The past several months have been witness to how the global financial crisis resulting from the US subprime mortgage crisis has swept across Asia. However, other than forecasting slower economic growth or a contraction, most countries in the region have failed to come up with effective measures to deal with the downturn. This is not to suggest that governments are not doing anything about the crisis; it is just that policies implemented to date have not produced the desired results.
Taiwan’s East Asian neighbors have implemented several measures to boost domestic demand, including extending loans to businesses and doubling domestic infrastructure investments. Together, China, Japan and South Korea have proposed more than US$1.2 trillion in stimulus measures to revive their economies.
Apart from these individual economic policies, East Asian countries hope to promote more regional collective action and cooperation to shore up domestic consumer confidence and stabilize the regional economy by expanding the existing cooperation network. For instance, the high-level ASEAN Plus Three — ASEAN plus Japan, China and South Korea — forum held in the Indonesian capital of Jakarta on Feb. 20 was an important channel for member countries to exchange opinions and foster collective confidence.
Especially worthy of attention is the tacit agreement among the member countries of the ASEAN Plus Three on how to combat the global financial storm. ASEAN Plus Three finance ministers meeting in Phuket, Thailand, on Feb. 22 proposed an action plan based on increasing trade and investment to restore the regional economy and financial stability through closer regional cooperation. The ministers agreed to augment regional supervision, expand bilateral currency swap arrangements and enlarge the Chiang Mai Initiative reserve fund to US$120 billion, from US$80 billion. The resolutions made on the 14th ASEAN Summit held last Thursday further served as an indication of how the nations in the region are to rescue the economy.
Looking at the progress in East Asian cooperation, Taiwan seems to have been excluded from the recent regional dialogue mechanism. Although the government has adopted many measures to boost the domestic economy, neither foreign investors nor international research institutes have high hopes for Taiwan’s economic performance this year. The government’s recent push to sign an economic cooperation framework agreement with China has become a hotly debated topic between the ruling and opposition parties. Defenders of the proposed pact see the agreement as the only solution to boosting Taiwan’s economy, contending that the opposition has overly politicized the issue.
Even though signing an economic pact with China may be significant, the government should also carefully think of how it could seek a wider cooperation platform while drawing closer to Beijing, as well as how it could enhance global participation to mitigate the impact of the global financial crisis on Taiwan.
For the past decade, Taiwan has seen repeated calls for participation in the ASEAN Plus Three, but many of those proposals or policy suggestions have been politically motivated. The future of Taiwan is not something that pan-green or pan-blue politicians can gamble with. It’s a gamble politicians can afford, but one the public cannot afford to lose.
While China’s participation in ASEAN would further marginalize Taiwan, we should not think we should rush to do the same thing. The government and the public could start by first paying attention to the progress of this year’s ASEAN summit.
Yang Hao is a postdoctoral fellow at the Center for Asia-Pacific Area Studies.
TRANSLATED BY TED YANG
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