Taiwan’s name is Taiwan on Dec 6, 2004

Chen pledges to change names

IDENTIFICATION: The president promised to change the names of some government agencies and state-owned firms to ''Taiwan,'' to avoid confusion with China By Huang Tai-lin
STAFF REPORTER , IN TAICHUNG

In a bid to make a distinction between Taiwan and China, President Chen Shui-bian yesterday pledged to rectify the names of all relevant government agencies to "Taiwan" in two years.

"All relevant agencies in international settings that are easily confused with those of China should gradually rectify their names [to Taiwan,]" Chen said at a news conference held at the Democratic Progressive Party (DPP).

"We will strive to rectify the names of our overseas missions," he added.

Currently, the name Taipei Economic and Culture Office(TECO) is commonly used for the nation's governmental institutions overseas. Taiwan's de facto embassy in the US is the Taipei Economic and Cultural Representative Office (TECRO).

"We will start this policy first with government agencies and state-owned corporations and have them accomplish the task within two years' time," he added, referring to state-owned companies such as China Shipbuilding Corp , Chinese Petroleum Corp  and China Steel Corp .

Chen said that the country should also participate in international organizations with the name "Taiwan" to avoid unnecessary confusion that often takes place in international settings.

"Domestically, we should do away with the Chinese Nationalist Party (KMT)-like phenomena of no differentiation between party and state," Chen said.

"Internationally, we should actively make the differentiation between Taiwan and China to avoid unnecessary confusion."

Reiterating that the "Republic of China is Taiwan" and that it is an independent, sovereign country, Chen said that according to the existing Constitution, the ROC is the country's official title and is the "biggest common denominator" of the Taiwan public's identification to national identity.

Saying that he is the defender of Taiwan's identity, Chen said that to highlight Taiwan's identity is not tantamount to changing the country's official national title.

"Until a majority consensus with the public is reached and formed, to hastily push for a change to the country's name would only divide people's power and affect the country's unity," Chen said.

At the news conference, Chen stressed the three historic missions he has taken up.

"First, to push for democratic reform and economic development," Chen said. "Second, to accomplish constitutional reform, to assemble the Constitutional Reform Committee after the [Dec.11 legislative] elections."

"And third, in order to strive for permanent cross-strait peace, after the legislative elections [I will] invite leaders from all sectors to join the Committee for Cross-strait Peace and Development, to push for a reopening of cross-strait negotiations so that the two sides can engage in a dialogue for peace," the president said.

While reiterating his determination to push for constitutional reform, to hold a referendum on a new constitution in 2006 and to have the new constitution implemented in 2008, Chen asked people not to dwell on whether it is "amending the Constitution" or "rewriting the Constitution."

"What matters is not the words `to amend' or `to rewrite,' but the point is to focus on its substantial changes and the historic participation of the people in constitutional reform," Chen said.

"Until a majority ... is reached and formed, to hastily push for a change to the country's name would only divide people's power and affect the country's unity."

China's ignorance of labor standards a threat: union

WAGE SLAVERY: Worker rights recognized in most developed countries are non-existent in China, and could subvert other Asian laborers, union leaders say

AFP , Miyazaki, Japan 

China's ignorance of global labor standards and its low wages pose a big threat to the workers of other Asian economies, union officials at an international meeting in Japan say.

The International Confederation of Free Trade Unions (ICFTU) is holding its first conference in Asia in the southern Japanese city of Miyazaki, drawing some 1,400 delegates from more than 150 countries.

China is not a member of the ICFTU and has sent no representative to the quadrennial meeting, but its presence is looming large over the six-day conference which started yesterday.

Officials of trade unions in Asia warned that China's low labor standards have created cheap production that is pressuring manufacturers and their treatment of workers across the region.

"China remains as a threat," said Noriyuki Suzuki, general secretary of the ICFTU-Asian and Pacific Regional Organization, which unifies labor unions in the Pacific-Rim.

"The industrial competitiveness of China is enormous and affecting East, South and Southeast Asia," Suzuki told reporters. "On the back of relatively cheap labor, China is having a big impact on the region."

