Books on Taiwan
Update No: 104 - (26/02/13)
A new broom?
A Cabinet reshuffle ahead of the nine-day lunar New Year holiday is being
interpreted as an attempt by President Ma Ying-jeou to retain his grip on power
both within his party and within government. Premier Sean Chen has lost his
position not for health reasons as has been given in the official pronouncements
of the change, but rather because he chose to disagree with Ma on some key
policy issues. In his place comes Jiang Yi-huah who is regarded as a liberal
academic although little is really known about him. Insiders believe that he
will be more ‘compliant’ and accepting of President Ma’s control of party and
government. Whether this will give him the leeway he needs to turn the economy
around remains to be seen. At present the numbers appear to be improving and a
window of opportunity is opening up. The next few months will be crucial.
[The elderly and sick former President Chen Shui-bian is still in gaol after a
disgraceful “trial” that failed to meet the standards of democratic justice,
primarily it is believed for political reasons.]
In February, the Chinese-speaking world bid farewell to the Dragon and ushered
in the Year of the Snake. According to the view of one local soothsayer
published in the local press, it will not be a good year for Taiwan. Financial
markets are likely to remain unstable and “the political establishment will rest
on its laurels ignoring the plight of the common people… ‘Conflict within the
government [will prevent] the implementation of good policy; the GDP will
stagnate or even fall as the vitality of the nation fails to revive.”
So, the new lunar New Year arrived with a sense of foreboding. Critics of
government would shrug their shoulders and say ‘so what’s new’ and certainly
they would have a point. The approval rating of President Ma Ying-jeou is at a
staggering low point of 13 per cent. Taiwan’s economic malaise is the root cause
of this unpopularity but a significant contributing factor is the aloofness of
the president and (what is perceived to be) his poor communication skills.
Both the ruling KMT party as well as the opposition DPP remain wracked with
internecine squabbling leaving Taiwan at present without a viable alternative
government; not that elections are due any time soon. In a sense therefore our
astrologer-publicist was really only stating the blindingly obvious.
In an effort to shore up his position, Ma has reshuffled his Cabinet. The
reshuffle was precipitated at the end of January by the resignation of Premier
Sean Chen. Publicly Chen’s resignation was ascribed to health reasons but
privately a number of analysts are opining that it was due to policy differences
with President Ma.
For certain, Chen quits the Cabinet leaving some thorny unresolved issues behind
him including the controversy over the role of nuclear power in Taiwan’s energy
mix, the hollowing out of Taiwan’s manufacturing base and salary stagnation that
has led to an erosion of real wages and regional competitiveness plus the issues
of pension reform and fuel price increases that came to the fore late last year.
And let’s not forget the hullabaloo over the invasion of Chinese interests into
Taiwanese media; this is an issue that is still festering.
Jiang Yi-huah, a 52-year old Yale educated academic replaces Chen as premier and
heir-apparent with MIT graduate Mao Chi-kuo (born 1948) elevated from his
position as Minister of Transport and Communications to become vice-premier.
Other changes include the appointment of China Airlines chairman Chang Chia-juch
as Minister of Economic Affairs; and Minister without Portfolio Kuan Chung-ming
in charge of the Council for Economic Planning and Development.
The resignation of Sean Chen was announced just ahead of the lunar New Year
holiday although there appears to have been some delay between the tendering of
Chen’s resignation and the public announcement of a cabinet shake-up. It is
widely rumoured that Ma wanted central bank Governor Perng Fai-nan to take the
premiership. Perng has been at the helm of the central bank since February 1998
and is seen as having been instrumental in weathering the storms of the 1997-8
Asian Financial Crisis as well as the more recent GFC. He is a man with a global
stature and Global Finance magazine has ranked Perng among the world’s top
central bankers for the past eight years in a row. Jiang it seems may have been
‘Plan B’ in the quest to find a new premier.
Little is known of Jiang other than that he has the reputation of being a
liberal academic who keeps his personal political views close to his chest.
