Economic Prosperity Without the World's Second Largest Economy?

Economic Prosperity Without the World's Second Largest Economy?
China Times Editorial (Taipei, Taiwan, ROC)
A Translation
February 25, 2015

Executive Summary: If the Green Camp loves Taiwan, it must tell the truth. Taiwan must make good use of the Mainland factory, develop the Mainland market, and integrate with the Mainland economy. Taiwan cultural standards are relatively high. It has a people-oriented spirit of service. The service sector is one of Taiwan's unique advantages. Greater China's service industry offers a wonderful opportunity for Taiwan. It is the key to Taiwan's ascent to the next level.

Full Text Below:

As the DPP sees it, the 2016 Republic of China presidential election on Taiwan is a lock. Alas, Green Camp strategy is riddled with economic fallacies. It must make pragmatic changes in the coming year. Otherwise, if it wins, Taiwan's economy will descend into chaos. That would hardly benefit the people. The Ma government stumbled badly. But its basic direction was correct. Taiwan's economic performance over the past year has not been bad. Its GDP growth and unemployment rates were better than those of Japan, South Korea, Singapore, and Hong Kong. People must see the fallacies in the Democratic Progressive Party's economic strategy. They must pressure the DPP to undergo reform. Failure to do so will be catastrophic for Taiwan's future.

First take the “GDP growth figures fallacy”. The Green Camp argues that GDP figures are meaningless. It dismisses them as cold statistics that evoke only public indifference, and must be swept aside. But we on Taiwan complain about low wages and high unemployment. The reason we are experiencing these difficulties is a stagnant economy. Economic growth is inadequate. To live well, to feel pride, we must grow the economy and increase gross domestic product (GDP).

Internationally the use of GDP figures is a foregone conclusion. When Bobby Kennedy ran for president in 1968, he criticized the use of GDP figures. He said “The gross national product does not allow for the health of our children, the quality of their education or the joy of their play. It does not include the beauty of our poetry or the strength of our marriages, the intelligence of our public debate or the integrity of our public officials.” But GDP growth is closely correlated with health, education, recreation, literature, family, wisdom, integrity and other indices. A bigger pie may present wealth distribution problems. But absent economic growth, the pie will not get bigger. No one will get a larger slice. Economic growth is essential to a better quality of life.

Green Camp trapped in Fallacies

The most serious Green Camp fallacies have their roots in opposition to the Mainland, hatred of the Mainland, and fear of the Mainland. It fears a "Trojan horse". It fears Mainland interference. Therefore it would rather shut out “the enemy” politically, militarily, socially, and economically -- even if it undermines Taiwan's economic development. Over the past year many netizens have satirized the green camp's blanket rejection of cross-Strait economic and trade exchanges. They have pointed out the green camp's glaring internal contradictions. For example, one netizen wrote, "Allowing capital outflows is condemned as hollowing out Taiwan. Allowing capital inflows is condemned as buying out Taiwan. Allowing talent to leave is condemned as a brain drain. Allowing talent to enter is condemned as inviting the wolf into one's home. Allowing others to earn money from us is condemned as insufferable bullying. Allowing us to make money from others is condemned as buying our affections.” No matter how cross-Strait economic and trade exchanges are conducted, and no matter which way capital and talent flow, they are universally condemned and resisted.

Taiwan has a small, shallow dish economy. Taiwan is a mere 36,000 square kilometers in size. It lacks the natural resources to feed 23 million people. Its economic scale is inadequate. It underwent an economic miracle in the 1980s and became a model for economic development, by dint of hard work on the part of the public, and a successful policy of economic freedom on the part of the government. Under a free economy, Taiwan businesses were energized. Under liberal trade policies, Taiwan burst onto the international scene and demonstrated its mettle.

Mainland China's Economic Rise

But times have changed. Taiwan's spirit remains. But Mainland China and other emerging economies have risen. MIT products are no longer as competitive as they once were in the international market. For the past 30 years economic globalization has been in full swing. Advances in communications technology, transport facilitation, networking without borders, and information flow, have created a global village. New product information is quickly transmitted to every corner of the globe, significantly reducing transaction costs. The world is now flat, and competitors abound. End markets impose harsher demands on language, product quality, market segmentation and lower product prices made possible by regional economic integration. Taiwan's old marketing approaches are no longer feasible.

