Pay Attention to Potential Risks in Warming Up of the Economy

  Pay Attention to Potential Risks in Warming Up of the Economy

China Times Editorial (Taipei, Taiwan)

February 26, 2018

 Translation of an Excerpt

Encouraging signs are everywhere for the global economy this year, and the domestic economy is also climbing from the bottom of the valley. Taiwan’s economy, which relies on exports as its economic lifeline, has of course been a great beneficiary of the upturn in the global prosperity. This was born out by the fact that although adjustment and upgrading of Taiwan’s industrial structure did not produce effects, exports showed double-digit growth. This year and next, we may face Taiwan's economy with relative optimism. However, for the potential crises and risks in the warm to hot economy, the government and the private sector must both face and cope.

The greatest crisis this year, also the crisis for the next few years, lies in the power supply. In the first day of work following the Chinese New Year’s holidays, operating power reserve flashed a yellow light, which in fact, was a warning signal. The Cabinet’s energy policy, which has been pushed for the past two years, has caused, across the nation, more serious air pollution in Taiwan, unstable power supply, and even created a great power outage last year; the government should decide whether to review and revise this policy.

Besides, the domestic investment environment has not improved much; private sector investment still needs to be uplifted, while adjustment and upgrading of Taiwan’s industrial structure failed to produce any effects. Taiwan needs more types of private sector investment in order to revitalize the employment market. However, with the exception of a small number of high-tech operators, new investments are relatively limited in many traditional manufacturing industries; operators even believe that Taiwan has been "driving out manufacturing industries."

This wave of economic resuscitation redux came not because the government implemented some wonderful, correct policies, but was a normal economic cycle; the effect of traditional economic policies, we should not become complacent or even elated and overjoyed, thus neglecting the true potential crises and risks. The Economist magazine at the beginning of last year had predicted that the global economy was entering the best economic prosperity in nearly 10 years, while warning that "economic growth has nothing to do with the policies of populist governments, nor is it their accomplishment." The government must heed this warning, and observe and resolve the potential crises and risks.

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