Winning Strategy for Taiwan's Economic Recovery

Winning Strategy for Taiwan's Economic Recovery
United Daily News Editorial (Taipei, Taiwan, ROC)
A Translation
September 14, 2015

Executive Summary: Taiwan's economy is now at a turning point. Exports have declined and growth has stalled repeatedly. This has been become a long-term problem. Our economic growth model is unsustainable. Meanwhile, the Mainland economy also faces a turning point, the most serious in a decade. The future will be bleak and rife with challenges. Cross-Strait economic and trade relations are close. The economic downturn on the Mainland will severely impact Taiwan's survival and development. It will test the long-standing model of cross-Strait economic cooperation. We have reached a crossroads. Choosing Taiwan's economic development strategy will be the most difficult challenge for whoever becomes the next president.

Full Text Below:

Taiwan's economy is now at a turning point. Exports have declined and growth has stalled repeatedly. This has been become a long-term problem. Our economic growth model is unsustainable. Meanwhile, the Mainland economy also faces a turning point, the most serious in a decade. The future will be bleak and rife with challenges. Cross-Strait economic and trade relations are close. The economic downturn on the Mainland will severely impact Taiwan's survival and development. It will test the long-standing model of cross-Strait economic cooperation. We have reached a crossroads. Choosing Taiwan's economic development strategy will be the most difficult challenge for whoever becomes the next president.

In August of this year, Taiwan's exports fell seven consecutive times over three consecutive months. This double-digit decline marked the most serious recession since the global financial tsunami. The National Development Council may dismiss it as a global phenomenon and claim that it was not confined to Taiwan. But Taiwan's export competitiveness has been falling since since 2012. What's worse, the fall is accelerating. The harsh reality is that Taiwan is more dependent on exports than most other economies. Long-term sluggish exports means long-term economic anemia, even long-term economic decline. This is the crisis Taiwan faces.

The Ma administration considers the rapid rise of the Mainland economy over the past decade as Taiwan's best opportunity for economic rejuvenation. As a result it has promoted ECFA, the STA, the MTA, and other agreements. It is committed to cross-Strait industrial cooperation, These agreements are the result of a Mainland policy that attempts to maximize Taiwan's business opportunities. The STA, MTA, and other agreements have been blocked since the Sunflower Student Movement. But Ma and the KMT government have made few changes to their thinking since. As KMT presidential candidate Hung Hsiu-chu repeatedly underscores, Taiwan must "stand on the shoulders of giants". Such policy statements are typical.

Now however, the Mainland economy has begun a slowdown that Xi Jinping terms the "new normal". It faces other unprecedented challenges as well. These include a housing market bubble, local government debt, shadow banking, excess capacity, and a rapidly aging population. None of these problems are easy to solve. Recently the stock market crashed, but the Mainland authorities were unable to turn the tide. On August 11, the RMB suddenly depreciated. This was the most significant turning point in a decade. The result was a race among nations to devalue their national currencies, and a global stock market crash. International experts consider Beijing's actions a declaration that Mainland China is no longer a safe haven from the vicissitudes of the global economy. This development is a wild card in the global economy.

Mainland Premier Li Keqiang recently delivered a speech before the Davos Forum in Dalian. He emphasized that "[Mainland] China is not the source of risk in the global economy. It is the power source for global economic growth". But growth is slowing, exports are falling, and capital is fleeing, faster than ever, and making reform ever more difficult. The Mainland economy is already undergoing major adustments. The impact on Taiwan's economy can only increase.

The impact of Mainland economic adjustments on Taiwan is multi-faceted. The slowdown will reduce demand for Taiwan's imports. Official efforts to upgrade the economy will cause talent and technology capital to migrate to the Mainland. Industrial restructuring and updating will exacerbate red supply chain threats to Taiwan exports. Cross-Strait economic and trade is changing. Quantitative change is becoming qualitative change. Competition from the Mainland is gradually replacing cooperation. This makes it an increasing threat to Taiwan. Taiwan must change its strategy. It has no alternative.

Taiwan faces a turning point in economic development. We must quickly discard our old mode of thinking, and adopt new strategic plans. The first change must be to change our excessive reliance on exports for economic growth. Domestic consensus is building. Economic development must be based more on domestic demand and local factors. This includes housing and urban renewal, social housing, long-term care, quality of life measures, and responses an aging society. Economic growth must shift, from exclusive reliance on exports to combined reliance on domestic demand in addition to exports. This will improve our ability to respond to fluctuations in the global economy.

The second change must be to our easy money foundry export model. Taiwan businesses use the Mainland as their factories. They fill OEM orders for international brands, and survive by means of volume and price. The rise of the red supply chain means it can offer even greater volume and lower prices than Taiwan. Taiwan must survive by offering higher quality instead. It must rely on innovation and the adoption of a value-added services export model. Only that will ensure sustainable competitiveness. That requires shared responsibility between the public and private sectors.

