Forsaking the Mainland Means Greater Hardship for Taiwan

Forsaking the Mainland Means Greater Hardship for Taiwan 
May 25, 2016 China Times
China Times Editorial (Taipei, Taiwan, ROC)
A Translation 
May 24, 2016

Executive Summary: President Tsai's New Southern Strategy will be among the new government's policy priorities. It constitutes a transparent move toward "economic Taiwan independence". It is certain to strain cross-Strait economic and trade relations. Taiwan has no reason not to cooperate with the Mainland. The two sides should maintain a symbiotic relationship. They must not isolate themselves from each other. This is essential for Taiwan's survival and prosperity.

Full Text Below:

President Tsai's New Southern Strategy will be among the new government's policy priorities. Interpreted positively, it “corrects” the former KMT government's "tilt toward the Mainland". Viewed negatively, it constitutes a transparent move toward "economic Taiwan independence". Either way, it is certain to strain cross-Strait economic and trade relations.

Taiwan has an export-oriented economy. Exports constitute over 60% of its GDP. Investments and consumption constitute only 40%. Its market requires sufficient scale and symbiosis. During early development Taiwan was highly dependent on the North American market. This gradually changed with fluctuations in the global consumer market. Currently nearly 40% of Taiwan's exports go to the Mainland, 24% go to Southeast Asia, and only 10% go to the US. Over half of Taiwan's external investments go to the Mainland. This high degree of integration with the Mainland has provoked concern on Taiwan.

The traditional green camp view is that such links are harmful to Taiwan's economy. They hollow out Taiwan's industry, and reduce domestic investment. This leads to low-wages and unemployment. Cross-Strait links have enabled the Mainland to control Taiwan's economy. Economic dependence on the Mainland must be reduced to ensure Taiwan's economic future. Furthermore, the green camp argues, Mainland economic growth has slowed in recent years. Development potential for Taiwan businesses is now limited. Therefore we must seek out new export markets. If Taiwan is to go its own way, it must rid itself of dependence on the Mainland economy. There may be short-term pain, the green camp concedes, but they must be born in order to survive. The New Southern Strategy is a matter of course.

In fact, whether the Mainland presents an opportunity or a threat to Taiwan, depends on whether Taiwan perceives Mainland China's rise in the proper light. We must point out a few facts. First, Mainland China has the world's second largest economy. Taiwan is dependent on exports and investment. Naturally the Mainland is going to be Taiwan's chief source of economic momentum. Mainland economic growth has indeed slowed. But sheer volume means an annual increase equivalent to that of Indonesia, with its 250 million people.

Second, Taiwan manufacturers began investing in Southeast Asia long ago. Since the 1990s, successive governments have imposed a wide range of investment and export policies. Not one of them has met expectations. Taiwan's economy remains highly dependent on the Mainland. That is the result of market decisions by Taiwan manufacturers. The global recession reduced Taiwan exports to the Mainland, including Hong Kong, by 12.4%. But that was nevertheless better than the 14.2% reduction in exports to ASEAN. Taiwan manufacturers on the Mainland still fared better than those in Southeast Asia.

According to Mainland Ministry of Commerce statistics, by the end of 2015 the Mainland had absorbed 2 trillion NT in capital from Taiwan. That year, listed companies on Taiwan reinvested 213.7 billion NT on the Mainland. This accounted for 39% of the income derived from listed companies worldwide. And that does not even include the astonishing gains derived from rising asset prices. Since 1992, Taiwan has benefited richly from Mainland economic development. How can we possibly give that up?

Taiwan has long been an important part of "Made in China". When the Mainland first began its reform and opening, manufacturing capacity was marginal. Taiwan manufacturers transferred low-end manufacturing operations to the Mainland. This enabled the Mainland to connect with the global supply chain, enabled local industries to combine, and gave birth to local industry groups. During the Mainland's early stages of reform and opening, investment arrived primarily from Taiwan, but also from Hong Kong and Macao, and constituted over half of all outside investment in the Mainland. Taiwan style management spread to all levels. Made in China is now sweeping the globe. Taiwan's historic contribution was indispensable. But Taiwan's past industrial growth and profitability model is rapidly approaching its end.

Taiwan must keep up with rapid transformation on the Mainland. Most large Taiwan businesses still see the Mainland as nothing more than their OEM base. This limits their opportunities for development. Taiwan manufacturers must not be lectured to “Go South!” yet again. Instead, they must have a long-term strategic vision. They must re-examine Taiwan's branding and R&D on the Mainland. The Mainland remains the world's fastest growing market. It has already fostered a number of world-class brands. It also offers opportunities for Taiwan businesses to develop their brands.

Meanwhile, Mainland China is the world's manufacturing center. In a number of forward-looking, high-end realms, Mainland technology and manufacturing lead the world. The Mainland has engaged in years of research and development. Liberation has led to innovation and vitality. The Mainland now leads in electronic payments, e-commerce, unmanned vehicles and drones. It is rapidly catching up in industrial robots. If Taiwan chooses to delink with the Mainland, Taiwan will be the loser.