A ban imposed by the Chinese government on independent trade unions is a major obstacle to improving working conditions in the country, said Lee Cheuk-yan (李卓人), general secretary of Hong Kong Confederation of Trade Unions and a legislative councillor in the territory.

"Chinese workers have no right to organize. I think that is the basic problem," Lee said.

Wages of Chinese workers are one-10th of those in Hong Kong, discouraging industry in the territory where the jobless rate has gone up to 6.7 percent from a bottom of around two percent in the late 1990s, Lee said.

Unemployment concerns are now shifting from the manufacturing industry to the white collar sector with Hong Kong companies in the service sector opening their back offices in Beijing, he said.

"It is not a fair, level playing field when we compare with other countries, where workers are free to organize," Lee said. "It's a big threat not just to Asian countries but to Chinese workers themselves."

Concern about China's labor market grew last week after Beijing suddenly called off a meeting with officials of the Organization for Economic Cooperation and Development over labor conditions in the country.

"We have a really big concern about the cancellation," said Kyoshi Sasamori, president of Japan's largest labor union, the Japanese Trade Union Confederation, known as RENGO.

"We are worried that China may go against the direction the West is heading for," Sasamori said. "We will closely monitor whether China is willing to open up its huge labor market or will remain a closed society."

An ICFTU official close to the issue said: "We are at a loss as the meeting was seen as a first step to let China sit at the table of dialogue. We have to firmly ask China to make it clear why they cancelled it."

Last month, China said it had issued new rules aimed at protecting workers, including ordering employers to pay owed wages and encouraging people to report labor rights violations.

China's experiment had high cost

By Chang Jung-feng

The People's Republic of China (PRC) was established in 1949. After three years of economic recovery, the first Five Year Plan was initiated.

The influence of Soviet economic thinking and support in the construction of 156 major facilities led China to make heavy industry the focus of its strategy for economic development.

Heavy industry, with its requirement for vast amounts of capital, was totally unsuited to China, which at the time had abundant labor but was short of capital.

When an economic development strategy runs contrary to the comparative advantage of a country, factor market equilibrium for production is lost.

When an economic strategy gives priority to a certain industrial sector (in this case heavy industry), creating an intense demand for a certain commodity (capital), a situation of excess demand is created, and demand will quickly outstrip supply.

At the same time, in sectors which have abundant resources (labor) but are a low priority (such as light industry), a state of excess supply emerges.

If China had a sound market system at this time, this would have led to an increased cost for capital and high interest rates, while the cost of labor would fall.

If China had allowed private ownership of the means of production, then the business community would quickly have turned to developing labor intensive industries such as light industry.

Even if this had been the case, this would have been contrary to the economic policy of Mao Zedong and others, who gave priority to heavy industry.

So, a viable solution for China was to use administrative means to guarantee preferential interest rates for heavy industry.

What capital remained would be distributed among other industrial sectors, such as light industry and agriculture. The result would be that interest on capital in most sectors would be much higher than that for heavy industry, creating a two-tier rate system.

In the same way, all surplus production factors, such as energy, raw materials, imports of technology and foreign exchange all become subject to distribution by the administration, and as a result, a two-tier rate system also emerges in the factor market (if this even continues to exist).

On the other hand, we all know from the theory of economic equilibrium, that when the factor market loses equilibrium, the product market also loses equilibrium. The result is an insufficient supply of consumer products (created by labor intensive light industry), and the creation of massive excess demand.

Ultimately, it demands the use of various kinds of ration tickets (for grain, meat, tofu, cloth and so on) to distribute goods, and the products of heavy industry either pile up or are not distributed to where they are needed.

In this situation, the "shortage" of Janos Kornai's "economy of shortage" exists, but at the same time, so does a surplus that cannot be distributed. When a two-tier rate system exists, it is no surprise that people will buy low to make a profit.

It was such people who were targeted as "speculators" in the "three striking" and "five striking" campaigns of the 1950s.

Finally, to push it to the bitter end, the whole thing took place within the compass of a planned economy, and private ownership of business enterprises was no longer permitted to exist.

With the abolition of private ownership, China's state planned economy was complete.

