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Books on Taiwan
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Update No: 037 - (01/03/07)
February ushered in the year of the pig. Local geomancers have
happily pronounced that 2007 will be a good year for Taiwan! Leave econometrics
out of the picture. The pig-according to the Chinese zodiac-is associated with
wood and earth; ergo, the property and construction sectors will boom!
In fact the "dog" year ended well enough. The benchmark TAIEX closed
prior to the holiday at 7,809.45 points. This represented a year-on-year
increase of 19.55 percent. Auspiciously, the property index rose by 102 percent
last year and with local property prices still considered to be under-valued by
Asian standards, there appears to be still room for further growth.
With presidential and congressional elections looming at the end of the year, a
rising economy bodes well for the incumbents, provided they can hold their act
together. This is by no means certain but at least the Democratic Progressive
Party (DPP) is looking in a slightly better position than it has for some time.
President Chen Shui-bian in his New Year address stayed clear of politics, much
to the relief of his party followers; not to mention US officials who are always
looking for the sting in the presidential tale. Unlike last year when President
Chen announced the disbandonment of the National Reunification Council-a
provocative move that signaled to the world that Taiwan was no longer interested
in exploring the idea of reunification with the Chinese mainland-this time Mr.
Chen focused on Taiwan's achievements in local rice production and on economic
recovery. It was short (2 minutes), visual (the president spoke as a "voice
over" to a montage of "feel good" images) and was clearly meant
to have one eye on the coming election season.
Presidential hopefuls take their starting positions
Indeed, with regard to the contenders for the top job, the candidates have
started to line up. Registration for the DPP primary will open from March 7 to
9th. This is one month earlier than previously planned. Party members will then
vote on May 6 on presidential and legislative candidates and this will be
followed by a series of public opinion polls. On the basis of party preferences
and public opinion the final line up will be announced on May 30th.
Four contenders are expected for the DPP presidential race: These are party
Chair, Yu Shyi-kyun, former Premier Frank Hsieh, Vice President Annette Lu and
Premier Su Tseng-chang. Both Yu and Hsieh have already announced that they will
be running.
For the Kuomintang, former Taipei mayor and KMT Chair, Ma Ying-jeou has already
announced his candidacy despite being indicted early in the month on charges of
corruption. In the overall scheme of things in Taiwan, his offence appears to be
rather minor-that he transferred some US$333,000 from his official account to
his personal account-but that is not the point. Ma has always projected the
image of a "Mr. Clean" and has waxed indignantly over the
transgressions of political opponents. No longer can he claim the moral high
ground.
As if to make matters worse, Mr. Ma resigned his chairmanship as soon as the
indictment was handed down. Yet almost immediately, the KMT not only refused to
accept Mr. Ma's resignation but reversed its own recently revised Constitution
back to the status quo ante by repealing its "black gold exclusion clause
that would have disqualified Ma from running as the party's presidential
candidate.
This particular clause was only written into the Constitution recently and under
Ma's chairmanship to suspend and prevent from seeking office, any party member
who was indicted.
So all in all, President Chen should be reasonably happy that at last the
political heat is off his shoulders and has been transferred to his bęte noir.
But it appears unlikely that Mr. Chen will step to the sidelines-at least not
just yet.
What's in a name?
Prior to the Lunar New Year holiday (and possibly with the thought that the
approaching holiday season would mean that the issue would quickly be
forgotten), Mr. Chen took yet another small step to distance Taiwan from China.
The government-owned postal service has changed its name. No longer will it be
called Chunghwa Post Company ("Chunghwa" means "China");
from now on it is the Taiwan Post Company. Stamps will no longer bear the name
"Republic of China" but simply "Taiwan."
One day later, other government-owned corporations underwent a similar
metamorphosis. The Chinese Petroleum Corporation became CPC Corporation Taiwan
and China Shipbuilding Corporation became CSBC Corporation Taiwan.
According to Mr. Chen the name changes will help identify these corporations
internationally with Taiwan rather than China thereby avoiding confusion. Fair
point! But commentators generally see the move as a further attempt by Mr. Chen
to establish his legacy before the expiration of his term of office.
A new voting system for the legislature
The end of year elections will not only be about voting in a new head of
state; they will also be about voting in a new legislature. Finally and in what
has been described as a momentous change to the country's political system, the
incoming legislature will be the first to be elected under a new system of
voting.
The new unicameral legislative body will have only 113 seats as compared to 225
at present. Seventy-three legislators will be elected directly from
single-member districts while the remaining 34 will be filled by parties who win
more than 5 percent of the total number of votes cast.
Essentially, voters will cast two votes: one for a local candidate representing
the district in which the voter resides and one for a party. The new system
replaces one described as a "single vote, multiple member" districts.
The change is expected to work in favour of the major political groups and at
the expense of smaller parties. The expectation is that in order to survive,
these smaller groups will have to merge with the larger parties. The outcome may
well be eventually, the final emergence of a two-party system for Taiwan.
Economic growth appears robust
Indeed, the economy appears on a roll. Taiwan's economy grew at a
faster-than-expected pace in the fourth quarter after stock market gains and a
recovery from credit-card defaults boosted consumption. Gross domestic product
rose 4.02 percent from a year earlier according to Taiwan's statistical agency.
Stronger than expected growth makes it easier for the Central Bank to continue
pushing up interest rates to stem outflows of money and keep the nation's
currency stable.
Policy makers have increased the key rate every quarter from September 2004 to a
five-year high of 2.75 percent, or just over half the Federal Reserve's
benchmark.
Consumer spending was boosted by a recovery from past credit and cash-card
defaults according to the agency.
The government forecasts a 4.3 percent economic expansion this year, up from the
previous estimate of 4.1 percent. Last year's growth was 4.6 percent. Household
spending, which accounted for a third of the fourth quarter's economic growth,
rose 2.4 percent from a year earlier. Private investment jumped 10.6 percent,
the most in two years.
Export growth, which slumped in the fourth quarter at 2.7 percent because of an
electronics glut is expected to play a smaller role in driving this year's
figure. Export growth slowed to 7.61 percent in the fourth quarter from 18.59
percent in the previous quarter, according to the statistics.
The domestic contribution to the economy will rise to 60 percent from 25 percent
last year.
Exports have been hurt by a US slowdown that created stockpiles of key
electronic items including liquid-crystal panels and semiconductors. Electronics
are the largest component of Taiwan's exports.
Taiwan's financial house may be starting to get in order. Taiwan lenders wrote
off more than US$3 billion of bad credit-card loans last year, helping to
dispose of a curb on spending. A jobless rate at almost a six-year low in
December is also encouraging people to start spending more. Growth in overseas
sales, which account for about half of Taiwan's US$355 billion economy, is
expected to slow to 6.2 percent this year from 12.9 percent last year, the
statistics bureau said.
Import growth is also expected to slow, with the trade surplus to widen to
US$22.7 billion from US$21.3 billion last year.
Inflation may reach 1.4 percent, the bureau said. That is down from the previous
forecast of 1.5 percent. Consumer prices have been rising since November after
previous declines.
The government forecast for first quarter growth was unchanged at 4.03 percent.
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