'Cross-Straits relations', key to break through Taiwan's economic predicament

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Last updated at: (Beijing Time) Wednesday, December 03, 2003

'Cross-Straits relations', key to break through Taiwan's economic predicament

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Taiwan's economy has witnessed an average annual growth rate of 8.1 percent from 1995 to 2000, the highest in the world. However, since Chen Shui-bian took the office over three years ago, it has seen a drop to 2.4 percent, a plummet among Asian countries.

On November 29, Chiang Ping-kun, a celebrity in Taiwan, analyzed the development of Taiwan's economy in an address on the problems and solutions of Taiwan's economy in Bangkok. Taiwan's economy is now facing great difficulties, he said. Affected by the turbulent political and economic situation on the island and the sluggish international economy, Taiwan's economy has seen a drastic downturn since May 2000.

According to Chiang who has been serving the financial circle, Taiwan's economy is facing both internal and external challenges and miseries.

First, despite the slow recovery of the world economy, it is still difficult to tell the future. Since the Severe Acute Respiratory Syndrome (SARS) was put under control, the world economy has obviously witnessed a by-and-by awakening. Nevertheless, the US economy, shadowed over by terrorist attacks, a stream of financial scandals and stricken by the US-Iraq war crisis, is still waddling along, facing a doubtful future. In addition, the negative element, the risk of global deflation is still in existence.

Secondly, with the prevalence of liberalization and facilitation in regional economy and trade, it is possible for Taiwan to become a rim-land. In Asia and Pacific region, Australia and Singapore, the Association of Southeast Asian Nations (ASEAN) and China's mainland, Japan and Singapore and ASEAN, the ten countries of the ASEAN, the United States and Singapore have signed the free trade accord one by one, facilitating the further liberalization of regional trade.

Thirdly, frequent warnings against Taiwan's competitiveness can be learnt in the world. This is represented by the relatively slow growth in exportation, which is 25 percentage points lower than that of the Chinese mainland. Non-governmental investment at standstill, over-saving and foreign exchanges savings increase sharply, indicating an economic imbalance in the island leading to resources unused, which will possibly weaken the impetus of future economic development. Unemployment resurgence hovers and people's consuming strength has not been fully released. The gap between the rich and the poor in the island kept widening while the fiscal revenue and expenditure are deteriorating with the island mired heavily in debt.

Therefore, Chiang Ping-kun pointed out, for Taiwan to get out from the present plight it is to improve the environment for investment and promote non-governmental investment; to strengthen research and innovation, enhance the technological level and constantly push forward the adjustment of industrial structure; to seek the cross-Straits harmony and establish a win-win relationship.

A set of statistics has indicated that an outstanding magnetic effect has been represented in the soaring economy of China's mainland. By the end of 2002, China's mainland has attracted a total foreign direct investment of over 440 billion US dollars, ranking the first among developing countries in terms of utilizing foreign capitals. Investment from Taiwan to the mainland has been going up, exceeding 33 billion US dollars, accounting for 7.4 percent of the total foreign investment into China's mainland. Products made by the Chinese mainland are expanding in the world market with outstanding growth. The number of items approved from the Chinese mainland into Taiwan has surpassed 8300 in all.

The increasingly closer cross-Straits economic and trade relations and a series of challenges facing the development of Taiwan's economy have urged Taiwan to speed up the integration of cross-Straits economies. Chiang Ping-kun said, Taiwan must give priority to its economic development, give full play to the advantage of the same language and same race across the Straits and close geographic locations, seize the opportunity of the growing economy in the Chinese mainland to quicken the development.

By PD Online staff Gao Lanrong

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