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Policy creates
mistress economy
By Huang Tien-lin 黃天麟
Uni-President Enterprises Corp is going to invest US$30 million to set up a
research and development headquarters in Shanghai. The company’s decision once
again lays bare the fraudulent nature of “manufacturing in China and receiving
orders in Taiwan” — a notion that pro-China academics and media use to
rationalize the trend for Taiwanese companies to “go west” and invest in China.
If there is no manufacturing industry left, what research and development is
there likely to be? If there is no nation and no sovereignty, what kind of
culture and creativity can there be? If industry and the economy are not
thriving, how much strategic planning and design is likely to be done?
These are very obvious questions to ask, but that has not stopped the government
in recent years from constantly uprooting industry, intentionally or otherwise,
and transferring it root and branch to the other side of the Taiwan Strait.
In the process, the government has been peeling off the nation’s sovereignty
layer by layer and handing it to China. It has gone on to promote a baseless
“mistress economy.” These trends are dressed up with impressive, but illusory
policies. While countless blocks of luxury apartments are being built to house
the few who stand to benefit, most people can only admire these mansions from
the outside.
A mistress economy is an economic policy that makes Taiwanese into a third party
and does not allow people to play a central role. Instead, prosperity or decline
depends on someone else — the real central figure. The triangular trade model,
in which companies are supposed to receive orders in Taiwan and manufacture the
goods in China, is what led to today’s mistress economy.
This economic policy hands the central role over to someone else, and it is the
reason young people entering the job market have to put up with miserable
monthly salaries of about NT$22,000 or less.
The mistress economy mentality has permeated politics, business and academia in
Taiwan over the last decade and has had very harmful effects. Taiwan and China
signed the cross-strait Economic Cooperation Framework Agreement (ECFA) in June
2010, and it took effect later that year. The follow-up cross-strait service
trade agreement was signed in June this year, but has yet to be approved by the
legislature.
President Ma Ying-jeou (馬英九) has even been willing to sacrifice Legislative
Speaker Wang Jin-pyng (王金平) to get the pact approved. These two agreements are
part and parcel of the mistress economy setup, because in the long run they will
both cause Taiwan to lose control over its own faltering economy. Last week, Ma
gave his stamp of approval to the Cabinet’s proposals for setting up “free
economic pilot zones” (FEPZ). His government would have people believe that
these zones will be the main ingredient for turning the economy around next
year. However, a close inspection of the plan makes it clear that it is still
stuck in the mistress economy framework. None of the “targeted industries” named
in the plan are focused on improving industry. Rather, they emphasize attracting
floating capital, or “hot money,” from abroad, and especially from China.
Whether it is financial services, intelligent logistics or educational
innovation, they are all likely to attract the same flock of vultures who fight
over whatever flesh they can find and fly away when they have picked the bones
clean.
The flagging state of Taiwan’s stock market is a clear reflection of this. Over
the past decade and more, the market has not been boosted by overseas capital,
or by Taiwan depository receipts (TDR), which are meant to attract investment
from abroad. On the contrary, the freedom given to vultures to come and go as
they please has caused the stock market to become emaciated. Investors all over
East Asia are amazed by the rate at which Taiwan’s stock market has been losing
momentum.
However, one cannot completely deny the so-called “effectiveness” of the planned
FEPZs. The bright side of the zones, as claimed by the Ma administration, is
sure to be a focus for pro-KMT pan-blue media in the run-up to the elections in
December next year. Stories like “such and such a company is set to invest tens
of billions of New Taiwan dollars in FEPZs” are sure to come to light one after
another. Such reports will try to give the impression that these zones are going
to transform the nation. They will try to delude voters into believing that the
“6-3-3” targets of 6 percent annual economic growth, US$30,000 per capita income
and less than 3 percent unemployment that Ma failed to fulfill by his promised
deadline last year are finally within arm’s reach. However, once the polls are
over all such promises will prove to be as illusory as the TDR has been.
Farmland will be wrecked as it gets gobbled up by another “targeted industry” on
the FEPZ list: “value-added agriculture.” Value-added agriculture will entail
bringing Chinese agricultural produce into the zones for processing them and
selling 10 percent of them on the domestic market. This is simply a disguised
way of importing Chinese farm products. Taiwan’s agriculture will be diminished
by competing products from China, and that is part of the plan. Taiwan is a
country, so it should approach the world with Taiwan as the centerpiece.
It needs straightforward and aboveboard economic policies that promote the
nation — policies comparable with the US government’s reindustrialization policy
and the “three arrows” that typify Japanese Prime Minister Shinzo Abe’s “Abenomics.”
On the other hand, the kind of development plans that Taiwan definitely does not
need are those that cling to the failed mistress economy mindset.
Huang Tien-lin is a former national policy adviser.
Translated by Julian Clegg
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