The beginning of a year makes many feel hopeful about a new start, but also anxious about the unknown. Last year was filled with uncertainty amid a series of turbulent events.
First, Russia’s invasion of Ukraine affected the entire world, causing a global energy crisis, food shortages and security problems. Regrettably, a ceasefire is unlikely in the near future.
Second, under Chinese President Xi Jinping’s (習近平) rule, China stirred up trouble. Beijing’s “zero COVID” policy severely damaged its economy, and the abrupt lifting of lockdowns and virus restrictions resulted in massive COVID-19 outbreaks.
China’s situation has set off alarms in countries that have already embraced a model of living with COVID-19.
Xi’s rule has caused economic stagnation and heightened people’s resentment toward the Chinese Communist Party, but the authoritarian regime has maintained its strict social control.
Moreover, China continues to compete with the US, creating tensions in the East China Sea, South China Sea and on its border with India. China has harassed Taiwan on a daily basis, making the circumstances in the Taiwan Strait a global issue.
In terms of the global economy, wars and geopolitical competition have wreaked havoc on supply chains, and those disruptions have not been repaired yet.
Global inflation has reached 9 percent. The US is confronting its most serious price hikes in 40 years, while consumer prices in Germany rose to its highest levels since the early 1950s. The US Federal Reserve has raised interest rates several times to deal with inflation, and other countries have followed suit.
Soon after, the US dollar appreciated substantially, affecting financial activities and economic development worldwide.
Consumer prices might keep rising, and the IMF predicted that the world might be facing the weakest economic growth profile since 2001. Even some high-income countries would be caught in long-term downturns.
The world has changed swiftly and dramatically. We are confronted with unprecedented challenges. People want their countries and economies to persevere and adapt to these changes.
Three years ago, when consumer prices had been low for some time, economic analysts were optimistic about global growth, but now, they say countries must address and tackle inflation and stagnation. The Fed has shown a strong determination in seeking to control inflation at all costs, insisting that it is the central bank’s duty to ensure price stability.
Influenced by global circumstances, Taiwan’s export-oriented economy has been declining for a few months. The official manufacturing purchasing managers’ index has reached a new low. The industrial output, export-import volume, stock index, monitoring indicator and consumer confidence index have been weak for some time.
A recession is clearly in sight.
Moreover, the cost of living has been rising and affecting every aspect of our lives, while a sense of resentment has been brewing.
Taiwanese have been caught up in price hikes. Taxi fares are set to rise, while prices of basic food items — such as eggs — have been high for a long time.
Taiwanese have seen the prices of vegetables, poultry, meat and fish rising for months.
These costs would soon trickle down through restaurants, fast-food chains and take-out shops.
Low-income households and those on fixed incomes are affected most in such difficult times.
The government released its estimates for inflation, but the public has found fault with the official figures, as the data failed to reflect the actual situation.
Directorate-General of Budget, Accounting and Statistics data showed that the producer price and wholesale price indices rose by double-digit percentages last year, but the consumer price index — which more directly reflects the economy’s effects on people’s daily lives — did not reach 3 percent.
Each index is assessed distinctively, and vegetable and energy prices might not be included when measuring the consumer price index, but reaching the 3 percent threshold is still implausible. It is no wonder the public would not buy it.
The methods of investigating and measuring the indices must be adjusted, while some fundamental problems, such as intentional price hiking, anticipated inflation and intermediary exploitation, must also be addressed.
On New Year’s Day, Vice President William Lai (賴清德) said that the government’s primary objective is to achieve economic growth, while protecting people’s livelihood.
Lai’s down-to-earth remarks are an example of the government trying to understand and communicate with Taiwanese.
Another hotly debated issue is surplus tax revenue. National tax revenue last year exceeded the budget by NT$450 billion (US$14.74 billion).
How will the government redistribute the money and issue tax rebates?
In addition to funding local governments, the Cabinet said it plans to allocate NT$200 billion of the remaining NT$380 billion to electricity subsidies, closing the gap in the Labor Insurance and National Health Insurance funds, and other government initiatives to cope with economic problems.
The Executive Yuan said it would consider distributing vouchers or cash to the public, but only after the remaining NT$180 billion has been effectively used.
In her new year’s address President Tsai Ing-wen (蔡英文) said that “money should be spent wisely.”
In the current political climate, Tsai’s declaration is one not often heard. Most politicians value an individual or a political party more than the public, and they tend to set short-term objectives rather than long-term plans.
The plan laid out by Tsai’s administration is comprehensive, thoughtful and responsible. It does not rule out the possibility of distributing cash or vouchers, but it is different from giving out new year red envelopes extensively and immediately.
Tsai’s plan is not political populism. It is not a firework display intended to be celebratory and bombastic. Hence, her plan was soon criticized. The government was accused of profiteering, dashing people’s hopes, robbing society, grabbing surplus tax revenue for its benefit and so on.
Having surplus tax revenue does not mean that the government should not worry about public finances.
It is appropriate to distribute the surplus as electricity price subsidies, aid to the Labor Insurance and National Health Insurance funds and as government initiatives to strengthen the economy.
After the defeat in the nine-in-one elections, the ruling Democratic Progressive Party has confronted a series of economic woes. It has rightly insisted on forging its own path rather than fawning over the public.
Former president Lee Teng-hui (李登輝) once said that a leader must have strong willpower and executive ability, especially when they are carrying out reforms or dealing with challenges. At the beginning of a new year, the Tsai administration has demonstrated its resolve. More tasks are to be undertaken, but Taiwan will stand tall.
Translated by Liu Yi-hung
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