Only Cross-Strait Cooperation can Resolve Economic Difficulties

Only Cross-Strait Cooperation can Resolve Economic Difficulties
China Times editorial (Taipei, Taiwan, ROC)
A Translation
May 1, 2013

Summary: The global economic picture is changing. The cross-Strait economy has suddenly encountered hardships. The solution requires a clear understanding of the situation. The two sides must work together. They must look to a new era of cooperation. They must throw open their doors. They must increase economic cooperation. They must give themselves more room to breath.

Full Text below:

Two days ago, the Executive Yuan Office of Budget and Accounting released its first quarter GDP growth figures. The economy grew a mere 1.54%. This represents a massive 1.72% downward revision from 3.26%. The failure to maintain a 3% growth rate was expected. But this was much worse. People are worried about a repeat of last year, when the growth rate was revised downward again and again. During the middle of last month, Mainland China's National Bureau of Statistics announced that the Mainland's GDP growth rate for the first quarter of this year was 7.7%. This was below market expectations. It was also a replay of the fourth quarter of last year, with its continuous decline in economic growth. Both sides of the Strait are issuing economic alerts. The global economic downturn affects both sides' exports. It also reflects long-term structural problems in the cross-Strait economy. The two sides must give serious thought to these economic difficulties, and solve them through cooperation.

Taiwan's first quarter GDP growth rate is substantially lower. This is due mainly to sluggish exports and private consumption. But the two factors have a structural basis. Taiwan is too dependent on exports to the European, US, and Mainland Chinese markets. Exports concentrate too much on information and communication technology products. The operational model posits Taiwan as the upstream base, the Mainland as the factory along the middle and lower reaches of the production chain, and Europe and the United States as markets for the final product. This is the triangular trade and OEM export model. But this export model has been undermined by several factors. They include shrinking end-market demand, brand name manufacturers supply chain changes, and emerging market competition. A crash is imminent. Much of the decline in exports is irremediable.

This OEM export economic growth model cannot raise Taiwan salary levels. In fact, salaries have been declining. They are now at late 1990s levels. This is inhibiting the growth of private consumption. The engine of domestic demand is about to flameout. Neither Taiwan's OEM export growth model nor its industrial structure have undergone substantive change. Economic performance is worsening. Even if the economy improves, any improvements will be difficult to sustain.

Now consider the Mainland's economic problems. Currently the Mainland's most serious economic difficulty is excess investment and excess capacity. It must rely on exports as an outlet for excess capacity. This is necessary for stable economic growth. But the Mainland economy has leapt to second in the world. Clearly it can no longer rely on traditional exports for growth. Also its main export markets, Europe and the US, are undergoing long-term economic restructuring. Therefore the Mainland must change its economic growth model. It must upgrade its export structure. It must increase domestic demand. Only then can it maintain economic growth momentum.

But the Mainland has encountered difficulties upgrading the export structure and increasing domestic demand. The development of service industries has been delayed. Industrial transformation remains under the thrall of expanding capacity. The result has been a long-term slowdown in economic growth. During the first quarter of this year, exports to the mainland rose to 13.4%. But exports to Hong Kong and special economic zones experienced abnormal, significant increases. Obviously false export reports camouflaged hot money inflows. One must discount the inflated exports component. During the first quarter the Mainland's GDP growth must have been less than the 7.7% figure recently released. The severity of the Mainland's economic problems can be imagined.

The two sides of the Strait are economically interdependent. The problems they face are related. To break through current difficulties, the two sides must be open-minded. They must look further ahead. They must work together. They must ride out the storm together. They must create a shared vision of the economy.

The Mainland wants to develop service industries. It wants to promote urbanization. It wants to learn lessons from Taiwan and integrate that experience with its own. This is the fastest and most effective way to do so. Therefore Beijing should be bold and allow Taiwan businesses to enter the Mainland service sector and domestic market. It should allow Taiwan businesses to swiftly expand into the service sector and increase urbanization. Taiwan can use the "Mainland as factory" model and transform it into a "Mainland as market" model.

The two sides should expand cooperation in both the global market and the regional economy. They should make full use of the ECFA cross-strait economic cooperation framework agreement. They should increase industrial cooperation. They should build common brands, establish common standards, enhance cross-Strait export competitiveness in the global market. The Mainland should evince political toleration. It should actively help Taiwan take part in regional free trade negotiations. This will increase mutual trust as the two side pursue a shared vision.

