Books on Taiwan
Update No: 047 - (27/11/07)
With election season fast approaching, the government needs
all the help it can get. While straw polls can be deceiving, the
"nose" of the local business community suggests that the ruling
Democratic Progressive Party is in for a tough fight if it wishes to retain its
hold on power. Taipei has always been a stronghold of the rival nationalist (KMT)
party and so the view from the capital and that from the countryside may be
vastly different. An observer in Kaohsiung-the thriving port city in the south
of Taiwan might take a diametrically opposite view from his counterpart in the
north for the "Deep South" is DPP heartland where the anti-nationalist
sentiment still lingers some 60 years after Chiang Kai-shek took over the
While most foreign analysts are expecting that when election season is over, the
KMT and its allies in the "Pan-Blue" alliance will control both the
Legislative Yuan (as they do now) as well as the presidency (which is held by
the opposition DPP) this outcome is by no means a certainty. The political
outlook therefore remains uncertain and compounded by the tensions between the
two rival groups as they jockey for advantage. Certainly the government is
vulnerable. It has never controlled the legislature and the Pan-Blues have from
the outset taken partisan positions designed to obstruct policy initiative. Even
despite this disadvantage the economy is not doing too badly at all, - much to
the chagrin of KMT leaders.
Polling will come in two-maybe three-stages. There will be the elections for the
unicameral legislature on January 12. At the same time and if the government has
its way will be a DPP-initiated (and blatantly political) referendum on
recovering more than US$6 billion in "stolen assets" owned by the KMT
and taken from government coffers during decades of authoritarian rule, when
there was little attempt made to differentiate between party and state assets.
Not surprisingly the KMT is resisting this referendum which clearly is designed
to push voters to the DPP camp by reminding them of past injustices at the hands
of the nationalists. The Presidential election will follow on 12th March.
The DPP kicked off its nationwide legislative election campaign this month with
a rally in Kaohsiung; the first of 50 such rallies across the country. The KMT
has started its own campaign by unveiling its initial candidate list for the
legislator-at-large seats. Under the revised rules, voters will cast two
ballots: one for a single-member district and the other for a second group that
will represent a national constituency.
Aside from party-political; point scoring; two major issues will dominate the
election: the state of the economy and relations with China. Despite attempts by
the KMT to claim that only a return to a KMT government will 'save' the economy,
the facts speak otherwise.
Indeed Taiwan has raised its growth forecast for 2007 as third-quarter GDP
growth came in at its fastest pace in more than three years driven by improved
consumer spending and strong exports. In the last quarter, Taiwan's GDP grew
6.92 percent from a year earlier, the fastest growth since 9.23 percent recorded
in the second quarter 2004, according to the latest data released by the
Directorate General of Budget, Accounting and Statistics. The agency raised its
2007 economic-growth forecast to a three-year high of 5.46 percent from its
earlier estimate of 4.58 percent.
Consumer spending, which accounts for about two-thirds of Taiwan's GDP, will
likely expand 2.93 percent this year, compared with 2006's revised 1.76 percent
growth. Private spending rose 3.51 percent in the third quarter, following the
second quarter's revised 2.57 percent increase.
The latest figures show that unemployment fell to a five-month low of 3.92
percent in October from September's 3.99 percent. The improving labor market is
helping consumer spending recover after nearly two years of credit tightening.
However, as compared to October last year the present rate is slightly above the
3.90 percent level of a year ago. Unemployment is highest among those with
university or other tertiary education. For this group the rate of unemployment
is 4.71 percent.
Other pleasing figures show that corporate investment in new factories or
machinery expanded 6.54 percent in the third quarter following the second
quarter's revised 8.55 percent growth, and will likely increase 5.07 percent
this year. Private fixed-asset investment will likely expand 4.23 percent in
2008, the government statement said.
Export orders are similarly doing better than expected with rising demand in
Europe and in China, more than compensating for any slowdown in US demand.
