China has gradually become a target of public criticism in the international economic and trade communities since the summer.
Mexican President Vicente Fox accused Chinese officials of using despicable methods to attract businesses and Italy's Minister of Economy and Finance Giulio Tremonti claimed it would be suicidal for Europe to open up its trade to China. Washington also blames its loss of jobs in the manufacturing industries on China's insufficient liberalization and the obviously undervalued yuan. The George W. Bush administration could eventually adopt a harder stance on this issue.
These criticisms are not unfounded. In the eyes of many developing countries, China has robbed them of their markets in the West due to its relatively cheap and abundant labor force.
EU and US officials recently complained that the opening of China's markets after the country's WTO entry has fallen far short of what was promised. The White House and the US Department of Commerce even announced that they would form a special team to investigate China's unfair trade practices and take the necessary measures to correct them.
The manipulation of the yuan's exchange rate has been China's most criticized measure. Beijing has pegged the yuan to the US dollar, although it has enjoyed a current-account surplus since 1994. Its trade surplus with the US exceeded US$100 billion last year.
People seem to have different opinions about exactly how much the yuan has been undervalued. The US National Association of Manufacturers estimates the yuan to be 10 percent to 40 percent undervalued. But the figure could even be as high as 50 percent to 60 percent, according to the famous "Big Mac index" of The Economist magazine.
People have different opinions on how to solve the problem.
When US Secretary of the Treasury John Snow visited Beijing last month, he suggested that the Chinese authorities build an exchange-rate system on the basis of free trade, an open market, free flow of capital and market orientation. In the same month, however, Nobel-winning economist Robert Mundell stressed during his visit to Taipei that drastic appreciation of the yuan would be catastrophic for China's economy. He also called for the establishment of an "Asian currency area."
Nicholas Lardy, a leading expert on China's economy, believes that Beijing can gradually revalue the yuan in two steps: First, it can appreciate the yuan by 10 percent to 20 percent and expand its range of fluctuation. It can also change its policy by pegging the yuan to the US dollar, the euro and the Japanese yen -- not just the US dollar. It can adopt a free-floating exchange rate and allow capital to flow freely after its financial system has been strengthened.
Due to a fear of losing face, Beijing is unwilling to give up the fixed exchange rate or allow the yuan's value to increase under international pressure.
China will encounter greater pressure from the international community. The US is most likely to take action as next year's presidential election draws near. China's resistance may trigger a backlash in the form of trade protectionism.
For Taiwan, the dispute over the yuan's value has highlighted the true face of China's economy behind its glamorous appearance. By putting 60 percent of its foreign investments in China, Taiwan may also suffer as the international community takes countermeasures against China. In the face of such an economically risky neighbor, Taiwan cannot remain unprepared for possible economic threats.
Lu Shih-xiang is the chief executive officer of the Foundation for the Advancement of Media Excellence and a member of the Taipei Society.
TRANSLATED BY EDDY CHANG
US$18.278 billion is a simple dollar figure; one that’s illustrative of the first Trump administration’s defense commitment to Taiwan. But what does Donald Trump care for money? During President Trump’s first term, the US defense department approved gross sales of “defense articles and services” to Taiwan of over US$18 billion. In September, the US-Taiwan Business Council compared Trump’s figure to the other four presidential administrations since 1993: President Clinton approved a total of US$8.702 billion from 1993 through 2000. President George W. Bush approved US$15.614 billion in eight years. This total would have been significantly greater had Taiwan’s Kuomintang-controlled Legislative Yuan been cooperative. During
Former president Ma Ying-jeou (馬英九) in recent days was the focus of the media due to his role in arranging a Chinese “student” group to visit Taiwan. While his team defends the visit as friendly, civilized and apolitical, the general impression is that it was a political stunt orchestrated as part of Chinese Communist Party (CCP) propaganda, as its members were mainly young communists or university graduates who speak of a future of a unified country. While Ma lived in Taiwan almost his entire life — except during his early childhood in Hong Kong and student years in the US —
Chinese Nationalist Party (KMT) lawmakers on Monday unilaterally passed a preliminary review of proposed amendments to the Public Officers Election and Recall Act (公職人員選罷法) in just one minute, while Democratic Progressive Party (DPP) legislators, government officials and the media were locked out. The hasty and discourteous move — the doors of the Internal Administration Committee chamber were locked and sealed with plastic wrap before the preliminary review meeting began — was a great setback for Taiwan’s democracy. Without any legislative discussion or public witnesses, KMT Legislator Hsu Hsin-ying (徐欣瑩), the committee’s convener, began the meeting at 9am and announced passage of the
In response to a failure to understand the “good intentions” behind the use of the term “motherland,” a professor from China’s Fudan University recklessly claimed that Taiwan used to be a colony, so all it needs is a “good beating.” Such logic is risible. The Central Plains people in China were once colonized by the Mongolians, the Manchus and other foreign peoples — does that mean they also deserve a “good beating?” According to the professor, having been ruled by the Cheng Dynasty — named after its founder, Ming-loyalist Cheng Cheng-kung (鄭成功, also known as Koxinga) — as the Kingdom of Tungning,
RSS