When asked how Taiwan should deal with future cross-strait politics and economics, some commentators argue that given China’s formidable rise thanks to its powerful trade and economy, Taiwan should adopt a more open and integrated approach toward China to benefit from the process.
However, such a vague and conceptual understanding of the Chinese economy may cause the government to misjudge the priorities for its international and cross-strait economic policies.
Since the 1990s, China has risen rapidly to become a major economic power, but a closer look at the its economic development and, to a greater degree, the operations of the Asia-Pacific economic system reveals an inherent weakness — a heavy dependence on exports and the US market. US Nobel laureate in economics Paul Krugman, Morgan Stanley Asia chairman Stephen Roach and World Bank chief economist Justin Lin (林毅夫) and Chinese economist Shen Minggao (沈明高) have all expressed similar concerns.
The Asian financial crisis in the late 1990s revealed the structural weakness of the East Asian economies, which competed for export markets by depreciating their currencies. These East Asian nations, including China, have since come to realize that relying on exports to the US to spur economic growth has its limitations and have therefore started to adopt strategies to boost domestic demand in the hope of balancing the risks of excessive dependence on exports.
Ten years have passed, but China and other Asian nations are even more reliant on exports to drive economic growth. Looking at the Asian economies as a whole, exports’ share of GDP has risen to 45 percent — up from 35 percent a decade ago. China, for one, draws more than 50 percent of its growth from exports, with the US being its biggest market.
China remains vulnerable in its dependence on exports and the US market to augment its economic growth. This means that a decline in US consumption demand or implementation of trade barriers and sanctions by the US government would lead to a drastic drop in Chinese exports and have a large impact on the entire Chinese economy.
The current global financial storm, which has affected Chinese exports, has prompted Beijing to adopt a 4 trillion yuan (US$585 billion) economic stimulus package in an attempt to revive its economy. This reflects the vulnerability of the Chinese economic growth model.
Given that the US and the EU are still the major end markets, Taiwan should not focus its efforts on how to integrate more closely with the Chinese production chain to stay cost-competitive. Instead, it should pay attention to new policies and industrial changes being implemented by the governments in the EU and the US amid the financial crisis. Both the Taiwanese government and businesses should focus their efforts on improving local industrial technologies and enhancing the global competitiveness and added value of Taiwanese products.
Lu Chun-wei is a research fellow at Taiwan Thinktank.
TRANSLATED BY TED YANG
For three years and three months, Taiwan’s bid to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) has remained stalled. On Nov. 29, members meeting in Vancouver agreed to establish a working group for Costa Rica’s entry — the fifth applicant in line — but not for Taiwan. As Taiwan’s prospects for CPTPP membership fade due to “politically sensitive issues,” what strategy should it adopt to overcome this politically motivated economic exclusion? The situation is not entirely dim; these challenges offer an opportunity to reimagine the export-driven country’s international trade strategy. Following the US’ withdrawal from the Trans-Pacific Partnership
Two major Chinese Communist Party (CCP)-People’s Liberation Army (PLA) power demonstrations in November 2024 highlight the urgency for Taiwan to pursue a military buildup and deterrence agenda that can take back control of its destiny. First, the CCP-PLA’s planned future for Taiwan of war, bloody suppression, and use as a base for regional aggression was foreshadowed by the 9th and largest PLA-Russia Joint Bomber Exercise of Nov. 29 and 30. It was double that of previous bomber exercises, with both days featuring combined combat strike groups of PLA Air Force and Russian bombers escorted by PLAAF and Russian fighters, airborne early warning
Since the end of former president Ma Ying-jeou’s (馬英九) administration, the Ma Ying-jeou Foundation has taken Taiwanese students to visit China and invited Chinese students to Taiwan. Ma calls those activities “cross-strait exchanges,” yet the trips completely avoid topics prohibited by the Chinese Communist Party (CCP), such as democracy, freedom and human rights — all of which are universal values. During the foundation’s most recent Chinese student tour group, a Fudan University student used terms such as “China, Taipei” and “the motherland” when discussing Taiwan’s recent baseball victory. The group’s visit to Zhongshan Girls’ High School also received prominent coverage in
India and China have taken a significant step toward disengagement of their military troops after reaching an agreement on the long-standing disputes in the Galwan Valley. For government officials and policy experts, this move is welcome, signaling the potential resolution of the enduring border issues between the two countries. However, it is crucial to consider the potential impact of this disengagement on India’s relationship with Taiwan. Over the past few years, there have been important developments in India-Taiwan relations, including exchanges between heads of state soon after Indian Prime Minister Narendra Modi’s third electoral victory. This raises the pressing question:
RSS