Export orders rose 17.99 percent year-on-year to a record US$32.2 billion in
October, the Ministry of Economic Affairs reported. The ministry attributed the
rise mainly to strong demand, especially from Europe, for information technology
and communications products which saw an annual increase of 21.72 percent last
month, the statement said. Orders also got a boost because of rising Asian
demand for consumer electronics, which rose 19.99 percent year-on-year, and
those of precision instruments, up 44.35 percent from a year earlier. Imports
rose 8.8 percent year-on-year to US$19.2 billion in October spurred by increased
purchases of crude oil and the refleeting programme of domestic airlines.
With elections just around the corner, opposition figures have been quick to
disparage these latest numbers. One opposition legislator claimed that the
revised economic forecast just ahead of the election was meant to create a sense
of "pseudo prosperity" by manipulating the exchange and interest rates
to benefit certain groups at the expense of the public as a whole.
Certainly the public may be feeling the pinch in some areas. With fuel prices
continuing to soar (and with fresh calls for Taiwan to further accelerate its
nuclear power generation programme) commodity prices over the past year have
increased by 5.34 percent, the highest annual price rise since 1994. The
wholesale price index has risen by 6.05 percent. However, consumer prices have
risen by a mere 1.35 percent. This suggests that it is not the public that is
feeling the real belt tightening but rather it is the manufacturers, wholesalers
and retailers absorbing the difference.
Salaries have gone up meanwhile by an average of 1.73 percent over the past
year. According to government figures, regular monthly salaries of local wage
earners in the country's service and industrial sectors averaged NT$36,676
(US$1,134) in the first nine months of this year. The average regular monthly
salary has risen for six consecutive quarters now.
The overall average monthly salary for wage earners (which includes regular
salary as well as irregular payments) during the January-September period was
NT$46,276, up 2.35 percent year-on-year, according to the statistics. These same
figures also show that the number of monthly hours worked by employees in
September stood at 170.8, down 21.8 hours from the previous month's level and
down 11.9 hours from the same month last year. The average number of monthly
hours for the January-September period was down two hours from the level a year
earlier. Even so, compared to the 35-hour week of many European countries,
Taiwan's workers put in far more to keep the economy bubbling along than their
What these numbers mean is simple to determine: attempts to make economic (mis)management
an election issue will likely go nowhere. The election will come back to the
issue of the relationship with China and Taiwan's political future. Here,
despite protestations to the contrary there is actually little difference
between the parties for the simple reason that Taiwan has left itself very
little room to maneuver. Time and again Taiwan's leaders have procrastinated and
missed the boat that would have allowed it to pull away from China in meaningful
The first such occasion was in mid 1989 following the Tien-an-mien incident. Had
Taiwan used that opportunity to declare independence it would have (probably)
gotten away with it. Of course it did not. Taiwan at that time was still
emerging from the martial law period and instead of looking to pull away from
China its political leaders were under the delusion that the government in
Beijing would collapse and the KMT would be invited back to "save"
Throughout the 90s, and with the brash confidence that came with
democratization, Taiwan's politicians were prepared to thumb their noses at
Beijing in the belief that as a newly emerging democracy, it was somehow
protected by an invisible shield-a wall of confidence-supplied by Washington.
The "realpolitik" of an emerging China was overlooked totally.
Taiwan also appears to have missed the globalization boat. Economic integration
for Taiwan's business community (much of it allied anyway to the KMT for
historical reasons) has been focused almost totally on China to the extent that
despite the incessant political noise across the Taiwan Strait, Taiwan is by far
the largest investor in China's emerged manufacturing economy. North America,
the European Union, Japan and Southeast Asia have-with few exceptions-been
overlooked in the rush to earn quick money in China. There have been some
political leaders with a strategic vision but by and large they have been a
minority and they have failed miserably in articulating that vision outside of a
narrow-and largely academic-circle.
As a result, the unspoken but key issue in this election may well turn out to be
the choice as to who will negotiate Taiwan's terms of surrender, if a Hong Kong
/ Macao type of end-game should swim into prospect.