Taiwan’s share of the Chinese market continued to fall last year, despite increasing bilateral trade, calling into question the effectiveness of the cross-strait Economic Cooperation Framework Agreement (ECFA), local researchers said yesterday.
While about 40 percent of Taiwanese exports continue to flow to China, that number represented a significant drop from last year and comes amid sharply slowing growth in that category — a trend not seen with Taiwan’s other major trading partners.
Researchers studying the ECFA, signed in June last year, said the controversial trade deal had in most cases failed to deliver many of its envisioned benefits for Taiwan’s struggling manufacturing industry.
“The ECFA was seen as helping Taiwan engage in free-trade agreements with other countries and increase the competitiveness of exports to China, creating investment at home and attracting foreign funding,” Tung Chen-yuan (童振源), a professor at National Chengchi University, told a discussion hosted by the thinktank Taiwan Brain Trust, which is generally perceived to be more sympathetic to the pan-green camp. “But almost a year after it was signed, the initial achievements are fewer than expected.”
Ministry of Finance trade data shows Taiwan’s exports to China grew at 14.3 percent quarter-on-quarter in the first three months of this year, significantly lower than the 75.6 percent growth in the same quarter last year. While Taiwan saw a major rebound in exports following the global financial crisis, the growth was seen in exports to the US and Europe, not to Japan and China.
In fact, Taiwan’s share of the Chinese market fell to 7.4 percent in the first quarter of this year from 8.4 percent in the same period last year, continuing a five-year trend, CEIC China Database statistics showed.
“The ECFA’s early harvest list has been in effect since the start of the first quarter of 2011, but [Taiwan’s] market share in China still fell to 7.4 percent, the lowest point since 1993. It shows the ECFA hasn’t really changed the fact that Taiwan is losing competitiveness in the Chinese market,” Tung said, referring to a list of initial tariff reductions.
Figures on foreign investments also suggest that President Ma Ying-jeou’s (馬英九) administration was “perhaps too optimistic in its ECFA predictions,” Tung said, and added there isn’t “any indication that it could pick up.”
Foreign investment in Taiwan has decreased for three straight years, dropping from a recent high of NT$15.4 billion (US$545.4 million) in 2007 to NT$3.8 billion last year, according to data from the Ministry of Economic Affairs. Taiwan attracted NT$1 billion in the first quarter this year, a 34.4 percent quarter-on-quarter decrease.
Similarly, capital outflows have continued to outpace inflows over the past two years, reversing gains made during a sudden spike in 2008, according to Tung, citing central bank figures.
Since the ECFA was signed in the second quarter of last year, US$32.8 billion more in outflows than inflows have left Taiwan. In the third quarter of last year, outflows outpaced inflows by US$12.9 billion, while falling to US$3.3 billion in the final three months. However, that number rose again to US$16.6 billion in the first three months of this year, after the early harvest list came into force.
“The ECFA didn’t have the immediate effect of attracting more foreign investment to Taiwan, according to the numbers,” Tung said. “The export of large amounts of capital brings with it a brain drain that also reduces the -competitiveness of Taiwan’s internal market, damaging economic growth.”
Despite the disappointing figures, the government continues to promote the agreement, other participants in the discussion said.
Former Mainland Affairs Council chairman Joseph Wu (吳釗燮) said not enough attention has been paid to China’s political motives and whether the arrangements with China infringed on Taiwan’s sovereignty.
Lai I-chung (賴怡忠), a researcher at Taiwan Thinktank, called the government “reckless” for signing agreements with Beijing on a one-by-one basis, “without a comprehensive plan.”
Lai added there were also questions about the legality of the process, with cross-strait negotiations conducted by the non-profit Straits Exchange Foundation (SEF) and China’s Association for Relations Across the Taiwan Strait.
The discussion was held one day after the American Chamber of Commerce in Taipei advised Taiwan to look beyond exporting to China.
However, on Tuesday, SEF officials praised “warming cross-strait ties,” including the ECFA, for helping contribute to Taiwan’s 10.89 percent economic growth last year.
TENSIONS: The Chinese aircraft and vessels were headed toward the western Pacific to take part in a joint air and sea military exercise, the Ministry of National Defense said A relatively large number of Chinese military aircraft and vessels were detected in Taiwan’s vicinity yesterday morning, apparently en route to a Chinese military exercise in the western Pacific, the Ministry of National Defense (MND) said. In a statement, the ministry said 36 Chinese People’s Liberation Army (PLA) aircraft, including J-16 fighters and nuclear-capable H-6 bombers, crossed the median line of the Taiwan Strait or an extension of it, and were detected in the southern and southeastern parts of Taiwan’s air defense identification zone (ADIZ) from 5:20am to 9:30am yesterday. They were headed toward the western Pacific to take part in a
Honor guards are to stop performing changing of the guard ceremonies around a statue of Chiang Kai-shek (蔣介石) to avoid “worshiping authoritarianism,” the Ministry of Culture said yesterday. The fate of the bronze statue has long been the subject of fierce and polarizing debate in Taiwan, which has transformed from an autocracy under Chiang into one of Asia’s most vibrant democracies. The changing of the guard each hour at the Chiang Kai-shek Memorial Hall in Taipei is a major tourist attraction, but starting from 9am on Monday, the ceremony is to be moved outdoors to Democracy Boulevard, outside the eponymous blue-and-white memorial
The Chinese Nationalist Party (KMT) supports peaceful unification with China, and President William Lai (賴清德) is “a bit naive” for being a “practical worker for Taiwanese independence,” former president Ma Ying-jeou (馬英九) said in an interview published yesterday. Asked about whether the KMT is on the same page as the Democratic Progressive Party (DPP) and the Taiwan People’s Party (TPP) on the issue of Taiwanese independence or unification with China, Ma told the Malaysian Chinese-language newspaper Sin Chew Daily that they are not. While the KMT supports peaceful unification and is against unification by force, the DPP opposes unification as such and
CASES SLOWING: Although weekly COVID-19 cases are rising, the growth rate has been falling, from 90 percent to 30 percent, 14 percent and 6 percent, the CDC said COVID-19 hospitalizations last week rose 6 percent to 987, while deaths soared 55 percent to 99, the Centers for Disease Control (CDC) said yesterday, adding that the recent wave of infections would likely peak this week. People aged 65 or older accounted for 79 percent of the hospitalizations and 90 percent of the deaths, the majority of whom have or had underlying health conditions, CDC data showed. The youngest hospitalized case last week was a six-month-old, who was born preterm and was unvaccinated, CDC physician Lin Yung-ching (林詠青) said. The infant had a fever, coughing and a runny nose early this month, but