Tai­wan’s eco­nomic in­de­pen­dence

The China Post - - COMMENTARY -

Be­fore leav­ing for a 12- day “cam­paign” tour of the United States on May 29, Tsai Ing- wen, the stan­dard bearer of the Demo­cratic Pro­gres­sive Party in next year’s pres­i­den­tial elec­tion, said the Amer­i­cans are very much con­cerned about Tai­wan’s eco­nomic in­de­pen­dence af­ter seven years of Pres­i­dent Ma Ying-jeou’s rule. She thinks Un­cle Sam cares a great deal, for Tai­wan isn’t as de­pen­dent on him as it used to be, and is re­ly­ing more and more heav­ily on China for eco­nomic growth to his dis­like.

Well, that’s not what Un­cle Sam re­ally cares about. It’s what Hil­lary R. Clin­ton, the 2016 pres­i­den­tial hope­ful, cares about. Mrs. Clin­ton, a for­mer first lady, has also ex­pressed the sim­i­lar care she has for Aus­tralia’s eco­nomic in­de­pen­dence.

Tsai doesn’t seem to know what Mrs. Clin­ton, who was Pres­i­dent Barack Obama’s sec­re­tary of state, cares about. The eco­nomic in­de­pen­dence of Tai­wan she is con­cerned about is the one in Un­cle Sam’s in­ter­est, not the one for the ben­e­fit of the small is­land state of ours in the in­creas­ingly eco­nomic in­ter­de­pen­dent world.

Eco­nomic in­de­pen­dence means a coun­try’s in­de­pen­dent ca­pa­bil­ity to de­velop its econ­omy. The coun­try has to have do­mes­tic con­trol of eco­nomic ac­tiv­i­ties on the one


hand and to in­de­pen­dently par­tic­i­pate in in­ter­na­tional eco­nomic ac­tiv­i­ties on the other. Tai­wan all but lost the for­mer ca­pa­bil­ity in the 1980s and 1990s un­der pres­sure from the United States.

Tai­wan was al­most solely de­pen­dent on the United States in the early 1980s for growth in ex­port trade, the main­stay of its econ­omy. Its ex­ports to the United States in 1984 ac­counted for 49 per­cent of that year’s to­tal ex­port trade. The fa­vor­able bal­ance of trade with the United States in the same year rep­re­sented 116 per­cent of the over­all bal­ance of trade. Kicked out of the GATT (Gen­eral Agree­ment of Tar­iff and Trade/pre­de­ces­sor of the World Trade Or­ga­ni­za­tion), Tai­wan was forced to start bi­lat­eral ne­go­ti­a­tions with the United States, and the re­sult was that Tai­wan was com­pelled to ap­pre­ci­ate the New Tai­wan dol­lar, re­duce cus­toms du­ties, re­move non-tar­iff bar­ri­ers, and open its mar­ket. Tai­wan lost con­trol of its do­mes­tic eco­nomic ac­tiv­i­ties.

Re­mem­ber the soar­ing ap­pre­ci­a­tion of the New Tai­wan dol­lar? One U.S. dol­lar was ex­changed for NT$39.8 in 1985. The dol­lar was NT$25.4 in 1992. The share of ex­ports to the United States in Tai­wan’s over­all ex­port trade dropped from 49 per­cent in 1984 to 29 per­cent and to a scanty 24 per­cent in 1995, while its Amer­i­can ex­port-gen­er­ated fa­vor­able trade bal­ance in the over­all bal­ance of trade plunged from 116 per­cent to a mere 81 per­cent. All this proves that Un­cle Sam kicked off what is known as “de-Amer­i­can­iz­ing and Sini­ciz­ing Tai­wan’s ex­ports,” the rea­son be­ing Tai­wan’s top-heavy re­liance on the United States for eco­nomic growth which en­abled Washington to co­erce Taipei into obe­di­ence.

