23 October 2016
Tsai Ing-wen needs to boost cross-strait trade for the sake of Taiwan's economy. Photo: Reuters
Tsai Ing-wen needs to boost cross-strait trade for the sake of Taiwan's economy. Photo: Reuters

Will a new president bring new hope for Taiwan?

The Japanese phrase “a little happiness” (小確幸) has become popular in Taiwan in recent years.

However, the term, which has a positive meaning, has been twisted into a sarcastic reference to the complacent, unambitious attitude of Taiwan’s younger generation.

Let’s hope Tsai Ing-wen, the island’s new president, will strive to improve the livelihood of the people by leveraging cross-strait relations.

Her predecessor, Ma Ying-jeou, failed to deliver on his promises, when he was installed eight years ago, of 6 percent annual economic growth, a per capita gross domestic product of US$30,000 and an unemployment rate of less than 3 percent.

Taiwan’s real growth in gross domestic product, after deducting inflation, actually beats Hong Kong’s, because of the island’s lower inflation.

In fact, Taiwan has registered nearly 3 percent growth, with an unemployment rate of 3.9 percent and modest consumer price increases.

So, things are not that bad.

Also, the island’s four pillar industries — petrochemicals, technology, shipping and fisheries — are still in pretty good shape, despite various problems.

For example, leading technology firms like Foxconn Technology Group, Asus (ASUSTeK Computer Inc.), Taiwan Semiconductor Manufacturing Co. Ltd. and Formosa Plastics Corp. have moved most of their production lines to the mainland, but their main research and development, back office, accounting and operating units, as well as the final production step, remain in Taiwan.

Last year, Taiwan’s exports totaled US$280.5 billion, making it the world’s 19th largest exporter.

It even beats major exporting countries like Switzerland, India and Sweden.

Certainly, the hollowing out of industry does exist in Taiwan, and the new president needs to tackle that.

As I’ve noted earlier, Taiwan’s economy can’t be detached from cross-strait political relations.

Tsai, who has a Ph.D. in law from the London School of Economics, has held several government positions.

It seems that she has put the same weight as Ma did on cross-strait economic and trading relations.

Her ideal would be to boost cross-strait trade while Beijing refrains from hampering Taiwan’s effort to expand its economic presence worldwide.

Meanwhile, some might argue that Tsai will face even more pressure than her predecessor in pressing ahead with the Economic Cooperation Framework Agreement (ECFA) with the mainland.

In fact, her Democratic Progressive Party (DPP), established in 1986, has had little interaction with the Communist Party of China.

The DPP has been focusing on its main rival, Ma’s Kuomintang.

Frankly, the major difference between the DPP and the CPC lies on the issue of unification or independence for Taiwan.

For now, both sides seem to prefer to maintain the status quo. That should benefit Taiwan’s economy.

Tsai can learn from the bitter lesson Ma learned when he tried to press ahead with legislating the ECFA and was thwarted by huge opposition from the public, culminating in the Sunflower student movement of 2014.

Nevertheless, it’s critical for Taiwan and the mainland to continue with the “1992 consensus” — an agreement that there is one China, which each side will define in its own way. That will pave the way for cementing economic ties.

Tsai has never given a clear statement about her views on that issue.

While Taiwan’s GDP could shrink this year, hopefully, the new president will bring some new hope for the island.

This article appeared in the Hong Kong Economic Journal on May 20.

Translation by Julie Zhu

[Chinese version 中文版]

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Hong Kong Economic Journal columnist

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