20100117 Wickedness in the guise of policy

Wickedness in the guise of policy

Sunday, Jan 17, 2010, Page 8

The administration of President Ma Ying-jeou (馬英九) has drawn criticism from all sides for its handling of the US beef issue, failing to please either the American or the Taiwanese public. This, however, has not compelled the government to change its ways. Ma’s team is still determined to sign an economic cooperation framework agreement (ECFA) with China without public consultation.

Premier Wu Den-yih (吳敦義) has announced that the government will start preliminary talks with China on the issue this month and hopes to have the ECFA signed in May. He said the government would decide on further easing of restrictions on investment in China by Taiwanese businesses toward the end of this month.

Wu’s announcement disregards the government’s earlier pledge that it would sign an ECFA only when public support surpasses 60 percent. This highlights the administration’s determination to hastily negotiate and sign an ECFA in the space of four or five months, regardless of public opposition or apprehension.

Negotiations between parties on an equal footing, for the benefit of all, would take longer. Surrender is faster, and that is what the Ma administration is doing in regard to this pact.

No one can doubt that the signing of an ECFA would herald a new wave of relocations to China by Taiwanese manufacturers. Judging from Wu’s remarks, the government is keen to see Taiwan’s capital-intensive, high-tech industries moving to China even before an ECFA is signed. Ironically, this comes only a week after Ma proclaimed in his New Year’s address that now is the best time to invest in Taiwan.

Ma and his ministers saying one thing while doing another is hardly news, but by playing the same game again right at the beginning of the new year, the government has revealed just how obsessed it is with cozying up to China.

They must take the public for fools.

Perhaps the most poorly considered policy approach since Ma took office is that of looking to China — and China alone — for economic opportunity. Direct cross-strait flights and communications, opening the gates to Chinese tourists, easing restrictions on Chinese investment in Taiwan and allowing Chinese financial institutions to set up shop here — all this has made Taiwan increasingly dependent on China economically.

Looking to China for solutions, however, has not delivered Ma’s promise to invigorate the economy. Taiwan’s overall economic performance is still bottom of the class. While the memorandum of understanding on cooperation in financial supervision signed in November and the ECFA have been touted by the government under the banners of “taking full advantage of the Chinese market” and “taking part in regional integration,” in reality they may lure Taiwan into a trap, with nothing gained and so much to lose.

As Taiwan’s factories, funds, talent and technology are sucked dry, Taiwan is likely to end up as a second Hong Kong, with its economy, security and sovereignty dependent entirely on China. That being the case, an ECFA should be subject to approval not just by the legislature, but also by the public through a referendum.

Most Taiwanese would agree that China is not a reliable country. Only the government, bound by its pro-unification ideology, could think otherwise. Do other countries think China can be relied on economically? Does hope for reviving the world economy really lie with a rising China, as some suggest?

On Friday, the New York Times carried a report filed in Shanghai that quoted American hedge fund manager James Chanos’ assessment of China’s economy as being like “Dubai times 1,000 — or worse.”

Chanos argues that the vast amounts of funds poured in by the Chinese government to deal with the financial crisis have led to excessively inflated credit, and that this in turn has created a real estate bubble and encouraged production of a mountain of goods that cannot be sold. This bubble economy is bound to burst sooner or later, he said.

Chanos also accuses the Chinese authorities of faking their figures, including their claim to have maintained a GDP growth rate of 8 percent last year.

Chanos’ views reflect the opinion of a growing number of experts worldwide that China’s economic stimulus program is creating an economic bubble.

It is worth noting that Chanos is well known in financial circles for having spotted accounting irregularities at Enron that gave a false impression of its corporate health. Now he has turned to investigating the flashy but hard-to-substantiate economic figures that China has been presenting to the world for several years.

Economic ups and downs and tampering with statistical data are commonplace in China. While China is a one-party state under the Chinese Communist Party, its system is in reality one of crony capitalism, in which only a minority economic elite has become rich.

The most that can be said for “rising China” is that the country has become richer, but the people remain poor.

The heavy prison sentence imposed two weeks ago on dissident Liu Xiaobo (劉曉波) highlights the fact that political repression allows no peaceful resolution of internal contradictions. China’s economy, society and culture all have the potential to disintegrate and collapse.

In relying on such a country for economic revival and future development, Taiwan’s government is putting all its eggs in the wrong basket, to say the least. Its policies threaten to render Taiwan vulnerable to exploitation and this is why the public does not — and should not — support Ma’s China policies.

The government should not just encourage Taiwanese to invest in Taiwan; it should also improve the investment environment to attract more foreign funds because investment is what brings jobs, higher incomes and economic growth.

The Ma administration calls for investment in Taiwan on the one hand, while on the other prompting capital-intensive high-tech companies and financial institutions to invest in China. It has welcomed group after group of provincial-level Chinese officials to visit Taiwan in the guise of purchasing missions, even if their real purpose is to look for investors.

In eagerly helping China to excavate Taiwan’s manufacturing and investment, the Ma administration betrays its pathological mentality of saying one thing while doing another.

The Taiwanese public cannot allow this wicked behavior to continue any longer.