The returns on cross-strait economic exchanges may be diminishing because the Chinese economic model is changing, former chairman of the American Institute in Taiwan Richard Bush said on Wednesday.
“Taiwan was a real beneficiary of export-led growth relying on essentially cheap labor, abuse of the environment and local corruption,” he said.
However, China was moving away from that model, and Taiwanese companies aiming to position themselves in the middle of the global supply chain had better move with it, he said.
At the same time, Chinese companies that would like to displace their Taiwanese partners are coming to prominence, he added.
Under these circumstances, Taiwan’s economic future cannot rest solely on liberalizing the nation’s relationship with China.
Taipei should beware of “putting all of its eggs in that basket,” he said.
Now director of the Center for Northeast Asian Policy Studies at the Brookings Institution, Bush launched his new book Uncharted Strait: the Future of China-Taiwan Relations.
He said that Taiwan needed to deregulate and improve economic relations with all of its major trading partners.
Bush said that although President Ma Ying-jeou (馬英九) understood that the country had to lift some of its protectionist trade barriers, politically it was extremely tough for him to put new policies into action.
Ma had used some of his political capital and had removed one key barrier involving the import of US beef, Bush said.
“I hope that leads to liberalizing steps between our two countries,” Bush said.
“We all understand how difficult this is to do in Taiwan’s domestic political context, but from a long-term perspective it is essential,” he said.
Bush said that it might be possible for Taipei to reach a separate and independent fisheries agreement with Japan before some kind of general agreement was reached between Beijing and Tokyo over the Diaoyutai Islands (釣魚台), known in Japan as the Senkakus.
“My personal understanding is that the Ma administration would very much like to see a new fisheries agreement with Japan — if only to improve the livelihood of the Taiwan fishermen,” Bush said.
He added that negotiations for such an agreement had gone on for some time and had now been given “a new urgency.”
“I hope that progress can be made soon, because the fishing season is coming. I don’t think that Beijing would be unhappy if Taiwan reached such an agreement,” Bush said.
He said that Taiwan’s agreements “in the economic area” seemed to be “OK” with Beijing.
Bush said that he wanted to “stress the danger” in the current dispute over the Diaoyutai islands.
“Realistic people understand that resolving the territorial dispute is a long way off, and very difficult,” he said.
One solution might center around “some sort of joint development” of the islands’ resources because that would emphasize cooperation, he added.
“The way countries — particularly China — are operating in the vicinity of the islands is worrisome,” Bush said.
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