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Chen shui-bian

Update No: 021 - (29/09/05)

September saw the 19th birthday celebration of the governing Democratic Progressive Party. While the DPP has provided much of the impetus to political liberalisation on the island - and can justly claim to have established Taiwan firmly as one of the truly liberal-democratic states within Asia, this has come at a price. As China asserts itself increasingly as a regional and global power, Taiwan's dream of becoming an independent nation state independent of China appear to be fading. This month the United Nations, for the 13th year in a row, rejected Taiwan's bid for membership of the world body and also ignored Taiwan's "plan B" whereby Taiwan's allies within the UN requested the body to play a pro-active role in ensuring peace across the Taiwan Straits. President Chen Shui-bian paid a visit to Taiwan's remaining allies in Latin America, visiting 5 of the 26 states that maintain diplomatic relations with Taipei. As expected his trip focused on Trade and dollar diplomacy - the offer of soft loans to diplomatic allies.

Not quite a coming of age
The Democratic Progressive Party (DPP) threw itself an early 19th birthday party in Taichung City that featured a number of prominent party members taking to the stage, not for making speeches, but to show off their musical talents. The theme of the party was "holding hands, making promises and lighting up Taiwan," but the real motive behind the celebration was to allow the DPP to promote itself and its candidates for the year-end mayor and county commissioner elections.
The celebration reached a climax when President Chen Sui-bian offered three wishes for the party and the country after he helped slice into a birthday cake and led a chorus of top officials in the party's anthem, Believing in Taiwan. 
Chen's first wish was that the DPP could turn Taiwan into a "progressive, complete, beautiful and normal country" and all the people of Taiwan would be able to live good and happy lives with dignity and pride. 
"Second, I hope the DPP will win a big triumph in the year-end elections under the leadership of DPP Chairman Su Tseng-chang and will grab at least half seats in 21 constituencies," he said. "I also hope that the DPP will win again in 2008 and the DPP's candidate will be elected president in 2008." 
"Third, I hope the DPP will never change its insistence on democratic reform, which is a vital path that it has to travel down," he said. "Only by holding on to reforms can the DPP continue to gain the support of the people of Taiwan and stay in power." 
All of this sounds good but Chen's failure to move on such basic issues as direct flights between Taiwan and China has actually weakened Taiwan's longer-term strategic position. While Taiwan will remain an important market in its own right for global business, Taiwan's failure to open up communications links with the mainland has cost it the opportunity to become an offshore regional hub for the Greater China market. Sadly, this may be his legacy to his country and his party.

A gift from the Supreme Court
The birthday bash offered some brief respite from the headaches and frustrations facing President Chen and particularly those relating to dealings with China and with a legislature controlled by the opposition that often seeks to frustrate Chen's reformist ideals and whose leaders appear at times to be taking their marching orders from Beijing.
Taiwan's Supreme Court rejected an appeal by the two main opposition parties -the Chinese Nationalist Party (KMT) and the People First Party (PFP) - to have last year's presidential election declared null and void on the grounds of suspected fraud and deceit. The ruling officially closed the bitter legal dispute over last year's presidential election although in typically defiant style, KMT spokeswoman Cheng Li-wen said the ruling "is neither the end nor the final judgement."
According to the Court, "the evidence presented by the plaintiffs was not adequate enough to show that fraud was involved during the election, nor was it strong enough to override the High Court's ruling. The Supreme Court decided to uphold the Taiwan High Court ruling which had decided that the pan-blue camp lawsuit had failed," said a spokesman for the Supreme Court referring to claims made by the pan-blue camp that last year's election was affected by many dubious factors, including unclear motives surrounding the assassination attempt on President Chen Shui-bian and Vice President Annette Lu on the eve of the poll and possible interference by a referendum held in tandem with the election.
The Supreme Court rejected the pan-blue legal team's claim that more than 900,000 ballots had been illegally distributed in polling stations. "After double-checking by both the plaintiff's and defendant's legal teams, only 3,700 defective ballots were identified, which did not affect the election result," said the Supreme Court ruling. According to the Central Election Commission's (CEC) announcement on March 20, Chen and Lu beat then-KMT Chairman Lien Chan and PFP Chairman James Soong by 29,518 votes.
Concerning the pan-blue legal team's claim that the CEC's holding of a referendum simultaneously with the election was illegal, the Supreme Court said that before a constitutional interpretation was given, the CEC was simply an administrative agency, which organized elections on instructions from the government. The court also threw out the claim that a referendum held simultaneously with the residential election violated the principle of a secret ballot. 

