Sunday, December 11, 2016

Trump Tsai Fever: Short Term Rewards, Long Term Risks

Trump Tsai Fever: Short Term Rewards, Long Term Risks
United Daily News Editorial (Taipei, Taiwan, ROC) 
A Translation 
December 9, 2016

Executive Summary: Trump Tsai fever rages on. But blowback is gathering strength. The government cannot afford to look only at superficial political gains. It must pay attention to the impact of Trump's policies on our economy as well. It must respond early, in order to find a better way and to end uncertainty in Taiwan's economy.

Full Text Below:

Donald Trump will not take office for another month. Yet his election victory has already had a major impact on the global economic and political order, in many respects. The Taiwan issue was not originally a matter of concern for the incoming Trump government. But the Trump Tsai phone call blew the matter out of proportion, and upset relations between Washington, Beijing, and Taipei. For the Tsai government, the incident may be a minor diplomatic victory. But for the people, greater uncertainty in cross-Strait relations is certain to make Taiwan's economic challenges even more daunting.

Following the Trump Tsai phone call, Trump and his administration used social media to accuse Mainland China of manipulating exchange rates, dumping products in the United States, and stealing American jobs. Trump issued a series of provocations. The US media predicted that Trump would continue to opeate in this manner after taking office. US-China relations will therefore be riddled with friction and uncertainty. In other words, if the Trump Tsai phone call benefits the Tsai government, and US-China relations became tense, the Mainland will exact revenge. Taiwan will be a fish in a barrel. The result will be a short term gains at the expense of long term losses.

The response from Beijing in the wake of the Trump Tsai phone call has been restrained. That is because Beijing sees Trump as merely a "president elect", and is in no hurry for a showdown. Beijing may have exercised restraint. But affiliated organizations, including party media channels, have not held back. They are even prepared to respond to a pro-Taiwan policy on the part of Trump once he takes office. If and when it becomes necessary, Beijing will lash out at Taiwan, politically or economically. The Tsai government must not misjudge the situation.

Mainland China, which has become economically powerful in recent years, often uses economic leverage to strongarm opponents. For example, South Korea agreed to allow the United States to deploy the THAAD anti-missile system in South Korea earlier this year. Beijing launched a diplomatic counterattack. It also forbade the airing of South Korean film and television programs on the Mainland. This and other economic sanctions exerted indirect pressure on South Korea. In the case of Taiwan, Beijing often applies pressure on Taiwan businessmen at critical moments, as a form of psychological warfare. For example, just before the Anti-Secession Law was passed in 20015, Hsu Wen-lung, former chairman of Chi Mei, was pressured into to publishing an open letter in support of the CCP's Anti-Secession Law.

This practice of "using business to influence politics" was replayed this year. The star of this year's show was the Hai Pa Wang Company, owned and operated by Tsai Ing-wen's family. The company's investments on the Mainland were audited for tax evasion, and its products were investigated for failure to meet health standards. Hai Pa Wang was forced to issue a public statement saying that "both sides of the Strait are part of one China". Meanwhile, Taiwan Semiconductor Chairman Morris Chang and Giant Tour Chairman Liu Chin-piao have reportedly resigned as presidential consultants. In fact the two resigned before the Hai Pa Wang incident, and before Taiwan Affairs Office Director Zhang Zhijun said he "opposed allowing Taiwan businessmen who advocate Taiwan independence to make money on the Mainland”. In any event, these changes and cross-Strait relations have become increasingly sensitive, and are directly and indirectly linked. They will inevitably undermine public confidence in the government.

Over the past two weeks, PLA Air Force warplanes have twice circumnavigated Taiwan, indicating that Beijing's intimidation against Taiwan has escalated to military means. Such intimidation is mostly symbolic, but will only increase in the foreseeable future. Taiwan cannot afford to be optimistic or naive.

Trump has declared that he will abolish the Trans-Pacific Partnership Agreement (TPP). If it is replaced by bilateral economic and trade agreements, the United States is bound to exert major pressure on smaller nations, in order to reap economic and trade benefits beyond those provided by the TPP. Naturally this does not favor smaller nations. Protectionist barriers to US trade will inevitably be raised, and trade friction between the United States and China will inevitably increase. This will have a major impact on Taiwan, which remains highly dependent upon exports to the US and the Mainland. Hon Hai intends to invest in the United States. This is something the business community must do to cope with the Trump government's new economic policies.

Under the circumstances, the Tsai government must deal with the aftermath of the Trump Tsai phone call. She must minimize the impact on cross-Strait relations, and avoid harming Taiwan businessmen on the Mainland. The US will focus its attention on exports from Taiwan over the next few years. Government ministries charged with economics and finance must have a response ready during bilateral trade negotiations on everything from pork to arms purchases. The government must develop a strategy for balance of trade issues between the US and Taiwan consistent with Taiwan's best interests.

Trump Tsai fever rages on. But blowback is gathering strength. The government cannot afford to look only at superficial political gains. It must pay attention to the impact of Trump's policies on our economy as well. It must respond early, in order to find a better way and to end uncertainty in Taiwan's economy.

2016-12-12 聯合報










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