The new government has condemned the previous government's policies, saying they led to excessive dependence on exports to the Mainland. But the record shows the greatest increase in dependence on the Mainland occurred during the Chen era. It was the result of economic forces, of the Chen government's insistence on changing course and resisting the Mainland, all to no avail. A New Southern Strategy is all well and fine. But we can hardly ignore the most important market of all, the Mainland. The fact is, the new government's ideologically motivated policies are guaranteed to sabotage Taiwan's economy.

Taiwan has no reason not to cooperate with the Mainland. The two sides should maintain a symbiotic relationship. They must not isolate themselves from each other. This is essential for Taiwan's survival and prosperity.

放棄大陸 台灣經濟只會更困頓
2016年05月25日 中國時報

蔡英文總統的新南向政策將是新政府的重點政策，從正面角度解析，是要改變前國民黨政府「過度向大陸傾斜」，從負面觀察卻質疑是為了實現「經濟台獨」。無論如何台灣將迎來兩岸經貿關係緊縮的挑戰。

台灣是出口導向經濟體，GDP超過6成來自出口的貢獻，投資與消費僅占4成，必須與足夠規模的市場依賴共生。台灣在經濟發展初期曾高度依賴北美市場，隨著全球消費市場的相對興衰而逐漸發生變化。目前台灣的出口近40%集中於大陸，24%集中東南亞，只有10%到美國市場；在投資方面，台灣對外投資超過半數以上集中於中國大陸。與中國這樣高度結合共生的發展趨勢，在台灣內部引發不少疑慮。

傳統綠營的觀點認為這樣的聯結對台灣經濟有害，例如：產業空洞化與國內投資不振，導致台灣的低薪與失業；兩岸聯結過深，已使得大陸掌握控制台灣的經濟槓桿，必須降低對中國經濟依賴，才能夠解決台灣經濟未來發展的問題。再者，大陸近兩年經濟成長減緩，台商發展受限，也需另尋出口市場。台灣既然要走自己的路，終究要擺脫對中國的經濟依賴，即使有短期陣痛，也要忍痛熬過，是以新南向政策水到渠成。

然而，中國大陸給台灣提供的是機會或是威脅，其實是台灣如何正確面對中國崛起的思辨，我們也必須指出幾點事實：首先，大陸是世界第二大經濟體，台灣仰賴出口及投資，大陸當然是台灣最主要的經濟動能來源。即使大陸經濟成長趨緩，但規模體量龐大，每年新增的經濟規模就相當於一個2億5千萬人口的印尼。

其次，台灣廠商其實很早就開始布局東南亞。自1990年代起，歷屆政府都在執行各式的分散投資與出口政策，成效卻都不如預期。台灣經濟之所以仍高度依賴大陸，顯然是台灣廠商物競天擇之後的市場選擇結果。再者，在全球不景氣的情形下，儘管去年大陸市場（含香港）占我出口比重年減12.4%，也仍優於對東協的年減14.2%，從比較利益的觀點來看，台灣廠商在大陸仍比在東南亞更具優勢。

根據大陸商務部統計，截至2015年底大陸實際累計使用台資約2兆台幣，當年台灣上市櫃公司認列的大陸轉投資收益達到2137億台幣，占上市櫃公司39%的全球收益，這還不包資產價格上漲帶來的潛在驚人收益。可見自1992年以來，台灣確實分享了大陸經濟發展的紅利，怎可輕言放棄？

台灣一直是「中國製造」的重要成分，改革開放伊始大陸製造微不足道，台灣廠商透過低端製造業務轉移，讓大陸開始與全球供應鏈體系相結合，並催生出本地的產業群聚。改革開放初期階段，以台灣為主體的港澳台外資曾貢獻了大陸半數以上的外來投資，台式管理擴散到中國製造的各個層面。如今中國製造席捲全球，台灣的歷史性貢獻功不可沒。但我們也要正視台灣過去的產業成長與獲利模式，現在已經逐漸接近盡頭。

台灣的衰退危機在於跟不上大陸的快速轉型，多數大型台商仍把大陸視為代工基地，侷限了發展的機會。當務之急不是導引廠商再次進行外延式的新南向，而應以長遠的戰略眼光，重新審視台灣在大陸的品牌與研發布局。大陸仍是世界成長最快的市場之一，已經孵育了若干世界級品牌，也提供了台灣企業品牌發展的可能。

另一方面大陸也是世界製造的中心，在若干前瞻與高端的領域，大陸的科技及製造能力已領先全球。在多年來解放創新研發的活力之後，大陸在電子支付、電子商務、無人車和無人機都有領先，工業機器人也在迎頭趕上。台灣不與其相連結，將是台灣自己的損失。

新政府指責前政府的政策導致台灣對中國大陸的出口依賴程度過高，但統計數據顯示台灣對大陸依賴程度大幅增加是在扁政府時期，這是經濟力量的結果，硬要扭轉、對抗只會徒勞無功。新南向政策很好，但絕對不能不顧好最重要的大陸市場。新政府的作為其實是以政治意識型態主導，勢必傷害經濟。

台灣沒有道理不選擇與中國大陸合作共生，兩岸應該共生而非孤立，這也是台灣生存與發展的必需前提。