But in such a planned economy, human effort is needed to simulate the effect of the "invisible hand" -- the market mechanism -- that economists speak of.

For this reason, the economy never achieves equilibrium, and when eventually the shortages and the surplus exceeds what the system can bear, then a period of economic adjustment is necessary, such as the economic macro-adjustment policy of 1963 to 1965.

In 1979, after Deng Xiaoping  came to power, he adopted an economic policy more in tune with China's comparative advantages (opening China for export processing and taking advantage of cheap labor), introducing market mechanisms and allowing the "invisible hand" to make itself felt.

Deng's policy shifted Mao's planned economy back into a market model. But, despite 25 years of reform and liberalization, there have also been five economic adjustments.

It can be seen from this that the economy still lacks equilibrium, and can only await the gradual development of market functions to reduce the need and scope of economic macro-adjustments.

China has conducted one of the biggest economic experiments in human history. Its cost has been enormous -- at the very least, more than 40 million people starved to death as a result.

Chang Jung-feng is vice president of the Chung-Hua Institution for Economic Research.

Beijing rising in southeast Asia

By Lin Cheng-yi

A year ago, China began talking of its "peaceful rising," but only six months later, they gradually stopped mentioning it, instead replacing it with the phrase "peaceful development." This does not mean, however, that Beijing has given up on realizing its peaceful rising. The phrase "peaceful development" sounds softer and is less likely to raise suspicions in the outside world.

"Rising" implies rapid ascent as well as the appearance of a new hegemon and competition for power and conflict, and it also carries certain differences from Deng Xiaoping's more cautious policies. Although Chinese Premier Wen Jiabao avoided mentioning "a peaceful rising" during a visit to Laos, the world still sees the rise in Southeast Asia of a well prepared China eager to lead.

Southeast Asia is what China wants most, and this is also the region where we can first expect to see a multipolar situation substitute the current US unipolarity. The leaders in Beijing are very fond of saying that Chinese development cannot ignore Asia, but that Asian prosperity also is dependent on China. If China is unable to become a dominant power in Asia, there can be no talk of a Chinese rise in the region. China has already become the biggest target for foreign investment in Asia, and it is also the region's largest importer.

ASEAN, Japan, South Korea, India and China all enjoy trade surpluses. Trade between China and ASEAN is expected to break through US$100 billion this year, approximately three times the amount of trade between Taiwan and ASEAN last year.

China's rise in Southeast Asia not only relies on its economic strength, but also on carefully thought out strategic planning. It is leaving even Japan, the US and South Korea in the dust. In contrast to Japanese Premier Junichiro Koizumi and South Korean President Roh Moo-hyun, Wen made at least 10 concrete suggestions at the APEC summit in Chile last month.

These suggestions included: China and Indonesia agreeing to increase annual trade to US$20 billion; building a mechanism for dialogue and cooperation between China's and ASEAN's chief prosecutors and ministers of youth affairs and energy based on the existing mechanism for cooperation between their ministers of foreign affairs, economy, communications and customs; making 2006 a year of China-ASEAN cooperation and suggesting the setting up of a China-ASEAN group of leadership figures; Beijing will set up a US$15 million fund for the promotion of Asian cooperation to the purpose of strengthening cooperation between China and ASEAN.

Other suggestions from China included leading an academic study into the feasibility of an East Asia Free Trade Area (EAFTA); setting up an East Asian Community with the long term goal of cooperation between ASEAN, China, Japan and South Korea, and supporting a leading role for ASEAN; backing the ASEAN suggestion to hold an Southeast Asian summit and suggesting that Malaysia organize the first summit; participating in the draft for a Treaty on the Southeast Asia Nuclear Weapon Free Zone at an early date and having China become an observer in ASEAN's East ASEAN Growth Area.

After China occupied Mischief Reef in the Spratly Islands in 1995, it has taken a softer and more friendly approach to the countries in Southeast Asia. Although some of these countries want the US, Japan and India to balance Chinese influence, Beijing's aggressive behavior is transforming the region into its own playground.