In sum, the global economic picture is changing. The cross-Strait economy has suddenly encountered hardships. The solution requires a clear understanding of the situation. The two sides must work together. They must look to a new era of cooperation. They must throw open their doors. They must increase economic cooperation. They must give themselves more room to breath.
   
中時電子報 新聞
中國時報 　2013.05.02
社評－兩岸合作才能突破經濟困境
本報訊

    　行政院主計總處前天公布第1季GDP（國內生產毛額）成長率僅1.54﹪，較預估的3.26﹪大舉下修1.72個百分點，也較市場預期「不保3」更差，讓人擔憂可能重演去年成長率連連下修的窘況。就在上月中，大陸國家統計局也公布今年首季大陸GDP成長率為7.7﹪，低於市場預期，亦是去年第4季終結經濟成長連續跌勢後再次反轉。兩岸經濟同時出現警訊，不單是因全球經濟持續低迷影響兩岸出口，而且也反映出兩岸經濟長期結構性的問題。雙方必須深思：如何透過合作以突破經濟困境。

    　台灣第1季GDP成長率大幅下修，主因是出口和民間消費不振，但這兩項因素都和結構性問題有關。台灣出口過於依賴歐、美、中國大陸市場；出口產品又過於集中資通訊等相關科技產品；營運模式又偏重「以台灣為上游基地」、「以大陸為中下游工廠」、「以歐美為最終產品市場」的三角貿易及代工出口模式。然而，此一出口模式受最終市場需求成長萎縮、品牌大廠供應鏈調整及新興市場國家加入競爭等多重因素影響，已面臨形同「崩盤」的危機，相當部分的出口萎縮已很難再恢復舊觀。

    　這種代工出口的經濟成長模式，也讓台灣薪資水準難以提升，甚至還退回到1990年代末期水準，從而也抑制民間消費的成長，讓內需的最大引擎熄火。所以，台灣代工出口成長模式不根本改變，產業結構不大幅調整，未來經濟表現一定會愈來愈差，即使景氣好轉也難以持久。

    　再看對岸的經濟問題。當前大陸經濟困境在於投資過度、產能過剩，必須依賴出口以去化過剩產能，才能維持經濟穩定成長。但隨著大陸經濟規模已躍居世界第二，顯已無法繼續依賴傳統式出口作為成長動力來源，再加上主要出口地區歐洲及美國皆陷入長期經濟結構調整，因而大陸惟有改變經濟成長方式，提升出口結構，全力擴大內需，才足以維繫經濟成長動能。

    　但是，大陸改善出口結構及擴大內需及也碰到重重困難，服務業發展遲緩及產業轉型仍難脫擴大產能的迷思，導致經濟成長出現長期走緩趨勢。今年第1季大陸出口雖回升至13.4﹪，但對香港出口及部分經濟特區出口異常大幅增加，明顯是以虛報出口掩護熱錢流入，若扣除出口灌水成分，大陸首季GDP成長率勢必低於日前公布的7.7﹪，經濟問題的嚴重性可以想見。

    　兩岸經濟唇齒相依，目前面臨的問題又彼此關聯，因此，要突破當前困境，兩岸必須打開胸襟，眼光放遠，攜手合作，共渡難關，進而打造經濟的共同願景。

    　大陸要發展服務業，推動城鎮化，吸取及結合台灣經驗，是最快、也最有效的方式，所以，北京應大膽開放台灣企業進入大陸服務業及內需市場，借重台商快速提升服務業及城鎮化的比重；台灣也可藉此將「以大陸為工廠」轉變為「以大陸為市場」的成長模式。

    　另一方面，兩岸也應在全球市場和區域經濟加強合作。要善用ECFA（《兩岸經濟合作架構協議》）的利基，深化產業合作，以共同品牌、共同標準，強化兩岸在全球市場的出口競爭力；大陸也應展現政治胸襟，積極協助台灣參與區域自由貿易談判，以鞏固兩岸互信，追求兩岸的共同願景。

    　總而言之，在全球經濟版圖重組的關鍵階段，兩岸經濟突困之道，關鍵在認清形勢，攜手合作。我們亦期待，在新一階段的兩岸協商，能夠大開大闔，為深化經濟合作，打開更寬廣的空間。