Eco­nomic glob­al­iza­tion has grown at an in­creased rate since the 1990s. One re­sult is that Tai­wan has much more Amer­i­can eco­nomic link­ages than it did in trade and di­rect for­eign in­vest­ment in the 1980s. Con­se­quently, when the sub­prime mort­gage cri­sis oc­curred in the United States in 2008, the Tai­wan econ­omy was hit hard­est, shrink­ing by 1.8 per­cent. It showed Tai­wan’s eco­nomic in­de­pen­dence was still un­der un­fa­vor­able Amer­i­can in­flu­ence. There wasn’t much im­prove­ment.

In­ter­de­pen­dence is Preva­lent

Now in the age of eco­nomic glob­al­iza­tion and re­gional eco­nomic in­te­gra­tion, in­ter­de­pen­dence is so preva­lent that no coun­tries in the world can claim an ab­so­lute eco­nomic in­de­pen­dence. If Tai­wan wants to in­crease its eco­nomic in­de­pen­dence, it has to im­prove its com­pre­hen­sive na­tional power, pro­duc­tiv­ity, na­tional com­pet­i­tive­ness, and com­pet­i­tive edges in the world in­dus­trial pro­duc­tion chain, while con­tin­u­ing diver­si­fi­ca­tion.

Par­tic­u­larly im­por­tant to Tai­wan is diver­si­fi­ca­tion. Tai­wan lacks in sources of energy. It has to di­ver­sify energy sources to re­duce risk in eco­nomic de­vel­op­ment. Tai­wan’s do­mes­tic mar­ket is small. It has to di­ver­sify mar­kets. It needs more over­seas mar­kets for its ex­ports than just one in the United States. Tai­wan has no choice but to de-Amer­i­can­ize and Sini­cize its ex­port trade, al­beit Tsai and her fel­low lead­ers of the Demo­cratic Pro­gres­sive Party hate it so much.

On the other hand, Tai­wan has to do one more thing while the world is un­der­go­ing a restruc­tur­ing of the in­ter­na­tional eco­nomic or­der. Tai­wan has to join re­gional trade and fi­nan­cial or­ga­ni­za­tions such as the RCEP (Re­gional Com­pre­hen­sive Eco­nomic Part­ner­ship), the TPP (Trans-Pa­cific Part­ner­ship) and the AIIB (Asian In­fra­struc­ture In­vest­ment Bank). Tai­wan also needs to join in the es­tab­lish­ment of their man­age­ment prin­ci­ples so that its eco­nomic in­de­pen­dence may be as­sured.

As a mat­ter of fact, the Kuom­intang ad­min­is­tra­tion has been do­ing the best it can to re­cu­per­ate Tai­wan’s Amer­i­canin­duced weak eco­nomic in­de­pen­dence. It hasn’t suc­ceeded, though.

No­body knows whether Tsai suc­ceeded in al­lay­ing Mrs. Clin­ton’s ap­pre­hen­sion of Tai­wan’s eco­nomic in­de­pen­dence go­ing awry in the Amer­i­can eye dur­ing her just com­pleted U.S. tour. To do so, Tsai is will con­tinue to do what she can to hurt Tai­wan’s eco­nomic in­de­pen­dence by op­pos­ing the Kuokuang Petro­chem­i­cal’s es­tab­lish­ment of Tai­wan’s Eighth Naph­tha Crack­ing Plant, op­er­a­tion of Nuke 4 (Fourth Nu­clear Power Sta­tion), coal-fired power gen­er­a­tion, free eco­nomic pi­lot zones, the cross-strait Eco­nomic Co­op­er­a­tion Frame­work Agree­ment ( ECFA) and the AIIB.

Of course, Tsai op­poses all these Kuom­intang gov­ern­men­tap­proved eco­nomic de­vel­op­ment projects to im­prove Tai­wan’s eco­nomic in­de­pen­dence for just one pur­pose. She does so to win the pres­i­den­tial elec­tion, come next Jan. 19. And she was fea­tured in the cover story of the Asia edi­tion of Time Mag­a­zine pub­lished on last Fri­day. “She could lead the only Chi­nese democ­racy,” Time says. In the process, how­ever, she may be selling out a Tai­wan which is likely to be­come eco­nom­i­cally in­de­pen­dent.

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