Unlucky 13
China and its allies have again succeeded in blocking Taiwan from entering the world body. This was Taiwan's 13th consecutive attempt to have the question of Taiwan's membership placed on the agenda of the General Assembly.
According to the Ministry of Foreign Affairs (MOFA), it had this year adopted a new strategy of "presenting two proposals. "The first proposal urged the UN General Assembly to "ensure the representation of the 23 million people of Taiwan in the UN" - as Taiwan had appealed in the past - while the second requested "a proactive role by the UN in maintaining peace in the Taiwan Strait."
It was the first time that Taiwan brought a second proposal to the UN, aimed at urging both sides of the Strait to resolve disputes through peaceful means, and requesting UN Secretary-General Kofi Annan to appoint a special envoy or a fact-finding mission to evaluate the security situation in the Strait.
The two proposals were placed in different categories on the agenda and MOFA hoped that they could be discussed separately in the General Assembly. However, the chairman of the meeting decided to go with the Pakistani representative's suggestion during the procedure discussion, as a result of which the two proposals were merged.
After a 45-minute discussion in the form of a two-on-two debate on whether to put the merged proposal on the agenda for the UN's 60th session, the two proposals were both excluded.
Despite feigned indignation, the result was in line with Taiwan's expectations. Nevertheless the annual ritual does have significance. Firstly it shows the public - and especially DPP supporters - that the government is still pursuing the goal of international recognition for Taiwan with or without China's support (in theory, the entry of Byelorussia and the Ukraine during the Soviet era provides a precedent for other than independent nation states to be members of the General Assembly and the granting of observer status to the PLO and others with less than full statehood bolsters Taiwan's argument that it should be included). Second of course, China's insistence on excluding Taiwan provides another opportunity for Taiwan to show to the rest of the world, China's intransigence on any issues involving the people of Taiwan.
While, Taiwan's foreign ministry talks about the need for a new strategy, in some respects the present strategy serves Taiwan quite well. We can no doubt expect attempt number 14 next year.

Mr. Chen's virtual visit to Washington
President Chen made two stopovers in the United States en route to and from Central America. The official stopover was taken in Miami and on the condition laid down by the State Department that the visits are private ones and that Mr. Chen refrain from engaging in any political activity.
Still, that did not stop him from receiving a US Congressional human rights award and appearing in Washington to receive it - even though his presence at the US House of Representatives was electronic, in a basement recording studio and at an event from which the press was banned. 
This was Mr. Chen's first "appearance" in Washington since his days as Taipei Mayor and the purpose was to receive the 2005 annual human-rights award from the Congressional Human Rights Caucus. The award was given for his efforts to promote human rights and political freedom in Taiwan and throughout Asia.
The award was originally intended to be delivered in Miami, during the transit stop, but Hurricane Rita disrupted travel schedules and the need for members of Congress to be in Washington for legislative votes scotched that idea. Instead, the chairman of the caucus, California Democrat Representative Tom Lantos, presented the award on behalf of the 250 caucus members in a unique ceremony in which Lantos spoke from the recording studio and Chen spoke from Miami via closed circuit television. David Lee, Taiwan's top envoy to the US, later took the human-rights award from Washington to Miami to present to Chen.

President Chen makes another overture
Speaking at a banquet given in his honour by Taiwanese expatriates during his Miami stopover, President Chen Shui-bian said that he would invite China's leaders to participate in a rational dialogue and reconciliation process in a bid to "open a window of opportunity" for democracy and peace on both sides of the Taiwan Strait. However, he added that no conditions should be set before any interaction, and that the dialogue should not be confined to a specific time period or location.
He said that he fully understands that the world community is expecting Taiwan and China to re-open dialogue in order to maintain peace in the Taiwan Strait.
Mr. Chen's transit stop came only days after Chinese President Hu Jintao had been received in Washington and his remarks were no doubt meant to remind America once again that on the issue of peace across the Taiwan Straits, Taipei is not the problem.
Or is it? It depends on your perspective of course. In a perfect world, he would be quite right but in fact, he and his Democratic Progressive Party are deeply distrusted on the mainland of China. While China's claim that Taiwan is an integral part of China rests on rather flimsy grounds, the fact is that China sees an independent and pro-American Taiwan as an unacceptable strategic risk and Mr. Chen has done absolutely nothing at all to allay Chinese concerns. 
During a bilateral meeting last week in Guatemala on the first step of his tour, President Chen revealed Taiwan's idea to set up the "Jung Pang Project" - a US$250 million fund for financing development in Central America. Money from the fund will become available in January next year. Funding will be available for Taiwanese businessmen investing in Central America.

