be exported to China are already being cultivated there. Some of them are being sold back to Taiwan or exported to other countries, in competition with Taiwan-grown products. The outcome being that the sources of many outstanding Taiwanese products are no longer viable. Examples include aquatic products, such as tilapia, eels and abalone, and farm crops such as green soy beans. Many high-quality Taiwanese farm products, including jujubes, dragon fruit, pineapples, tomatoes, mangoes and orchids are now being produced in China.
As a result, there is no longer any opening for such domestic produce on the Chinese market. Even worse, they now have to compete on global markets with look-alike products from China, and even suffer the impact of Chinese rival products dumped on the market at low prices.
Just as domestic agricultural products are suffering from this planned program of transplantation to China, the manufacturing industry, which is credited as being the major contributor to Taiwan’s so-called “economic miracle,” is also struggling.
Having long served as the workshop of the world, China has now adopted national policies of internalizing its supply chain and fostering Chinese manufacturing, and it seeks to cultivate world-class products in the fertile soil of its huge domestic consumer market. As well as being encouraged by government policies, Chinese businesses enjoy the advantages of cheap labor and low production costs.
In addition, Beijing authorities have treated investment as a means of embellishing its GDP figures.
The practice of boosting production without regard for profit and loss has caused production to surge ahead of demand, leading to price crashes for overproduced goods. Heavy industries such as iron and steel, cement and coal are close to collapse, and the sorry state of high-tech Chinese industries, including solar panels, LEDs and display panels, is having a knock-on effect on their Taiwanese counterparts. It is definitely a lose-lose situation.
Nonetheless, government measures aimed at fostering Chinese industries, as well as practices, such as talent poaching and the theft of industrial secrets and technology, have indeed improved China’s industrial supply chain. The greatest victim of this stronger Chinese supply chain is without doubt the country that has invested the most in China — Taiwan.
In June, Barclays Capital Asia released a report by senior analyst Kirk Yang (楊應超), Hello China; Goodbye Taiwan, that delves into the crisis faced by Taiwan’s high-tech industry as China threatens to take its place.
The Chinese economy has risen by enjoying the benefits of globalization and free trade, but now that it has grown so strong it is coming into ever-sharper conflict with its main global trading partners. Apart from intensifying conflicts between China and mature economies like those of North America, Europe and Japan, a trade war between China and Taiwan is also underway.
Chinese companies’ practice of grabbing orders, people and technology from Taiwanese factories amounts to a war of annihilation. The economy is now in a life-or-death struggle, yet Ma remains blissfully unaware. The government is still forcefully pushing for the economy to link up with China’s. Without doubt, this policy is pushing Taiwan into the fire pit and driving its industries toward extinction.
Translated by Julian Clegg
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