Alarm Bells: Two Indicators Slowing Down

 Alarm Bells: Two Indicators Slowing Down

United Daily News Editorial (Taipei, Taiwan)

July 24, 2018

 Translation of an Excerpt

President Tsai Ing-wen has recently bragged about her achievements in governance a number of times, saying that Taiwan’s economy is in the "best state in 20 years"; however, right at this moment, the economics government agencies, on the other hand, reported different messages in the two indicators released by them, which are worthy of attention. The first is the export data for June made public by the Statistics Department under the Economics Ministry, which surprisingly showed a slow-down, ending 21 consecutive months of growth, or 0.1% lower than that of May. Second, the investment review committee under the Economics Ministry made public the data for investments in Taiwan in the first half of this year, showing the investments by countries covered in the New Southward Policy declined by 21.7% compared with the same period last year, while Taiwan’s investments in those countries declined by 31.2%, showing a slowdown in two-way, simultaneous loss of steam.

The changes in these two indicators have different reasons, but both reflect the long- and short-term changes as well as policy effectiveness of our economic structure, which is indeed a caveat. In the former, the principal reason for export numbers to slow down must have been affected by the fallout of the US-China trade war. Among them, ICT products suffered greater impact, showing a 7.6-percentage point reduction in comparison with the preceding month, a margin worth noting.

Our two-way investments with countries covered by the New Southward Policy showed a simultaneous slowdown, reflecting the loss of steam in the New Southward Policy, which has been pushed for over two years, or has encountered special bottlenecks and hindrances. Since coming to office, President Tsai has been pushing for the "New Southward Policy” with all efforts, aiming to balance the over-reliance on Mainland China. Also because of this, under the government's huge promotion and policy preferential treatment, in the initial stage, it probably attained progress more quickly, but after a having reached a certain degree, it became difficult to elevate; thus, and the New Southward Policy has been blocked in this kind of bottleneck without further advance.

The US-China trade war has begun; what impact would it cause Taiwan’s economy? Government agencies have treated it lightly, claiming that the impact would be limited. Some officials even harbor the mentality of "watching the show," waiting to see the US punish Mainland China, wholly unaware that the close interactions in cross-Strait economics and trade would leave Taiwan’s economy entangled and under attack. Now, with respect to the caveat involving the surprising reduction of export orders, the government definitely cannot face it cavalierly; otherwise, "the best economy in 20 years," we are afraid, would probably evaporate in an instant.

In fact, in comparison with the slowdown in two-way investments with countries covered by the New Southward Policy, what is more worrisome is the great slowdown in foreign and overseas Chinese investments as well as Mainland investments in Taiwan. Foreign and overseas Chinese investments in Taiwan in the first half of this year amounted to only US$3.3 billion, a decline of 20%, while major investments completely stopped; Mainland investments in Taiwan amounted to only US$130 million, a decline of 10%. In other words, at present, all external investments in Taiwan have been completely mired in a state of wait-and-see; when Taiwan is no longer deemed a place worthy of investing by entrepreneurs, isn’t this a problem that the Tsai government should deeply self-reflect?

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