The economy continues to do well
Taiwan's economy appears to be picking up after bottoming out in the first half of the year, driven by strong overseas demand in the coming traditional peak season, but the surging oil prices are likely to continue weighing on the nation's consumer prices. The influence of recent hurricanes in the United States is also of concern from the viewpoint that lingering effects may dampen demand for Taiwan's up market consumer goods.
According to the most recent government survey, Taiwan's consumer prices for the first eight months were 2.13 per cent higher than the same period last year, but the figure may go up further due to rising crude oil prices, which may trigger higher inflation. To ease the concern, Premier Frank Hsieh has demanded that state-run Chinese Petroleum Corp, which supplies 70 per cent of the gasoline in Taiwan, keep its fuel prices at their current levels for the rest of the year.
Local manufacturers were upbeat about the economic outlook in the next quarter, pushing the leading industry index to 110.8 points last month from 103.12 in July, according a poll conducted by the Taiwan Institute of Economic Research, a leading government think tank.
As for the foreign-exchange market, the New Taiwan dollar has risen by 0.61 per cent against its US counterpart this year, which created a disadvantage for the export-dependent economy, Chen said.
With the nation's trade surplus having shrunk significantly, the NT dollar is likely to stay at its current level or depreciate (as indeed latest figures suggest it is doing). For the first eight months of the year, Taiwan reported a trade surplus of US$1.17 billion, down 79.1 per cent from a year earlier, according to government statistics. 

Export growth better than expected 
Taiwan's exports grew by a better-than-anticipated 7.6 per cent year-on-year in August, against 5.3 per cent year-on-year in July, which could provide a boost both to the Taiwan dollar and Taiex. Imports grew overall by 11.1 per cent year-on-year in August, against 9.7 per cent in July. Electronics, Taiwan's key export rose by 15.3 per cent year-on-year in August, against 11.0 per cent in July, which suggests that an expected 2H05 surge in hi-tech sales is on course. 

August shipments to China rose by 11.8 per cent
year-on-year, against 7.0 per cent in July, while sales to the US grew by 0.8 per cent year-on-year, down slightly on July's 1.0 percent rise. The Taiwanese government has forecast 6.9 per cent export growth in 2005, down sharply on the 21 per cent rise in 2004. 

NT dollar hits lowest level in 10 months
Despite pleasing economic results, the New Taiwan dollar had its lowest close in 10 months versus the US currency on September 23rd following speculation the central bank will sell the currency to maintain demand for exports after the yen dropped the previous week. Exports make up almost half of Taiwan's economy and the yen's 3.8 per cent drop against the Taiwan dollar in the past year makes it harder for companies such as Taiwan Semiconductor Manufacturing Co to compete with Japan's NEC Electronics Corp.
Taiwan's currency closes at NT$33.096 against its US counterpart on the Taipei foreign exchange market, its weakest close since Nov. 10 and biggest drop since Sept. 6, according to Taipei Forex Inc. The currency may weaken further.
Overseas sales grew last month at the fastest pace in four months as the Taiwan dollar fell 2.4 per cent, its largest decline since May 31, 2001. The yen strengthened 1.7 per cent against the US dollar that month. 