Globalization Cannot Take Place without the Mainland

Taiwan stands alone. Its markets are small. Internationalization is difficult. In international business and expatriate activity, Taipei City pales next to other Asian capitals. When it comes to business or tourism, Taiwan is often bypassed. Our education system vigorously develops students' foreign language skills. But for whatever reason, language skills on Taiwan are clearly inadequate. On the International English test TOEFL or IELTS, Taiwan scores below the rest of Asia, including Singapore, Hong Kong, Philippines, Malaysia, and the Chinese mainland. South Korea has recently caught up, as a result we have fallen behind them. The only ones we still rank ahead of are Japan and North Korea.  Former colonies such as Vietnam and Cambodia speak French. We have been left in the dust. With other international languages such as German and Spanish, Taiwan holds no advantage.

Regional economic integration includes multilateral trade agreements (RTAs) and bilateral free trade agreements (FTAs). Taiwan's progress on these has been quite slow. Regarding globalization, there is no such thing as globalization without the Mainland. The Mainland is already the world's largest factory and the world's largest market. During the late 1970s Deng Xiaoping's reform and opening introduced “socialism with Chinese characteristics”.  This focused on the market and the liberation of economic vitality. Investments and exports led to gradual economic development. The Mainland now has the world's second largest economy and is the second largest destination for FDI.

Targeting Greater China Service Industries

The Green Camp condemns both large and small Taiwan investments on the Chinese mainland as hollowing out Taiwan, as helping the Mainland China, as stealing Taiwan jobs, and as depriving Taiwan of its wealth. But according to IFRS accounting, Taiwan businesses must prepare consolidated cross-Strait financial statements. Profits earned by businesses on the Mainland are combined with those of the parent company on Taiwan. They must pay taxes on both sides, as well as contribute revenue to Taiwan. Mainland profits earned byTaiwan multinationals or Taiwan businesses that return to Taiwan, boost Taiwan parent company stock prices. Taiwan shareholders and investors profit, capital markets benefit, and Taiwan's economy is revived.

The Green Camp assumes that allowing the two sides to expand economic relations will make Taiwan dependent on the Mainland, and favor the Mainland. But Taiwan has a shallow dish economy. Hitching a ride on the Mainland will revive a stagnant economy and bring sustainable development opportunities. Past reliance on exports to the US and European countries is no longer feasible. Taiwan cannot do with the Mainland market. Seeking a niche on the  Mainland, integrating into Asia, and subsequently into the world" is the ideal development strategy, especially when we enjoy two irreplaceable advantages, geographical proximity and a common language.

If the Green Camp loves Taiwan, it must tell the truth. Taiwan must make good use of the Mainland factory, develop the Mainland market, and integrate with the Mainland economy. Taiwan cultural standards are relatively high. It has a people-oriented spirit of service. The service sector is one of Taiwan's unique advantages. Greater China's service industry offers a wonderful opportunity for Taiwan. It is the key to Taiwan's ascent to the next level.

社論－切割全球第二大經濟體 活水何在？
2015年02月25日 04:10
（系列二）

2016台灣總統選舉，民進黨看似篤定勝選，但綠營的經濟戰略充滿迷思，如不能在1年內做出務實調整，一旦勝選，台灣經濟將陷入極不確定狀態，恐非國人之福。馬政府施政固然失敗，但國家大方向正確，過去1年台灣經濟表現不差，無論GDP成長率或失業率，表現都優於日、韓、星、港。民眾如果不能看清民進黨經濟戰略的迷思，施壓民進黨轉型，將對台灣未來的發展非常不利。

首先，所謂「GDP成長數字的迷思」，綠營人士主張GDP無用，只是冷冰冰的統計數字，人民無感，應該揚棄。但我們在抱怨低薪、高失業之餘要理解，台灣當前種種困境最主要原因是「悶經濟」，就是因為經濟成長力道不足。要日子過得好，出門有面子，就要發展經濟，要提升國內生產毛額（GDP）。

國際上對GDP有沒有用的問題，討論已久。甘迺迪在1968年競選總統時，就提出對GDP的批評說︰國內生產毛額並不會考慮到我們孩子的健康、良好的教育品質，或是遊玩的快樂；它也不會包含詩詞的美、婚姻的堅定、公眾辯論的機智，或是公務人員的廉正，…。但是GDP提高，與健康、教育、遊樂、文學、家庭、智慧、清廉等指標都有高度正向的關係。把餅做大之後，雖然還有分配的問題，但是沒有經濟成長，餅就不能做大，就不可能讓大家分得更多，經濟成長是改善生活品質必要的條件。

