Taipei caught in undertow of booming China trade
TAIPEI, Taiwan — During the festive Chinese Lunar New Year holidays direct round-trip flights between Taipei and Beijing, Shanghai and Canton will be heading across the Taiwan Straits to reunite families and friends. Taiwan’s EVA Air will be plying these otherwise restricted routes using specially adorned Hello Kitty themed jets as part of the annual New Year festival thaw between Taipei and Beijing — the politically estranged cousins, of what most still regard as the wider Chinese family.
There’s a rich and almost incongruous irony to the current relations between Taiwan’s vibrant democracy and People’s China. In the early years after the establishment of Mao’s People’s Republic in 1949 and until the early 1980’s Beijing remained politically totalitarian and economically mired in low growth socialist stagnation. Since the mid-1980’s and especially in the past decade, China stayed communist politically but has allowed elements of private enterprise into its now thriving economy.
Taiwan on the other hand, engineered extraordinary socio/economic growth. Between 1953 and 2000 growth averaged 8 percent annually while the island’s per capita income surged from $53 to $14,000! Taiwan earned the honorific Little Dragon of East Asia.
But now there’s a new bittersweet dynamic defining divided China which goes beyond the politics of Beijing’s thinly veiled military threats to the very nature of Taiwan’s economy and future prosperity. Domestic political infighting over the national identity, corruption in the ruling DPP party, and the pull of the Mainland market has seen Taiwan’s economy enter a noticeable slowdown. Wrangling among Taiwan’s politicos has moreover caused a loss of economic confidence.
Dr. David Huang, Deputy Chairman of the government’s Mainland Affairs Council (MAC) puts the matter in perspective — “Since the early 1990’s more that $80 billion and up to $100 billion has been invested in Mainland China by Taiwan firms.” He stated, “More than half of Taiwan investment worldwide now goes to China.” Companies look to a nearby but low cost production base with a familiar culture.
The once-banned trade across the Taiwan Straits has become a deluge — commerce between the separated Chinese cousins hit $70 billion in 2005 with a whopping trade surplus going to Taiwan. That $40 billion surplus for Taipei is more that a carrot and stick from Beijing. Huang admits, “We don’t deny it contributes to our growth — at the same time Taiwan firms have created ten million jobs in Mainland China.”
President Chen Shui-bian has clearly warned about this dependence on the Mainland markets and the powerful political undertow it exerts on both business and domestic policy. Still many observers remain wary of the DPP’s “creeping moves to Taiwan independence,” and sees this as a reason Beijing has shunned official contact with Taipei.
Dr. Parris Chang of the National Security Council concedes, “The economy here is dependent on trade with China…This is how Beijing tries to entrap Taiwan.”
As Dr. Chang told this writer, “this dependence puts us at the mercy of China who puts pressure on investors — then there is pressure on our government from the business investors in Mainland China.” Currently 500,000 Taiwanese are living on the Mainland.
Prof. Chi Su an erudite legislator with the opposition Nationalist Party (KMT) adds, “The PRC is a threat to us but also an opportunity.” He calls for a “win-win solution” between both sides in the long-running dispute. The Nationalists, a majority in the Legislature favor a cooling of tensions with China with the ultimate goal of reunification — but based on China’s democratization.
Both Taipei and Beijing long held the political dogma that they were China but
with different political systems. Today opinion polls underscore the political reality that most people on Taiwan (80 percent) want to keep the status quo while ten percent want unification now, and another ten percent want formal Taiwan independence. The PRC warns that the “independence” option would invite the wrath of the Dragon — triggering a military attack on Taiwan and a wider crisis which would almost certainly embroil the United States and Japan.
So the real issue remains that the PRC claims Taiwan and threatens force to “bring the island back to the motherland.” Democratic Taiwan obviously fears China militarily but businessmen can and will conduct commerce with Beijing. Few people, though some politicians, wish to push the political envelope and risk war with the Dragon.
Cross straits commerce illustrates Adam Smith’s classic view that the “invisible hand of the market” is already uniting both sides, though the politicians are still speaking another language.
John J. Metzler is a U.N. correspondent covering diplomatic and defense
issues. He writes weekly for World Tribune.com. |
