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Key Economic Data 
  2003 2002 2001 Ranking(2002)
Millions of US $  406,000    
GNI per capita
 US $ 18,000
Ranking is given out of 208 nations - (data from the World Bank)

Books on Taiwan

Update No: 088 - (26/05/11)

By conventional economic yardsticks, Taiwan has emerged from the recent GFC in very good health. Despite the economic contraction in Japan, a major export destination for Taiwan, exports were again at a record high in April. Outbound shipments were up by 24.6 percent in April, traditionally a slack month, compared to the previous year. Export orders, a signal of likely performance over the next three months, are at a new record high and domestic consumption is regaining momentum.
GDP expanded by 6.55 percent in the first quarter, beating predictions and leading government to issue another upgrade for 2011 as a whole. The upgrade was miniscule – from 5.04 percent to 5.06 percent – but at least it was a move in the right direction.
But while the government is upbeat, as it should be with an election looming, many are pointing out that recent disasters in Japan and elsewhere, as well as rising commodity prices add an element of uncertainty to forward projections.
Other numbers are looking quite rosy also. Taiwan’s current account surplus has reached US$10.75 bn, unemployment is at a 31-month low and per capita GNP is nearing US$20,000. According to the Swiss-based International Institute for Management Development (IMD) which ranks 59 of the world’s most competitive economies, Taiwan has moved up from eighth to sixth place in global rankings. This is the best outcome it has received since 1994.
With new elections looming, including both legislative and presidential polls, now to be combined on the same day; the strong economic recovery should allow the KMT to romp home to victory. In fact, despite the positive news, with both major parties now declaring their presidential candidates, the outcome is by no means certain.
Incumbent President Ma Ying-jeou had already declared his intention to seek a second term some time ago and he has no challengers within his party. The opposition, Democratic Progressive Party (DPP) has nominated Chairperson, Tsai Ing-wen, as its candidate. Tsai will be Taiwan’s first female presidential candidate. She was contesting –and won – the nomination against former premier Su Tseng-chang who graciously conceded following the primary, thereby avoiding any possibility of disunity and factionalism developing ahead of the January 14 election day.
Recent polls suggest that despite the economy growing at its fastest pace in 23 years in 2010, Tsai might even have a slight edge over Mr. Ma at this stage (although the margins are by no means decisive).
Voters do not have an easy choice.
Ma Ying-jeou has now completed three years of his initial four-year presidential term. Yet he has failed to build on his initial mandate and consolidate public trust among voters. His net approval rating remains low and people appear divided in their overall trust of their president. The results of the monthly survey poll conducted by Global Views Survey Research Center for April 2011 showed that he enjoyed an approval rating of only 32.9 percent, while his disapproval rating stood at 56.6 percent. Compared to the previous month his approval had slipped by 2.1 percentage points while his disapproval had gone up by 4.6 points. This sagging popularity, evident since January 2011, should be worrisome for him going into an election.
When coming to office Ma put great store by his China policy. By seeking rapprochement with Beijing and abandoning any talk of independence, his hope was that China would reciprocate by giving Taiwan greater freedom to manoeuvre internationally. That at least was the way it was presented to the public although many know that some senior KMT officials harbour an unstated agenda of gaining personal political clout in China proper.
So far, while the international community, and especially the United States, has heaved a collective sigh of relief that Taiwan has abandoned the confrontationist approach to China that marked the Chen years, it is clear that the result of this new approach has been underwhelming for Taiwan.
China continues to put pressure on the US to downgrade its relationship with Taiwan and especially to avoid selling military equipment to Taipei. In international meetings, China continues to ensure that Taiwan is represented, if at all, as a ‘province of China’. Taipei has itself played along with China in what is seen by many as a policy of appeasement, in which perhaps the prime example was the ban on displaying Taiwan’s national flag during visits by Chinese officials to Taipei.
The landmark ‘Economic Cooperation Framework Agreement’ signed last year was intended to improve Taiwan’s economy by opening up the movement of goods, services and people across the Taiwan Straits. While it is expected to be beneficial in the longer-term, so far it has bought neither tangible benefit to the average Taiwanese worker, nor greater freedom for its government to engage internationally.
