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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: 048 - (21/12/07)

The approaching end of the year is always a good time to take stock; traditionally we look back at where we have come from; assess where we are now and plan ahead for the New Year as to the direction we want to go. As it goes for individuals, so it goes for corporations and for countries. 

Let us therefore end the year in the same tradition. 2008 will be a seminal year for Taiwan and the path it chooses over the next three months will likely set its future course for some time to come. While the situation remains unclear for the moment, we can at least look at the options.

In January Taiwan's voters will go to the polls to elect a new parliament-the unicameral 'Legislative Yuan' that remains controlled by the opposition Kuomintang. The KMT will likely retain its control after January and the only question that seems to be occupying people's minds is the size of the margin-will it be increased or eroded? What will it say about the likely outcome of the presidential election due two months later?

The presidential poll follows in March. President Chen Shui-bian of the Democratic Progressive Party must step down after serving two four year terms. Former Premier and DPP Party Chair, Frank Hsieh is hoping to take over the reins of the presidency but he faces a tough fight against an iconic opponent, the charismatic (although by now, slightly aging) Ma Ying-jeou of the KMT. Ma is a former Justice Minister, mayor of Taipei City and, more recently KMT Party Chair.

It will be a tough fight but Mr. Ma seems, at this time, to have a slight edge if for no other reason than after eight years people seem to want change. After all, what is the point of having a democracy if you cannot throw out your government? Common wisdom seems to take the view that if the KMT controls both the presidency and the legislature, there will be less confrontation in government. 

This seems to miss the point that a major part of the confrontation of recent times has arisen simply because the KMT has chosen to be obstructionist. Additionally, having seen the impact on the USA of several years of a congress and a presidency run by the same party, the good heath of a democratic system might suggest confrontation is a definite plus, not a minus. But few people think these issues through in any depth. It may come down to the fact that Mr. Ma is more photogenic than his opponent.

Frivolity aside, there are important issues at stake. The KMT would like people to think that the election is being fought on the issue of the economy. The trouble for them here is that the economy is frustratingly buoyant-around 5.5 percent growth this year and a further 4.5 percent expected in 2008 in spite of an expected slowing of the global economy. 

But It is not really about growth rates or investment. This election is being fought over the very lifeblood of Taiwan itself-its identity. The DPP, which was molded from the fires of opposition to the martial law and control by the mainlanders, is avidly pro-Taiwanese to the point of rejecting any Chinese identity. On the other hand we have the KMT, which has always had its roots on the Chinese mainland and which continues to harken back to the theme of a united China-but united that is under its own leadership - not that of the Communist Party of China.

This comparison may be stretching fact a little, but not too much. There are shades of opinion on all sides of course and the moderates of both parties would probably have much in common with one another. But with elections approaching, politicians are apt to want to identify on the basis of their differences not their commonalities. And here is the rub; neither party really has any clear vision as to what it wants for the country. Both appear to be trapped by their own history.

The KMT, in emphasizing how much better things would be if it were back in charge is really harkening back to the days of KMT INC when government and party were really one and the same, and when the prime minister's role was more akin to that of a general manager than a policy-implementer. The KMT ran government and the corporations on the basis of connections. Outside the party, much has changed. Over the past eight years, government-owned corporations have been largely privatized and the KMT-owned corporations are now (supposedly) run at arm's length from political influence but, of course, that could change.

The KMT did not become the world's richest political party by accident. During martial law, government-owned land, properties and corporations were sequestered by the Party. The DPP wants these assets returned to the people and is proposing to hold a referendum on the issue at the same time as the elections next year. The precise date has not been settled because there are now not one, but four referenda being proposed-two from each of the main camps.

In fact the issue of the referenda illustrates well how each of the major political groupings are hostage to their own history. The DPP has proposed the holding of referendums on joining the UN under the name "Taiwan" and on the recovery of KMT "stolen" assets. The KMT has countered with two of its own, one covering the investigation of corruption in government and the other on joining the UN under the name "Republic of China."

What will these referenda achieve? Very little it seems other than to define the "issues" and as a way of gathering the faithful to the vote.
The issue of assets and the issue of corruption are tit-for-tat tactical efforts by each party to show the other in a bad light and win voter support for the wider cause. But the UN proposals are interesting, not because Taiwan has any chance of admission to the UN under either name, but because they go to the heart of national identity as seen by each of the groups and will, in a real sense, determine how the whole question of cross-straits relations are dealt with by government in the coming years. 

This is about as distinctive as it gets. Whether the KMT wins the day and returns to government after the March poll or whether the DPP gets another four years at the helm, the economic focus will continue to be on China. Mr. Hsieh would have us believe that he will hold "innovation, tolerance and diversity" as his principal values. His economic strategies are far from diverse: a wider opening to global capital, including investment from China; an amnesty on capital remitted illegally to China and elsewhere, to facilitate its return; an adjustment to the ceiling on investments into China and a lowering of taxes on inherited property, to encourage the wealthy to keep their money in Taiwan. Behind all the jargon and hyperbole, the underlying principle is that the DPP would continue to open up the economy to China much as has been done for the past 17 years and is very little different from the policies espoused by Ma Ying-jeou and his running mate, former premier Vincent Siew.
One is left wondering how either party can justify economic integration with China while failing to accept the notion that political integration, in one form or another, must eventually follow. Perhaps in this regard, the KMT is at least more intellectually honest about it.

These are all issues designed to shore up voter support on election day and hardly address the broader visionary approach that people want to see. In the headlong rush to pin Taiwan's economic future to China's coat-tail, globalization does not even rate a passing mention. 

Yet as a country with OECD standards of development and per capita GDP, the opportunity to integrate Taiwan with the advanced economies of North America, EC, Japan and other technologically advanced nations seems to have been given little or no consideration. Instead, Taiwan-which has so far produced some excellent innovation itself in its science parks-has chosen to integrate with the technologically less developed countries, particularly China which is all too ready to act as the proverbial sponge. Such issues and ideas designed to take Taiwan to the next level of technological innovation appear regularly in the local press but are given scant attention by policy-makers.

Indeed, in an effort to broaden the debate as to where Taiwan should be headed, both the European Chamber of Commerce in Taipei (ECCT) and the American Chamber (AMCHAM) have come up with their own blueprints for the future.
The ECCT has noted that in the global race for economic prosperity, Taiwan is starting to drop behind the leading group within the Asian region and now lags such countries as Korea, Hong Kong and Singapore. According to the latest Global Competitive Report released by the World Economic Forum, Taiwan has become the worst performer of the four Asian tigers. 

The Chamber has proposed a number of suggestions to serve as a roadmap for the incoming government of which the urgent need to normalize cross-straits relations tops the agenda. That of course means direct cross-straits links and would be difficult for either party to agree with for no other reason than that China regards such links as a domestic issue, whereas Taiwan treats them as an international issue. Neither leader would dare sign off on a document produced by Beijing that relegated Taiwan's status to that of a mere province of China.

AMCHAM chose an easier path and focused on issues needed to boost competitiveness including the need to revamp tax policies, restructuring of the financial system, education reform, a leveling of the playing field for international business and liberalizing work permits for foreign nationals including professionals from the Chinese mainland. This is a more pragmatic approach and provides an opportunity for constructive engagement whoever wins the election.
We will need to wait until January 12 to find out more of what the future holds. That is the date Taiwan goes to the polls. Watch this space.

NB: it is worth noting that although the two parties appear to be running neck and neck in terms of political support come polling day, some 70 percent of Taiwanese nationals now identify themselves as being Taiwanese rather than Chinese.

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