In particular, Beijing's "three neighbors" diplomacy (creating prosperity, harmony and stability among its neighbors) towards its neighboring countries is centered around the idea that "big countries are crucial and peripheral countries are important" and uses political, economic, energy and cultural means to strengthen China's position as the leader of Southeast Asia.

Although Taiwan's investment in, and labor imports from, Southeast Asia surpass China's, Taiwan's decade-old "go south" policy is insufficient to counterbalance China. Southeast Asia has always dealt with the political and economic separation between China and Taiwan by welcoming Taiwanese investment while mostly withholding their political support.

Following the rise of China, Taiwan's room to speak up has been gradually circumscribed. Taiwan's resources are limited, and it is not placing enough emphasis on Southeast Asia, instead concentrating almost exclusively on the US and Japan. It is not very strange that Taiwan is coming up short.

China's rise in Southeast Asia not only challenges the influence of the US and Japan, it also makes it increasingly difficult for Taiwan to make friends in the region. In contrast to China's peaceful development, Taiwan is currently going through a chaotic period of political deconstruction and reconstruction. The fact that Southeast Asian countries are not on Taiwan's side is evidence that Taiwan's "go south" policy is an empty slogan.

Although China also has its "three neighbors" slogan, its ability to execute should be reason for Taiwan to engage in some soul-searching.

Lin Cheng-yi is director of the Institute of European and American Studies at Academia Sinica.

Editorial: Economic issues must be faced

In the current election campaign all party platforms contain some sort of a pledge to keep Taiwan prosperous. But none deal in specifics. Perhaps there simply isn't much to debate over the economy; nobody really thinks there are many votes in, say, fiscal rectitude. And after all, if the pan-blues got thrashed in the legislative elections in 2001, when the economy was visibly wobbly, how can they expect to be able to use it to their advantage with GDP growth nudging 5 percent?

There are however a couple of issues that badly need to be addressed. It would be nice to know that one side or the other had some clue as to what to do about the country's economic problems. Unfortunately, they apparently don't.

The first issue is the government's budget deficit. This is a problem that everyone has seen growing since the mid-1990s and nobody has had the courage to address. Currently the central government deficit is estimated to be about 3.5 percent of GDP, to which you can add another percentage point for the various deficits of local governments and state-owned enterprises. This is not perhaps dire, but it is more than is advisable. More importantly, nobody appears to be addressing the problem.

True, the DPP has vague plans to balance the budget by 2010, but hardly seems to take them seriously. Meanwhile, as every election comes around, we see all sides commit themselves to more social spending, categorically deny any intention to raise taxes and fudge about how such programs will be funded -- knowing that the electorate, by and large, doesn't ask such questions or listen to economists who do.

Taiwan's current tax burden is about 13 percent of GDP, well below the average in OECD countries and even below South Korea (18 percent) and Singapore (16 percent). A debate in Taiwan between low-tax, low-service advocates and those who look to European-style welfarism is long overdue. What sort of society do we want to live in and what are we prepared to pay for?

The second major issue being ignored is the far from virtuous circle involving China and the US. Currently many Asian countries, including Taiwan, are buying US debt to keep their exports cheap by stopping their currencies from appreciating against the dollar. This in its turn allows the US to keep on a spending binge, purchasing those exports on borrowed money.

The linchpin of this system is China. The US is on a spending spree, buying China's goods with money it has borrowed from China. But how long can this continue? Some in the US call for a revaluation of the yuan, which would mean that China basically stopped financing the US trade deficit. This would hurt American consumers as goods would get more expensive, but it might cause chaos in China as its boom ends and millions are thrown out of work -- which might necessitate the selling of more US debt, and so on. But to not revalue the yuan would mean China would have to continue buying US debt instead of spending its money in something more important domestically. This is hardly desirable and might not even be an option. And this whole merry-go-round has to be seen in the context of China's bankrupt banking system, which is little more than a system whereby the state robs the people of their savings.

How long can this go on? There is a very real possibility of it ending in a world of pain not just for Taiwan's two biggest trading partners but for the global economy as a whole. That a global depression might only be averted as long as China continues to prefer to lend its money to the US rather than try to ameliorate its exploding social problems or bail out its banks should scare us all.