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Economics and
politics can never be separated
By Lo Chih-cheng 羅致政
President Ma Ying-jeou (馬英九) has repeatedly stated that Taiwan’s economic
development cannot be separated from that of China, while criticizing the
administration of former president Chen Shui-bian (陳水扁) for what he describes as
closed economic policies and telling the public how he has improved the
situation.
Indeed, no country can ignore the scale of China’s market and its economic
development in recent years. However, it is extremely naive to suggest that
China is some kind of panacea — the answer to all of Taiwan’s economic problems.
To do so would be to disregard a whole raft of problems.
First, as an economic entity, China is not a completely deregulated market.
Politics plays a significant role in its economic development. Taiwanese
businesses investing in China lack comprehensive legal guarantees, and there are
many cases of corrupt local governments with their fingers in the cookie jar.
Indeed, an increasing number of these companies are returning to Taiwan,
complaining about their treatment by undesirable elements in China, or even by
the government. This evidently is a serious problem.
Second, China has access to a prodigious labor pool and follows its own model of
industrial development. For the short term at least, Taiwanese products enjoy an
advantage in the Chinese market. However, if Taiwan fails to upgrade and improve
its own manufacturing industries and continues to rely on low-tech and original
equipment manufacturing (OEM), China will very soon be able to manufacture these
same products at a lower cost.
It will become progressively difficult to sustain Taiwan’s traditional
manufacturing industries solely by relying on the Chinese market. This is
especially true given Beijing’s current development model, which entails
absorbing Taiwan’s technology and using it in its own factories. For an example
of this, look at what’s happening in the agricultural industry.
Third, China is making all kinds of concessions and opening up trade with
Taiwan, but all these are predicated on political considerations. In other
words, China has consistently and clearly placed politics over economics. Not
only has it maintained that the “one China” principle is to inform all trade
exchanges with Taiwan, it is furthering its goal of unification by making Taiwan
increasingly economically dependent. Anyone who is naive enough to believe that
politics and economics can be kept separate when dealing with China has erred in
their understanding of the very basis of China’s cross-strait policy and the
timetable it has set for achieving its goal.
As far as China is concerned — and perhaps for any other country too — economic
development, while important, is no substitute for politics. The idea that one
can avoid or dissipate political disputes through trade exchanges alone has
never been borne out historically. When engaging in economic and trade exchanges
with China, then, not only does Taiwan need to be careful about ensuring
sustainable economic development, it also needs to consider the concomitant
political implications.
Lo Chih-cheng is chief executive of the Taiwan Brain Trust.
Translated by Paul Cooper
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