The local press has speculated that one reason for his appointment may be that
he will be Ma’s alter ego in the latter’s quest to keep control of both the
party and the government apparatus. The announcement of the cabinet reshuffle
was made in the form of a late night press release in the name of the ‘party and
government leadership’. Ma serves as both the national president as well as
chairman of the KMT and it is understood that he is seeking to overturn party
convention by seeking a third term at the chairmanship. Whether he is doing this
as the behest of Beijing, is a matter of speculation. Certainly he has shown a
penchant for promoting mainlanders to his cabinet over native Taiwanese and he
appears to rely on a small circle of confidantes rather than seek opinions from
a wider caucus for fear that he may hear views contrary to his own.
Analysts have seen the Cabinet reshuffle as an attempt by the president to
better integrate the administrative and legislative branches of government while
at the same time consolidating his grip on the party leadership thereby
thwarting any internal power struggle ahead of next year’s mayoral elections and
the presidential elections due in 2016. Ma wishes to put his imprimatur on both.
Barring any slip on his part, Jiang appears to be being groomed as Ma’s
successor and the person to lead the KMT into the 2016 election. Chen has lost
his opportunity by appearing too independently-minded.
The crux of the matter is whether the new cabinet can do any better than its
predecessor at pulling Taiwan out of the economic doldrums and restoring
people’s confidence in the KMT government. A January 26 by-election in Taichung
which the KMT should have won hands down, proved to be a cliff hanger with the
KMT candidate eventually winning by a margin of less than one per cent. Seen as
a litmus test of voter sentiment, this once pan-blue stronghold must now be
considered marginal. This combined with Ma’s enduring unpopularity, is something
that the new leadership team will need to address. The problem is that the
biggest stumbling block may be Ma himself.
Once local commentator claims
“the timing of the Cabinet reshuffle showed Ma is desperate to raise his
approval ratings and consolidate his leadership in the KMT. Jiang taking over
the premiership also reflected the KMT’s lack of talent and Ma’s limited
“The selection of Jiang as premier is not surprising. This latest personnel
reshuffle only confirms Ma’s habit of choosing officials with an academic
background from a limited talent pool.”
Certainly, the key economic ministries have had a shake-up while the leadership
of the central bank remains intact. This may be a wise move given the
uncertainties that continue to linger on the global economic horizon. Yet all
may not be lost. Despite the gloomy predictions of the soothsayers, the
Taiwanese economy may be doing better than expected.
The Ministry of Finance reported in early February that exports had risen for
the third successive month helped by a tentative economic global recovery that
bolstered demand for Taiwan’s electronic products. In January the IMF raised its
forecast for annual growth in the volume of global trade from an earlier 2.8 per
cent to 3.8 per cent. While one per cent may not seem like much, it actually
represents a 36 per cent increase from previous volume estimates. Importantly
exports to both China and the United States are showing signs of recovery.
Inbound tourism is also growing at a rapid rate as direct flights to major
Chinese cities and a relaxation of the rules surrounding tourists from China,
start to show results. Inbound tourism surged by 20 per cent in 2012 to reach a
record of 7.3 million visitors. The biggest increase was in arrivals from China
which increased from 1.8 million to 2.6 million—a whopping 44 per cent increase
over the previous year. The Taiwan Tourism Bureau has estimated that foreign
exchange earnings from tourism reached US$11.6 billion in 2012 and the
hospitality industry is one area where employment is burgeoning.
The most recent economic forecasts suggest that, barring unforeseen vents, the
longer term economic outlook for Taiwan may be improving. Some private
forecasting agencies are already predicting that Taiwan’s GDP growth could
accelerate to around 3.9 per cent in 2013 from the 1.25 per cent recorded in
2012. The government think-tanks have yet to announce their revised forecasts.
If borne out, an improving economy may give the Ma administration some welcome
breathing space and a window of opportunity. Certainly, the reshuffle of key
economic positions may well be the KMT’s last opportunity in a while to regain
the hearts and minds of the electorate.