On Nov. 10, US President Donald Trump ended his visit to China. He might have received a big “gift” of US$253.5 billion there, but as soon as he arrived in Da Nang, Vietnam, he said that the US would no longer tolerate dumping, currency manipulation, government subsidies and other chronic trade abuses, and that it is necessary to restore fair competition to distorted markets.
Trump is the first global leader to question globalization. Before the 1980s, nations had an unshakable belief in globalization. Trade volumes grew and poorer nations could also share in the wealth, thanks to investments by developed nations.
When China joined the free market, this belief in globalization as a trading system that would benefit the entire world began to falter, because China is an autocracy that used all of its might in the pursuit of global economic dominance.
The effectiveness of free trade, barter and division of labor can only come to fruition if global trade is in a general state of equilibrium.
Japan also experienced a gigantic trade surplus, but it still was not more than US$40 billion to US$50 billion, and following global condemnation, it allowed the yen to appreciate.
China’s approach has been different: To be able to enjoy the benefits of globalization, Beijing depreciated the yuan from 1.5 yuan to the US dollar in 1980 to 8.5 yuan in 1995, and it did so without experiencing coups, upheavals or inflation.
The move suppressed labor costs to levels between one-20th and one-40th of the cost in developed nations and China used that to attract foreign capital, steal technology and build its position as the world’s factory.
China’s trade surplus stands at US$500 billion annually, 10 times the size of Japan’s highest surplus. Can the global trade system really withstand the effects of a trade deficit of US$500 billion with China every year?
China’s exchange-rate manipulation and dumping have given it a foreign-exchange reserve of more than US$4 trillion. It uses this surplus to buy up advanced technology companies and concentrate the power of global economic growth in its hands, maintaining annual economic growth of 7 percent.
This is the result of sacrificing other nations’ economic growth.
Taiwan is the biggest victim of China’s policy. Taiwanese businesses are moving to China in droves, causing Chinese incomes and economic growth to rise, while Taiwanese incomes have dropped and economic growth has fallen to between 1 and 2 percent.
Japan and the US have also sacrificed growth. In the US, this has caused a backlash among blue-collar workers, resulting in Trump’s election as president.
Bizarrely, some academics and media outlets in Taiwan still see China as Taiwan’s savior and think of China’s US$30 billion trade deficit with Taiwan [Ministry of Finance data showed a trade deficit of US$63.03 billion for the first 10 months of the year] as a sign of goodwill.
However, this deficit is the result of Taiwanese businesses relocating their production to China, which is benefiting China and negatively affecting Taiwan.
Taking a pragmatic look at the situation, it is difficult to see businesses that have moved nearly all their production — perhaps about 80 percent — to China as Taiwanese businesses. From a fiscal and management point of view, the government should treat these “Taiwanese” businesses differently to bring operations for companies grounded in Taiwan back to reasonable levels.
At least Trump keeps saying that he will put the US first and restore fair competition to the distorted market.
Could Taiwan do the same? It is just a matter of determination.
Huang Tien-lin is a national policy adviser and former managing director and chairman of First Commercial Bank.
Translated by Perry Svensson
It is almost three years since Chinese President Xi Jinping (習近平) and Russian President Vladimir Putin declared a friendship with “no limits” — weeks before Russia’s invasion of Ukraine in February 2022. Since then, they have retreated from such rhetorical enthusiasm. The “no limits” language was quickly dumped, probably at Beijing’s behest. When Putin visited China in May last year, he said that he and his counterpart were “as close as brothers.” Xi more coolly called the Russian president “a good friend and a good neighbor.” China has conspicuously not reciprocated Putin’s description of it as an ally. Yet the partnership
The ancient Chinese military strategist Sun Tzu (孫子) said “know yourself and know your enemy and you will win a hundred battles.” Applied in our times, Taiwanese should know themselves and know the Chinese Communist Party (CCP) so that Taiwan will win a hundred battles and hopefully, deter the CCP. Taiwanese receive information daily about the People’s Liberation Army’s (PLA) threat from the Ministry of National Defense and news sources. One area that needs better understanding is which forces would the People’s Republic of China (PRC) use to impose martial law and what would be the consequences for living under PRC
Although former US secretary of state Mike Pompeo — known for being the most pro-Taiwan official to hold the post — is not in the second administration of US president-elect Donald Trump, he has maintained close ties with the former president and involved himself in think tank activities, giving him firsthand knowledge of the US’ national strategy. On Monday, Pompeo visited Taiwan for the fourth time, attending a Formosa Republican Association’s forum titled “Towards Permanent World Peace: The Shared Mission of the US and Taiwan.” At the event, he reaffirmed his belief in Taiwan’s democracy, liberty, human rights and independence, highlighting a
The US Department of Defense recently released this year’s “Report on Military and Security Developments Involving the People’s Republic of China.” This annual report provides a comprehensive overview of China’s military capabilities, strategic objectives and evolving global ambitions. Taiwan features prominently in this year’s report, as capturing the nation remains central to Chinese President Xi Jinping’s (習近平) vision of the “great rejuvenation of the Chinese nation,” a goal he has set for 2049. The report underscores Taiwan’s critical role in China’s long-term strategy, highlighting its significance as a geopolitical flashpoint and a key target in China’s quest to assert dominance
RSS