Wednesday, July 28, 2010

Preventing Mainland Students from Coming Compels Taiwan Universities to Leave

Preventing Mainland Students from Coming Compels Taiwan Universities to LeaveChina Times editorial (Taipei, Taiwan, ROC)
A Translation
July 28, 2010

Recently, several universities on the Mainland began recruiting high-scoring senior high students from Taiwan. This attracted public attention on Taiwan. The data suggests that in the coming years, such recruitment attempts will become an increasingly common. This has raised concern that the best students on Taiwan will be lost. News reports also indicate that the Mainland is attempting to persuade the National Taiwan University and other universities to establish special classes or campuses on the Mainland. Therefore, if the goverrnment prevents Mainland students from studying on Taiwan, the Mainland will induce our best universities to leave Taiwan.

The provision of higher education is a special kind of service industry. Education and other key service industries are under the aegis of different agencies. The Financial Supervisory Commission controls finance. The Ministry of Communications and Transportation controls tourism and telecommunications. The Department of Commerce controls retail shops. Most manufacturing industries find themselves in highly competitive circumstances. For example, suppose South Korea's Samsung panel industry gains an advantage. Taiwan's AUO will be hurt. If Toyota is impacted, global demand for Germany's Volkswagen or South Korea's Hyundai will increase. But not all service industries work this way. If the service sector in Nation A prospers, that does not mean a recession will hit the service sector in Nation B. Internationally speaking, service sector competition is not a zero-sum game. Take universities. An improvement in Beijing University's reputation will not diminish National Taiwan University's reputation. The two sides may both be recruiting students. But that does not imply a conflict of interest. It all depends on how the government approaches the matter.

In general, the Mainland wants exchanges with Taiwan. It has confidence in its economy. Therefore it has opened its arms to students from Taiwan. Taiwan's economy may not be as robust as the Mainland's, but that need not undermine our confidence. Calls for a halt to cross-Strait exchanges are largely ideologically motivated. Eight years of DPP rule has indoctrinated some on Taiwan with an "inordinate fear of Communism" rooted in ideological extremism. Two years ago, during the presidential election, a DPP campaign ad used language that dripped with contempt for people from the Mainland. It actually warned that "Parks will become toilets. Conversation will become expectoration." DPP fundamentalists are contemptuous even of wealthy tourists from the Mainland who came to Taiwan to spread money around. Imagine how they feel about patients who come to Taiwan seeking medical care, or scholars who come to Taiwan to take advantage of its educational resources.

Under a free economy, economic and trade exchanges between the two sides is certain to be quite complex. One cannot obstruct such exchanges simply by imposing one's will. Forcibly preventing people from coming to Taiwan could inadvertently force Taiwan to pay an even higher price. A fellow of the Academia Sinica Institute of Finance and Economics gave a speech on July 5 that cited a case worth the DPP's attention.

As everyone knows, Mainland China has a huge population. The standard of medical services however, is low. Among wealthy Mainlanders however, there is a strong demand for quality medical care. Medical care on Taiwan is among the best in the world. The quality of doctors is excellent. The language and cultural pose no barriers. Wealthy patients from the Mainland are naturally going to seek treatment on Taiwan. Taiwan must make an effort to attract these wealthy patients. If one is afraid that outside patients will "consume" local health care resources, one can establish "special zones." One can provide a limited variety of medical treatments in designated zones. That way health care for outsiders can remain distinct from government provided health care for insiders. But Taiwan independence fundamentalists are obstinately opposed even to such special administrative regions. Academia Sinica members have issued a stern warning. The Taiwan independence fundamentalists' hatred and insularity will almost certainly harm Taiwan.

The government on Taiwan can refuse to allow Mainland patients to seek medical treatment on Taiwan. But this will not diminish the urgent medical needs of wealthy patients from the Mainland. Market incentives will lead to the establishment of many hospitals on Mainland China. These hospitals will recruit many doctors. Over time, as long as wealthy patients on the Mainland are willing to pay, hospitals and doctors on Taiwan will establish operations on the Mainland. In the language of international trade, prohibiting patients from the Mainland from "inputting" to Taiwan, will lead to the "outputting" of hospitals and doctors to the Mainland. The same is true for cross-Strait education. The "inputting" of patients is usually referred to as international medical services. The "outputting" of hospitals on the other hand, is considered direct foreign investment (FDI). Robert Mundell is the Father of the Euro. Forty years ago he warned that trade in goods and services is interchangeable with direct foreign investment. If a government prevents the flow of merchandise, the consequence is often capital flight. This capital flight is clearly more deleterious to the nation from which it flees than the flow of any merchandise.

In short, those who would prohibit trade with the Mainland had better think matters through. The consequence of governmental barriers is frequently capital flight. Capital flight really can "hollow out" Taiwan. Those attempting to prevent trade with the Mainland usually characterize themselves as "Taiwanese patriots." They usually characterize anyone who "hollows out Taiwan" as a "traitor to Taiwan." But this is precisely what they are guilty of. The line between "patriotism" and "treason" is often quite thin. It often depends on a sophisticated understanding of trade theory. The slanderous propaganda in their newspaper ads may have a short term impact. But in the long run how will these self-styled "Taiwanese patriots" escape blame for "hollowing out Taiwan?"

中時電子報 新聞
中國時報  2010.07.28
社論-不讓陸生輸入 當心學校出走








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