Mon, Nov 26, 2007 page8

• Taiwan is heading in the wrong direction

  • By Hwan C. Lin 林環牆
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  The actual direction of Democratic Progressive Party (DPP) presidential candidate Frank Hsieh's (謝長廷) "happiness economy" is now clear. Despite the proposal to dynamically manage the cap on China-bound investments, the basic principle is to continue opening up to China. This "new silk road" is similar to the policy of Chinese Nationalist Party (KMT) presidential candidate Ma Ying-jeou (馬英九) and his running mate, former premier Vincent Siew (蕭萬長).

  Of course, there is room for rational debate about the "Taiwan victorious" strategy, but if the predicament from 17 years of growing economic integration with China is not confronted and China-bound investments are allowed to continue, Taiwan will be threatened, not renewed.

  In the past seven years, I have repeatedly made suggestions about Taiwan's economic policies. Yet, the supposed new trend of "confident openness" proposed by the DPP still holds sway. Is this phenomenon a consensus reached after logical debate, the arrogance of political factions or a persistent enthusiasm for China resulting from being permanently lost along the "Silk Road?"

  In 2001, the North American Taiwanese Professors' Association's public policy committee formed an economic and technological policies team. I was responsible for drafting several policy recommendations that were published on April 28 of that year, including "three strategic considerations, four major obstacles and 10 policy proposals."

  In brief: "Taiwan's globalized economic integration should aim toward North America, the European Union, Japan and other technologically innovative global centers. Only then would it aid in the importation and dissemination of technological advancements and raise Taiwan's ability to evolve economically. Contrariwise, over economic integration with technologically weak developing countries, including China, would remove Taiwan's limited resources from innovative global centers and distance Taiwan from high tech markets in developed nations. This is not conducive to Taiwan's long term interests."

  This kind of strategic discourse is vastly different from the "active opening and effective management" policy set by the 2001 Economic Development Advisory Conference. Seven years later, our previous concerns have materialized. As an opinion piece about Taiwan's economic policy and its alienation from the US and Japan in the Nov. 14 edition of the Liberty Times (the Taipei Times' sister newspaper) said: "On the surface, Taiwan's outward economy appears prosperous. However, deeper analysis reveals the reverse of these: a one China structure diametrically opposed to the DPP's independent position which alienates allied nations and leans self-destructively toward the enemy state."

  Some say that to open further to China and increase Taiwan's "winning circle" is the way to go. There is some basis for this belief. Yet one should remember that this theory assumes that key production elements do not migrate across countries and technologies remain in stasis. Once Taiwan's capital and technology migrates to China en masse, and Taiwan has to invest in itself to increase its lead in advance of China, then the so-called "winning circle" will be expanding in China, not Taiwan.

  Hsieh's "sovereignty versus opening-up" thinking that seeks to relax economic cross-strait strictures over-simplifies the issue. Taiwan's winning strategy lies in proactive innovation and increasing globalization.

  Hwan C. Lin is a research fellow at the Taiwan Public Policy Council, a US think tank, and associate professor of economics at the University of North Carolina at Charlotte.

  Translated by Angela Hong
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