Taiwan's jobless rate rises slightly in August
The unemployment rate rose 0.04 percentage points to 4.36 per cent last month due to a rise in job resignations and business closures, the Directorate General of Budget, Accounting and Statistics (DGBAS) said in its latest statement. However, the jobless rate for last month was down from 4.67 per cent a year earlier, making it the lowest figure for the same month over the past five years, the DGBAS said.
On a seasonally adjusted basis, the jobless rate was 4.11 per cent last month, down 0.04 percent from the previous month and down 0.28 per cent from a year earlier, according to the statistics agency. The number of people out of work rose by 5,000 to 454,000 last month, with the eligible workforce at 10.42 million. The jobless rate was 12.11 percent for people aged between 15 and 24 last month, while the rate was 3.9 per cent for people aged between 25 and 44, the agency said.
For the first eight months of the year, the average unemployment rate was 4.19 per cent, down 0.33 per cent from a year earlier, the agency said. 
The employment outlook does not look promising. Taiwanese employers reported weaker hiring intentions for the second consecutive quarter, with all six sectors surveyed anticipating a decrease in their staffing demand, according to the latest survey data.
Of the 1,711 employers interviewed, 22 per cent expect an increase in hiring in the fourth quarter, 6 per cent foresee a decrease, and 48 per cent say there will not be any change in their workforce levels. This resulted in a "net employment outlook" figure - used as a comparative measure by subtracting the number of employers planning to reduce staffing levels from the number planning to hire staff - of 16 per cent in Taiwan. That represents a sharp drop from the third quarter's 24 per cent.
The higher cost of oil is likely to hit the local manufacturing sector, push up food prices, increase the cost of transportation and production and eventually reduce employment growth, the survey said.
Among the six sectors polled, the most bearish hiring outlook was reported by employers in transportation and utilities (9 per cent), wholesale and retail trade (9 per cent) and mining and construction (8 per cent) sectors, the report said. The service sector, however, had the most buoyant view, with a net employment outlook figure at 21 per cent.

Financial reforms to continue despite setback
The failure to secure a buyer for the state-controlled Taiwan Business Bank has raised fears that the whole process of financial and banking reform may be undermined. The government had announced its intention to halve the number of state-controlled banks in order to ensure greater competition in the banking system.
The sale of shares in the Taiwan Business Bank (in which the government owns a 41 percent stake) was aborted because of a lack of consensus between the bank's labour union and the potential buyer. Although the name of the buyer has not been disclosed publicly it was rumoured that E.Sun Financial Holding Co, Taiwan's No. 10 financial holding company, was the likely buyer. The union had demanded that the buyer offer better early-retirement packages for the benefit of its members in case of layoffs. 
Taiwan Business Bank chairman Herbert Chung resigned to take responsibility for the state-controlled bank's share sale, which collapsed on Wednesday night. Chung, 57, was chairman of the Bank of Overseas Chinese before he assumed the Taiwan Business Bank chairmanship in June last year. Before joining the Bank of Overseas Chinese, Chung served as president of the Export-Import Bank of the ROC for more than two years. He has more than 26 years' experience at foreign banks, including Belgium's Fortis Bank and the Royal Bank of Canada.
State-run banks at present have a 55 percent share of the market by assets, and 50 per cent by revenues. The government wants to withdraw from these businesses to facilitate fair competition and internationalization. This year, the government has disposed of the poorly performing Bank of Overseas Chinese, Taiwan Development & Trust Corp. and Chang Hwa Commercial Bank in a "gradual and transparent" way, to improve the sector's competitiveness.
Despite the present setback Minister of Finance Lin Chuan said that the nation's second-stage financial reforms will continue, although the failed auction deal will affect the government's plan to halve the number of state-run banking institutions.
The minister declined to name the bank's union as a major reason for the bid's failure, despite concern that the union's strong opposition to the privatisation scheme may create a domino effect among other lenders. 

Taiwan's last notebook factory closes
As a sign of the times, Taiwan's notebook computer industry - once the world's largest - has closed its last assembly line and completed a massive relocation to China. First International Computer Co last month shut down its Taiwanese factory, becoming the last Taiwanese laptop maker to move its production facilities to China. According to chairman Chien Ming the company has sustained losses in the past few years as other Taiwanese makers churned out less expensive laptops in China, taking advantage of lower labour and production costs there.
Taiwanese firms produced US$21.8 billion in notebook computers last year, accounting for 72.4 per cent of the world total. But leading makers such as Quanta Computer Inc and Compal Electronics Inc began producing in China several years ago, leaving only their research and development centres in Taiwan.
Besides notebook computers, Taiwan is also the world's leader in manufacturing desktop computers, monitors, motherboards, keyboards and mice. Most of Taiwan's computer hardware is made on an original equipment manufacturing basis, meaning products are made to be marketed abroad under large international brands such as Apple, Dell or IBM. However, most of these goods are now made in China by Taiwanese-owned firms.

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