綠營陷於恐中迷思

綠營更嚴重的迷思是反中、仇中、恐中的負面情緒，害怕「木馬屠城」，唯恐大陸因素干擾，因而企圖在政治、軍事、社會，甚至經濟上全面「拒敵」於境外，寧可妨害台灣的經濟發展。這1年來網路有一篇流傳甚廣的貼文，諷刺綠營面對兩岸經貿交流，無所不反對，而且邏輯自相矛盾。貼文如下：「讓資金流出去，叫做掏空台灣；讓資金流進來，叫做買下台灣。讓人才走出去，叫做人才外流；讓人才走進來，叫做引狼入室。人家賺你的錢，叫做欺人太甚；人家讓你賺錢，叫做收買人心。」反正對於兩岸的經貿及資金人才的往來皆高舉反對牌。

台灣是小型淺碟子經濟體，只有36000平方公里，缺少自然資源，要養活2300萬人口，經濟規模又不夠大，能夠有成長奇蹟，成為1980年代經濟發展的模範生，主要憑藉的是台灣人民的努力與政府成功的採用自由經濟的開放政策。在自由經濟的制度中，企業才有活力，在開放的政策下，台灣走出去，在國際舞台上才有大展身手的機會。

中國經濟體大崛起

但時空大環境已經改變，台灣精神雖然依舊，隨著中國等新興經濟體崛起，MIT於國際市場的競爭力已不如以往。30年來經濟全球化如火如荼，通訊技術日新月異，交通運輸便利，網路無國界，資訊流通便捷，「地球村」儼然成型，新產品的訊息可以快速傳遞到世界各個角落，資訊的交易成本大幅降低，「世界是平的」，競爭者眾。最終市場對於溝通語文、產品品質、區隔化及藉區域經濟整合降低產品售價的要求日益提高。台灣人過去的行銷方式，現在看來已經不太行得通了。

全球化不能沒大陸

台灣孤懸海上，市場規模小，推動國際化程度更顯困難。比較亞洲各國首都國際企業及外籍人士活躍度，台北市明顯遜於其他首都，不論是商務或是旅遊，台灣都可能是被跳過去的一個點。我們的教育制度雖然也大力培養學生的外文能力，但是因為種種原因，台灣人外語能力明顯不足。例如國際英語檢定的托福或雅思的分數，低於亞洲的新加坡、香港、菲律賓、馬來西亞，與大陸在伯仲間，最近因為南韓急起直追，我們也已經落後，只比日本、北韓要好。因為殖民地的關係，越南、柬埔寨等地的法文，我們望塵莫及，其他的國際語文如德文、西班牙文，台灣也沒有優勢。

區域經濟整合，不論是多邊的貿易協定（RTA）或雙邊的自由貿易協定（FTA）如雨後春筍的增加，台灣的進展卻相當緩慢。現在談全球化，沒有不談中國大陸的；原因是中國大陸已是世界最大工廠，也是世界最大市場。70年代後期鄧小平的改革開放，開始以中國特色的社會主義，注重市場，釋放經濟活力，力爭上游。在投資與出口的引導下，逐步發展經濟，使大陸已經是世界第二大經濟體，第二大外人直接投資的地區。

瞄準大中華服務業

綠營認為台灣大企業或小台商到大陸投資，是掏空台灣，是幫大陸人搶台灣人的工作，是剝奪台灣造就自己的財富。然而檢視資料，現今在IFRS的會計制度下，台商在兩岸的營業需要編制合併報表，企業在大陸賺錢，併入台灣母公司，也是兩邊都要繳稅，也貢獻台灣的稅收。跨國公司或台商回台上市，大陸獲利推升台灣母公司股價，台灣股東及股民都能得利，資本市場也因而注入活水，活絡台灣經濟。

綠營認為兩岸深化經濟關係將使台灣依賴大陸、向大陸傾斜。但對於台灣的淺碟子經濟，搭上這班順風車不但能突破目前的悶經濟，還可帶來持續的發展機會。台灣過去依靠大量出口至美歐國家的模式已不可行，未來發展的重點不能沒有大陸市場。「卡位大陸、融入亞太、邁向全球」是最佳的發展戰略，況且我們還有「地理位置相鄰」、「語言相通」這兩項無可取代的優勢。

如果綠營真愛台灣，就要講真話，台灣應該善用大陸大工廠，開發大陸大市場，與大陸經濟結合應更加緊密。台灣文化底蘊相對較高，深富「以人為本」的服務精神，是台灣服務業的獨特優勢。大中華的服務業，是台灣的大機會，是讓台灣經濟更上層樓最重要的門道。