Academia Sinica recently predicted that given a low base in 2009, last year’s economic growth could reach 10.31 percent. Disregarding this base of comparison, President Ma Ying-jeou (馬英九) proudly touted his administration’s achievements, announcing his “golden decade” plan during a speech to celebrate the 100th anniversary of the Republic of China (ROC). Ma carried on as if his China--leaning policies had helped build a solid base for Taiwan’s economic growth. However, this is very far from how things really stand.
While the local economy seems to have recovered, a major crisis is just waiting to happen because the government’s economic policies rely too heavily on China. If the Ma administration continues with its China-leaning policies, there won’t be any “golden decade.” In fact, it would be a miracle if Taiwan could even survive for another decade.
Taiwan’s impressive economic performance last year came in the wake of a recession after being hit severely by the global financial crisis in the previous two years. A slight recovery from this low gave people a false sense of security that the economy is experiencing strong growth. In reality, however, even government officials have to admit that few could feel last year’s recovery. Although economic growth soared, there was no corresponding growth in employment opportunities and salaries, and therefore most people did not feel any better off.
Academia Sinica cited three major reasons for this. The main reason is triangular trade, where orders are received in Taiwan and manufacturing takes place overseas. This makes money for businesses, but does not do much for workers. So how serious is the problem with Taiwan’s triangular trade? Recent data from the Ministry of Economic Affairs showed that as much as 50.95 percent — an all-time high — of all foreign orders for Taiwanese products were manufactured outside of Taiwan. This figure has kept increasing and has not fallen below 50 percent since it exceeded that level in March last year.
Taiwan’s economic growth is based on exports. Exports do generate massive amounts of foreign reserves and provide many job opportunities. However, after Taiwanese businesses looked at costs and moved their operations to China, the trend of receiving orders in Taiwan and producing overseas has continued to climb, exceeding 50 percent after Ma came to power. The information technology (IT) industry accounts for a large part of Taiwan’s economy, but 83 percent of all IT production takes places overseas. For example, Foxconn Technology Group, which has about 920,000 employees around the world, has only about 6,000 employees in Taiwan. Asustek Computer, including its manufacturing arm, Pegatron, has approximately 120,000 employees around the world, but only about 7,500 in Taiwan. These two examples make it clear that overseas production is hurting employment opportunities in Taiwan.
Most of this overseas production takes place in China, which means Chinese workers have absorbed many employment opportunities from Taiwan. When the economy slows down, Taiwanese workers are the first to be laid off, but when it picks up and companies start receiving new orders and increasing investments, many choose to set up factories in China and take on more Chinese labor. Taiwanese workers have been marginalized and most employers could not care less about them. Many have no choice but to rely on temporary work subsidized by the government — a program designed to boost employment figures.
The government insists that its China-friendly policy can stop Taiwan’s isolation, help attract foreign investment and encourage the return of China-based Taiwanese businesspeople. However, the economic data do not support these claims. From January to October last year, foreign direct investment in Taiwan — excluding Chinese investment — dropped 19.5 percent compared with a year earlier, while Taiwanese investment in China grew 130.1 percent during the same period. What’s more, Ministry of Finance statistics show that shipments to China and Hong Kong accounted for 41.8 percent of Taiwan’s total exports last year of US$274.6 billion. So on the whole, Taiwan is not only investing and producing in China, it is also heavily reliant on China for exports. The way China has Taiwan by the neck economically is an extremely worrying state of affairs.
Fortunately, the public is not blind, as many workers have become victims of the -government’s China-leaning policies. This is why the pan-blue camp lost badly in several recent elections and only just managed to hang on in the special municipality elections by milking all the sympathy it could from the Sean Lien (連勝文) shooting incident. In the end, the pan-blues still trailed behind the Democratic Progressive Party in terms of number of votes received. Again, in the first election of the 100th anniversary of the ROC, the Chinese Nationalist Party (KMT) was defeated, losing the by-election for chief of Nantou’s Caotun Township (草屯), a traditional pan-blue stronghold. This is another demonstration of public dissatisfaction with the government.
If elections show what the public really thinks about Ma’s China policy, so do the results of an opinion poll recently released by the Mainland Affairs Council. These opinion polls often sway in favor of the government, but in this case, the poll showed the number of respondents who support unification dropping to an all-time low, while those who favor maintaining the “status quo” and then independence surged to a six-year high. Those who supported maintaining the “status quo” in the broad sense of the word accounted for 87 percent of respondents.
In his speech, Ma gave himself all the credit for the “accomplishments” that will be made in the next 100 years. However, regardless of how hard he tries to wrap his China-leaning policies in pretty slogans and eloquent speeches, the public has repeatedly told him in opinion polls and elections: “Mr Ma, you are wrong.”
TRANSLATED BY DREW CAMERON
In their recent op-ed “Trump Should Rein In Taiwan” in Foreign Policy magazine, Christopher Chivvis and Stephen Wertheim argued that the US should pressure President William Lai (賴清德) to “tone it down” to de-escalate tensions in the Taiwan Strait — as if Taiwan’s words are more of a threat to peace than Beijing’s actions. It is an old argument dressed up in new concern: that Washington must rein in Taipei to avoid war. However, this narrative gets it backward. Taiwan is not the problem; China is. Calls for a so-called “grand bargain” with Beijing — where the US pressures Taiwan into concessions
The term “assassin’s mace” originates from Chinese folklore, describing a concealed weapon used by a weaker hero to defeat a stronger adversary with an unexpected strike. In more general military parlance, the concept refers to an asymmetric capability that targets a critical vulnerability of an adversary. China has found its modern equivalent of the assassin’s mace with its high-altitude electromagnetic pulse (HEMP) weapons, which are nuclear warheads detonated at a high altitude, emitting intense electromagnetic radiation capable of disabling and destroying electronics. An assassin’s mace weapon possesses two essential characteristics: strategic surprise and the ability to neutralize a core dependency.
Chinese President and Chinese Communist Party (CCP) Chairman Xi Jinping (習近平) said in a politburo speech late last month that his party must protect the “bottom line” to prevent systemic threats. The tone of his address was grave, revealing deep anxieties about China’s current state of affairs. Essentially, what he worries most about is systemic threats to China’s normal development as a country. The US-China trade war has turned white hot: China’s export orders have plummeted, Chinese firms and enterprises are shutting up shop, and local debt risks are mounting daily, causing China’s economy to flag externally and hemorrhage internally. China’s
US President Donald Trump and Chinese President Xi Jinping (習近平) were born under the sign of Gemini. Geminis are known for their intelligence, creativity, adaptability and flexibility. It is unlikely, then, that the trade conflict between the US and China would escalate into a catastrophic collision. It is more probable that both sides would seek a way to de-escalate, paving the way for a Trump-Xi summit that allows the global economy some breathing room. Practically speaking, China and the US have vulnerabilities, and a prolonged trade war would be damaging for both. In the US, the electoral system means that public opinion
RSS