When Kuo Hao-yong graduated from National Taiwan University – the most famous in the island – she found a job in a marketing company. She earns NT$25,000 (US$828) a month, of which NT$10,000 goes on rent and a similar amount on living expenses, leaving her with very little to save.
The average monthly salary of a university graduate is NT$22,000-25,000, half the level compared to that in Hong Kong. In 2012, the average non-farm worker in Taiwan had an income of US$1,550, compared to US$2,119 in Hong Kong, US$2,500 in South Korea and US$3,500 in Singapore. Between 2002 and 2012, this wage fell by an average 0.31 percent a year, compared to increases in the three other ‘little dragons’.
It is statistics like these that drove Taiwan students to occupy the parliament building and fuel the opposition to the service trade agreement which their government signed with Beijing in June 2013.
They argue that the benefits of integrating Taiwan’s economy with that of the mainland have flowed to a limited number of large companies and not the middle and working classes. In addition, this has come at a heavy political cost, with these firms increasingly under the control of Beijing, which controls the market vital to their growth and survival.
From 2001 to 2011, the Taiwan economy had a decade of positive growth. During the period, the share of profits of companies received by their staff fell from 48.3 percent in 2001 to 45.7 percent in 2011. In 1990, the figure was 51.71 percent.
This division of benefits has sharply divided Taiwan. Leading the pro-mainland camp is Lian Chan, who was chairman of the Kuomintang from 2000 to 2005 and then given the title of honorary chairman.
In April 2005, he made his first visit to the mainland in 60 years and received a rapturous welcome. Since then, he has been there 16 times, more than any other Taiwan politician, taking with him nearly 1,000 business, political and cultural leaders. They include the heads of many of the island’s biggest companies, such as Yulong Group, Evergreen and Fubon Finance.
It is companies like these, as well as Hon Hai, Ding Hsin and the Wang Wang Group, that have profited the most from Taiwan’s integration with the mainland. They have economies of scale, access to abundant capital and are well-connected to the politically powerful in China.
Many have become part of the global production chain, supplying parts and components to multinationals that produce goods in the mainland and sell them to markets around the world. But this integration is a double-edged sword, says Wu Jie-min, an assistant researcher at the Social Studies Research Centre of Taiwan’s Academica Sinica.
“Their headquarters are in Taiwan, their production in China and their market is the world. They are both Taiwanese and Chinese companies. They are subject to the control of local governments in terms of tax, land and environmental protection. Yesterday they cut your tax rate; today they accuse you of tax evasion. Yesterday they allow you to pass the environmental test; today they order you to stop production.
“ICBC is worth more than the entire assets of Taiwan’s financial system,” he noted. “With Chinese control, Taiwan investors may not be able to borrow money. If you do not follow orders, you will be punished.”
One company that felt the wrath of Beijing was plastics producer Chi Mei, which invested in an electronics factory in Zhenjiang, Jiangsu province, in the late 1990s. In 2000, its chairman Hsu Wen-lung supported DPP candidate Chen Shui-bian as president.
In 2004, the People’s Daily named Hsu as someone not welcome in the mainland because he supported Taiwan independence. He had to write a public letter saying he did not support independence.
President Hu Jintao then said publicly that, due to the disavowal, Chi Mei’s business in the mainland would prosper.
Another opponent of the Service Trade Agreement is Gao Wei-bang, chairman of the Taiwan Victims of Investment in China Association.
“According to figures from the Taiwan Affairs Office in 2011, there were over 28,000 cases involving infringement of rights of Taiwan investors in China between 2000 and 2010. That means an average of 2,800 a year. Of these, only 15 have been resolved,” said Gao.
“The Taiwan government is unable to protect the interests of its investors in the mainland. If this agreement is signed, more Taiwan firms will go there. Is this not like telling them to jump into a pit of heated bricks?”
In 1998, Gao set up a factory in an economic development zone in Beijing to make products of his own design and technology, for export to the US. A year later, a competitor with powerful connections used Gao’s absence during the Spring Festival to accuse him falsely of not paying debts; he seized all the factory’s product and equipment.
Having lost all his investment, Gao appealed to the judicial system and senior political leaders, but to no avail.