Taiwan’s Economic Independence

 Taiwan’s Economic Independence

 Joe Hung

104.06.23

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.  It’s what Hilary R. Clinton, the 2016 presidential hopeful, cares.  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. 

Perhaps, Tsai is too young to know how our economic independence was crippled thanks to no other than Uncle Sam’s machination.  Let me remind her. 

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. 

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 American-induced 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 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 government-approved economic development projects to improve Taiwan’s economic independence for just one purpose. She does so to win the presidential election, come next January 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.

Attachment : none