Recent economic growth has not been spread throughout the economy and the income gap is widening. Real wages appear to have stagnated and inflation has eroded any benefit that might have come from wage hikes. The recent decision of government to grant a three percent pay hike to public servants (a group that traditionally votes KMT anyhow), ahead of the election has angered many. Although the government has asked business to follow its lead, many businesses claim they cannot afford to do so. To make matters worse, house prices continue to rise and home ownership has become beyond the reach of many workers, especially younger workers.
To many, especially those that support the DPP, Ma has been China’s ‘Trojan horse’ especially as many meetings with Chinese officials have been held outside of the framework of public or legislative oversight. Most of those meetings have been under the guise of talks between Taiwan’s Straits Exchange Foundation (SEF) and China’s Association of Relations Across the Taiwan Strait (ARATS). But in a perfect reprise of China’s traditional ‘united front tactic’ it has also reopened annual meetings between CCP and KMT officials.
Immediately upon coming to power three years ago, Ma had his predecessor, President Chen Shui-bian, indicted on charges of corruption. What raised eyebrows in some quarters was the fact that many of the charges levelled against Chen were the same, or similar, to charges brought against Ma when he was mayor of Taipei during Chen’s presidency, but on which he was given the benefit of the doubt and acquitted. Not so with the hapless Chen. He and his wife were stripped of all dignity in the process and found guilty by a less than impartial court, where the odds were stacked against him from the outset. There were many who thought then that Ma was acting as a surrogate for Beijing in persecuting Chen so relentlessly.
So can Tsai wrest the presidency from Mr. Ma and, more to the point, can the DPP take control of the legislature from the KMT? The answer to the second question is probably easier than the first. With the KMT controlling 70 percent of Taiwan’s unicameral parliament it would take a massive landslide for the DPP to win – something it has never done so far and despite the grumblings over KMT performance there is no sign of such a massive landslide occurring. So the smart money is on the KMT maintaining control over the legislative process for the foreseeable future.
But the presidential race is governed by different factors to those of the legislative election. Ms. Tsai is likely to prove a formidable opponent for Mr. Ma. Tsai is the current party chair; she was trained at Cornell University’s Law School and the London School of Economics and is known for her mellow temperament and understanding of the realpolitik of cross-straits policy. She was first appointed to a series of government positions under President Lee Teng-hui and was one of the principal drafters of his doctrine on the special state-to-state relationship between China and Taiwan which Lee espoused but which China shot down.
Under Chen Shui-bian she served as Minister of the Mainland Affairs Council and became a member of the DPP in 2004. She assumed the party chairship in 2008 after the DPPs defeat to the KMT in that year’s presidential election.
As party leader, she is far removed from the strident anti-Chinese nationalism of former President Chen. As much as a majority of voters appear to fear the repercussions of Ma’s cross-straits policy; nobody wants a return to the confrontation with China that was the hallmark of his presidency. Taking her cue from Barak Obama, Tsai has stressed generational change (she is 55 years old) and is projecting herself as a politician of the middle ground. Her China strategy is anchored in the desire ‘to seek consensus from difference in a peaceful way’ rather than in hostility. Her grounding in cross-straits policies may be her real strength. She understands the implications of a nascent China and the geopolitical realities of the region.
Can she convince voters that the new DPP does not represent a return to the past but rather offers a new path for engaging with China that may better resonate with Taiwan’s voters? China itself is on the cusp of generational change with Hu Jin-tao stepping down as party chief in 2012 and the presidency the following year. How this will play out for Taiwan is unclear at the present time. The one certainty is that those jockeying for power in Beijing cannot be seen to be going soft on the ‘Taiwan question.’ Once a new leadership is in place, there may be an increase in the degrees of freedom allowed Taiwan in seeking out its space vis-à-vis China.
That leaves but one question. How will Tsai react to the Chinese concept of ‘one China’ which not only Beijing but virtually the entire world now accepts. Whatever, die-hard pro-independence stalwarts might dream about, the present reality is such that Taiwan needs to build its own consensus around this question. If anyone within the DPP can do it, Tsai is possibly the one.

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