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Awaking from the
‘China Dream’
By Lin Cho-shui 林濁水
A certain Chinese-language newspaper recently ran an editorial entitled: “Change
Needed If We Are to Break the 22K Spell.” The 22K referred to was the NT$22,000
that university graduates can expect to earn as a starting salary, a figure
lower than it was 14 years ago.
The percentage of higher education graduates emigrating once they finish
university to search for employment has now reached 61.1 percent, the highest in
the world, the editorial said.
It added that over the past 20 years Taiwanese manufacturing increasingly relied
on a business model in which Taiwan-based companies take orders for goods, but
outsource the production of those goods to manufacturing plants based overseas,
especially in China.
While this has been happening, salaries at home have stagnated.
Taiwan has rapidly revamped its business model by shifting its manufacturing
base to China, ignoring continued investment and improvements in its domestic
industry.
The unfortunate product of all this is that graduate salaries are slumbering
under the 22K spell, the editorial said. If this spell is to be broken, the
current growth model has to change. If Taiwan is to increase domestic demand and
local manufacturing, as well as stem the graduate outflow, it is going to have
to change the way it approaches domestic investment and labor costs.
This article is for the Liberty Times (the Chinese-language sister newspaper of
the Taipei Times). The Liberty Times has been arguing for a more “local” economy
for 20 years. Now, the United Daily News, the Chinese-language newspaper that
published the editorial, has finally come around to this way of thinking.
One could say that during the past five years under President Ma Ying-jeou
(馬英九), many have been living a kind of “China dream,” one that the United Daily
News has supported all the way.
Only now is it waking up and smelling the coffee.
In the late 1980s, the nation had just embarked on its democratization process
and cross-strait relations were starting to thaw after 40 years.
Taiwan was riding high, doing better than the other “Asian Tigers,” and China
looked to it for investment, technology and its original equipment manufacturing
business and export model. This was China’s “Taiwan dream.”
Not long after Taiwan started on its “China dream.”
Several academics, both excited by the thawing relations between the two sides
and troubled by pangs of remorse at having abandoned China to indulge in its
culture in Taiwan, wanted to extend a helping hand to the old country and give
it the benefit of Taiwan’s experience. They wanted to see cross-strait economic
integration, dreaming of a “Greater China” economic conurbation.
In the early 1990s, former president Lee Teng-hui (李登輝) got caught up in the
“China dream,” hoping that China could become a kind of economic hinterland for
Taiwan. What he saw was a market comprised by China’s 1 billion strong
population, and how this could help make Taiwan a business hub in the
Asia-Pacific region.
He envisaged using the thaw in cross-strait relations to exploit China’s
position and qualities to develop an Asia-Pacific hub in six major areas:
shipping, air freight, manufacturing, finance, telecommunications and media.
Lee would later temper his enthusiasm by introducing his “no haste, be patient”
policy and ultimately abandon the China dream.
However, following his departure from the Chinese Nationalist Party (KMT), the
party took up the dream again.
At this time, China’s was starting on its path to becoming an economic
juggernaut, just as Taiwan’s economic growth was slowing down and the nature of
the China dream slowly began to morph: It went from being a dream of a Greater
China economic area guided by Taiwan, to a situation in which Taiwan would
become entirely dependant on the Chinese market.
Taiwan was standing on the shoulders of the Colossus of China –– a dream coined
as a cross-strait common market.
Ma’s “6-3-3” plan — his promise of an economic growth rate of 6 percent, an
unemployment rate of less than 3 percent and per capita income of more than
US$30,000 within his first term of office — has become a bit of a laughing
stock.
Ma contends that he was fully justified in believing he could deliver on his
promise when he made it.
According to Ma, the plan was only dashed as a result of the global financial
crash that originated in the US. In this he is being disingenuous. Apparently,
he and his advisors would have the public believe that they were blissfully
unaware that the crash when it occurred.
This seems unlikely, because at the time former vice president Vincent Siew
(蕭萬長) had noted that the US financial crisis was extremely serious and that the
US was in decline, with the caveat that there was no need to panic because
Taiwan could always rely on China.
With the “direct three links” in place — trade, transport and postal
communications — Kaohsiung Harbor could become an Asia-Pacific shipping hub and
the cross-strait common market would ensure that Taiwanese goods would have an
advantage in China over goods from other countries.
The China dream appeared to be rosy and the 6-3-3 plan looked entirely
reasonable.
The reality was not so optimistic, and despite the official restoration of the
three links on Dec. 15, 2008, the shipping container volume going through
Kaohsiung Harbor for the years 2009, 2010 and 2011 — 8.58 million, 9.18 million
and 9.64 million standard crates respectively — did not attain the 9.67
million-crate volume recorded in 2008, or the 10.25 million crates in 2007.
China had evidently already woken from its Taiwan dream and was now realizing
its own. Its manufacturing strategy had moved from following Taiwan’s lead, to
competing with it directly.
Ma has made the mistake of believing that reliance on China would give Taiwan
more access to the spoils of China’s success.
The much-touted establishment of the three links meant that foreign vessels and
foreign-registered vessels were prohibited from using these routes, proving a
headache for shipping companies and ports alike.
With the signing of the Economic Cooperation Framework Agreement and the
supposed trade benefits it would bring, Taiwan lost sight of its goal of signing
free-trade agreements with other countries, creating problems for companies such
as Formosa Plastics and LCD panel makers.
As it turns out, Beijing’s interpretation of the China dream was its own dream,
its own industrial strategy and had nothing to do with complying with Ma’s
interpretation.
Most important, in relying exclusively on China and investing too heavily in the
“three links” has led to China beginning to replace Taiwan’s manufacturing base.
Consequently, Taiwan’s industry has been hollowed out: Unemployment continues to
rise — with no indication of improvement — and there is increasing inequality in
income distribution.
Five years ago, Ma led everyone on a China dream that he dressed up as a
panacea. Many are only now starting to wake up from it, not long after Ma, with
China’s help, secured his second term.
The trouble is that Taiwan has squandered five years’ worth of time, effort and
resources. In waking up from the China dream, the nation faces three casualties:
Ma’s popularity ratings, the degree to which Taiwanese identify themselves as
Chinese and the nation itself.
Lin Cho-shui is a former Democratic Progressive Party legislator.
Translated by Paul Cooper
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