The third change must be to our cross-Strait economic cooperation strategy. The Mainland is the world's second largest economy. Cross-Strait trade makes the two sides inseparable. Shutting out the Mainland market is impossible. Bilateral economic cooperation must jettison politically-motivated thinking and adopt market-oriented thinking. Cooperation must be treated as cooperation. Competition must be treated as competition. The government's responsibility is to establish market rules and exclude unfair competition. Reverting to market-oriented thinking will make Taiwan businesses more competitive. This is Taiwan's winning strategy under the new reality of cross-Strait coopetition,

在台灣經濟轉捩點上贏的策略

2015-09-14聯合報

台灣經濟正面臨轉捩點，出口連連衰退及經濟成長停滯，已逐步惡化為長期病徵，既有的經濟成長模式無以為繼。另一方面，中國大陸經濟正面臨十年來最大轉折，進入挑戰重重的黯淡時期已無可避免。兩岸經貿關係至為密切，大陸經濟變局嚴重衝擊台商生存發展，更考驗已行之多年的兩岸經濟合作路線。處於十字路口，未來台灣經濟發展策略要如何抉擇，可說是下一任總統最大的考驗。

到今年八月為止，台灣出口已經「連七黑」，而且連續三個月呈兩位數下滑，是全球金融海嘯以來最嚴重的衰退。儘管國發會解釋是全球性現象，非台灣獨有問題，但自二○一二年以來，台灣出口競爭力衰退問題已經浮現，且惡化速度不斷加快。更嚴酷的現實是，台灣比大多數國家更依賴出口，因而當出口不振成為長期問題時，經濟就陷入長期貧血式成長，乃至逐漸走向衰敗，這是當前台灣經濟最大的危機。

近十年大陸經濟的崛起和快速壯大，被馬政府視同為台灣經濟注入新活水的最大機會，因而推動ECFA及兩岸服貿、貨貿等協議，致力為兩岸產業合作搭橋等，都是在抓住大陸商機思維下的政策產物。儘管太陽花學運後服貿、貨貿等協議受阻，但馬政府和國民黨思維並沒有太大調整，國民黨總統參選人洪秀柱競選政見多次強調：台灣要「站在巨人的肩膀上乘勢而起」，即是代表性的政策宣示。

然而，現在大陸經濟不但已進入習近平所強調成長減緩的經濟「新常態」，而且更遇到前所未有的嚴厲挑戰：房市泡沫化、龐大地方政府債務、影子銀行、產能過剩、人口快速老化等問題，沒有一樣容易解決。最近又遇到股市暴跌危機，大陸國家隊救市亦未能力挽狂瀾；今年八月十一日人民幣遽貶，更是十年來最大的轉折，結果引發各國貨幣競貶及全球股災。國際專家解讀，北京此舉旨在宣示中國不再為全球經濟遮風擋雨，從而也為全球經濟投下新的變數。

大陸國務院總理李克強日前在大連舉行的「達沃斯論壇」演講時特別強調：「中國不是世界經濟風險之源，而是世界經濟增長的動力源之一。」但是，面對成長減緩、出口衰退、資金外流愈來愈嚴重、深化改革又受挫的嚴峻情勢，大陸經濟進入全面調整的黯淡時期已無可避免，對台灣經濟衝擊也將日益擴大。

大陸經濟調整對台灣的影響是多面向的：成長減緩將減少對台灣進口的需求；官方致力打造成經濟升級版，將使得台灣人才、技術資金愈發流向大陸；推動產業轉型換代，勢必加劇紅色供應鏈對台商出口的威脅。兩岸經貿發展從量變走向質變，大陸對台灣的競爭與威脅逐漸凌駕於合作與機會；台灣改變策略勢在必行，也是不得不爾的選擇。

面對經濟發展的轉捩點，台灣須快速改變舊的經濟思維和運作模式，進行全新的戰略部署。第一個須改變的，是高度依賴出口的經濟成長模式。這在國內已有愈來愈高的共識，如果經濟發展能有更多內需及在地成分，例如住宅及都市更新、社會住宅擴建、長照服務和其他可以提升生活品質及因應社會老化的各種產業，則未來經濟成長動能就可從出口的「單引擎」變成出口加上內需的「雙引擎」，如此，因應全球經濟波動的能力就可大幅提高。

第二個須改變的，是賺容易錢的代工出口模式。台商「以大陸為工廠」，為國際品牌大廠接單代工，是以規模及成本取勝；現在紅色供應鏈崛起，規模比台商更大，成本更低，台商唯有轉進到「以質取勝」、靠創新研發及加值服務的新出口模式，才能建立永續的競爭力。這也是政府和民間共同的責任。

第三個須改變的，是兩岸經濟合作策略。大陸是全球第二大經濟體，兩岸經貿又密不可分，排除大陸市場的單飛思考不切實際；但雙方經濟合作須從「政治思維」轉向「市場思維」，該合作的就合作，該競爭的就競爭，政府責任是在建立市場規則和排除不公平的競爭。回到市場思考，台商才會更具競爭力，這也是在兩岸競爭又合作的新情勢下，台灣贏的策略。