The media are increasingly expressing worries about the growing poverty gap in Taiwan. They bemoan the fact that some people are enjoying the fruits of the economic recovery, while others have gained nothing. In contrast to the extravagant lifestyles of the wealthy elite, the poor cannot even afford a nutritious meal for lunch, they say.
Media commentators say one of the main reasons for the growing wealth gap is that triangular trade, in which orders are taken in Taiwan for goods made abroad (mostly in China), does not improve Taiwan’s employment situation or stimulate domestic demand. As companies move their production bases to China, there are fewer and fewer job opportunities for workers in Taiwan. As a result, the poor keep getting poorer, while only a few factory owners and traders reap the profits.
As long ago as 2000, skeptical commentators, such as myself, warned repeatedly that the trend toward taking orders in Taiwan for goods made in China was likely to have damaging economic and social results for Taiwan. However, China-friendly academics and media outlets took a different view, the foremost purveyor being the Chinese-language Commercial Times.
In 2002, the “order from Taiwan, made in China” business model had developed to the extent that 19.28 percent of all production by Taiwanese companies was carried out abroad. The Commercial Times said there was no need to panic, as this was a sign of industrial internationalization and was a good thing. The paper assured its readers that, while some low-added-value processing had moved to China, core management operations would still be carried out in Taiwan.
“Isn’t this exactly the result we wanted?” the paper asked.
Politicians who were convinced by such arguments came up with fantastic schemes like turning Taiwan into a “global logistics hub,” and they proposed offering tax incentives to operations centers. This, of course, amounted to encouraging companies to move their production bases to China.
Since that time, this business model has become even more widespread. Now overseas production accounts for more than 50 percent of the total output of Taiwanese manufacturers, compared with just 13 percent in 2000. Over the same period, real wages have fallen back to the level they were 13 years ago and more than 260,000 people now live below the poverty line.
Now that the harm has been done, the belated show of concern by the Commercial Times is not much help. Let’s hope that from now on they will discard their greater-China ideology and instead focus on Taiwan and its more than 20 million inhabitants.
Ten years ago the paper’s contributors portrayed the order from Taiwan, made in China business model as a wonderful thing. In reality, we have all tasted the bitter fruit of this policy —— climbing unemployment, shrinking pay packets and a floundering economy.
A decade later, history seems to be repeating itself; Taiwan signed the Economic Cooperation Framework Agreement (ECFA) with China in June.
Given the great difference in size between Taiwan’s economy and that of China, this kind of economic integration will obviously make Taiwan into just a Chinese island. Still, those who supported the order from Taiwan, made in China business model now support the ECFA and insist that the pact heralds “a golden decade for Taiwan.”
Will the ECFA really usher in a golden decade for this country? We need only look at what became of those earlier promises to see what the future has in store.
Huang Tien-lin is a former national policy adviser to the president.
TRANSLATED BY JULIAN CLEGG
Taiwan stands at the epicenter of a seismic shift that will determine the Indo-Pacific’s future security architecture. Whether deterrence prevails or collapses will reverberate far beyond the Taiwan Strait, fundamentally reshaping global power dynamics. The stakes could not be higher. Today, Taipei confronts an unprecedented convergence of threats from an increasingly muscular China that has intensified its multidimensional pressure campaign. Beijing’s strategy is comprehensive: military intimidation, diplomatic isolation, economic coercion, and sophisticated influence operations designed to fracture Taiwan’s democratic society from within. This challenge is magnified by Taiwan’s internal political divisions, which extend to fundamental questions about the island’s identity and future
The narrative surrounding Indian Prime Minister Narendra Modi’s attendance at last week’s Shanghai Cooperation Organization (SCO) summit — where he held hands with Russian President Vladimir Putin and chatted amiably with Chinese President Xi Jinping (習近平) — was widely framed as a signal of Modi distancing himself from the US and edging closer to regional autocrats. It was depicted as Modi reacting to the levying of high US tariffs, burying the hatchet over border disputes with China, and heralding less engagement with the Quadrilateral Security dialogue (Quad) composed of the US, India, Japan and Australia. With Modi in China for the
The Chinese Nationalist Party (KMT) has postponed its chairperson candidate registration for two weeks, and so far, nine people have announced their intention to run for chairperson, the most on record, with more expected to announce their campaign in the final days. On the evening of Aug. 23, shortly after seven KMT lawmakers survived recall votes, KMT Chairman Eric Chu (朱立倫) announced he would step down and urged Taichung Mayor Lu Shiow-yen (盧秀燕) to step in and lead the party back to power. Lu immediately ruled herself out the following day, leaving the subject in question. In the days that followed, several
The Jamestown Foundation last week published an article exposing Beijing’s oil rigs and other potential dual-use platforms in waters near Pratas Island (Dongsha Island, 東沙島). China’s activities there resembled what they did in the East China Sea, inside the exclusive economic zones of Japan and South Korea, as well as with other South China Sea claimants. However, the most surprising element of the report was that the authors’ government contacts and Jamestown’s own evinced little awareness of China’s activities. That Beijing’s testing of Taiwanese (and its allies) situational awareness seemingly went unnoticed strongly suggests the need for more intelligence. Taiwan’s naval
RSS