Wang Jianmin: The DPP cannot achieve Taiwan's economy, but it can destroy it

Source: Global Times

The continued spread of COVID-19 has hit the global economy hard. However, in this context, Taiwan's economic growth will exceed 3% in 2020, and its performance is quite concerned. In addition to the certain competitiveness of Taiwan's industry and the characteristics of the industrial structure just to meet the additional demand brought about by the epidemic, the mainland economy took the lead in resuming production and resuming work, and the huge market drove the high growth of cross-strait trade, which is an important driving force, which further strengthens Taiwan's dependence on the mainland's export market. This result gave the DPP authorities a resounding slap in the face to cooperate with the United States in its attempt to carry out cross-strait economic "decoupling, and also exposed the political lie that Taiwan's economic performance was relatively brilliant as a result of getting rid of dependence on the single market (the mainland) advocated by the green camp politicians on the island.

So under the impact of the epidemic and the overall recession of the global economy and trade, why did Taiwan's economy behave like this?

This is first of all closely related to Taiwan's industrial structure characteristics and industrial competitiveness. The COVID-19 pandemic has had a huge impact on the global industrial chain, supply chain, economy and trade, impacting many traditional industries and service industries such as tourism and transportation, but it has also brought huge demand for products such as chips, laptops and home office equipment. These industries or products are the biggest advantages of Taiwan's economy and industry. Taiwan's semiconductor and electronic product advantages have been fully utilized, becoming the most important force supporting Taiwan's foreign trade exports and economic growth.

Source: Visual China

In addition to the above factors, the more important reason or real password for Taiwan's better economic performance lies in the mainland factor. Taiwan's electronics industry has achieved major development by relying on the cross-strait industrial division of labor and the huge market on the mainland, and a large number of Taiwan-funded enterprises have driven Taiwan's industrial and economic development through investment in the mainland and import of related equipment and important parts from Taiwan. Because of this, the mainland has become Taiwan's largest foreign trade export market and the most important overseas electronic product processing and manufacturing base. At the same time, Taiwan-funded enterprises are also the main force of the mainland's exports, and Taiwan-funded enterprises account for 7 of the top 10 foreign trade export enterprises in the mainland in 2020. The strong oem production of Taiwan enterprises' electronics industry is also mainly concentrated on the mainland.

In particular, after the outbreak of the new crown epidemic, the mainland took the lead in controlling the spread of the epidemic by relying on its strong organizational mobilization and governance capabilities, and took the lead in resuming work and production, which helped maintain and even expand the export of Taiwan products to the mainland. In 2020, the total import volume of the mainland from Taiwan exceeded 180 billion US dollars, and imports from Taiwan continued to maintain high growth in 2021, importing 182.47 billion US dollars from Taiwan in the first 9 months, an increase of 28.9% year-on-year, and it is expected that the total import volume from Taiwan will be close to 240 billion US dollars, and Taiwan's trade surplus with the mainland will be 125.42 billion US dollars. Large-scale exports to the mainland have become the most important driving force for Taiwan's economic growth. Without the mainland's huge market and Taiwan's large-scale exports to the mainland and a huge trade surplus, Taiwan's economy will not only be difficult to grow, but it is likely to decline.

Not only that, the better performance of Taiwan's economy lies in the goodwill shown by the mainland to Taiwan's economy and people's livelihood. After the outbreak of the new crown epidemic, the DPP authorities vigorously engaged in "Taiwan independence" separatist activities such as "seeking independence with the epidemic" and "fighting China with the epidemic," and at the same time engaged in so-called "ditch-breaking" plots in the economy. With regard to the DPP authorities' perverse actions, the mainland has expressed its firm opposition and given a serious warning, but has not taken punitive measures against Taiwan economically, has not restricted Taiwan's exports to the mainland, has not cancelled the concerns of all circles, and has not given Taiwan zero-tariff treatment for more than 500 products in the ECFA early harvest plan, and has even continued to introduce a series of policy measures to encourage cross-strait economic and trade exchanges and cooperation.

This has enabled Taiwan to maintain the sustained growth of exports to the mainland and ensure the driving force of Taiwan's economic growth, so the proportion of Taiwan's exports to the mainland (including Hong Kong) has not only not declined since the outbreak of the epidemic, but has not "broken the ditch" as expected by the DPP authorities, but has further increased. Taiwan's economic growth dependence on exports rose to 43.9% in 2020 and remained at a high level of 42.7% in the first nine months of 2021, which is significantly higher than the export dependence on the mainland (including Hong Kong) during the Ma Ying-jeou administration.

As mentioned above, it is necessary to clarify the fact that cross-strait economic exchanges, especially Taiwan's huge exports to the mainland, are the most important reasons for Taiwan's economic growth, and the truth cannot be deliberately distorted like the DPP authorities. Not only that, but it is also necessary to realize that although Taiwan's economy has performed well, there are also many weaknesses and difficulties in the development of its economic and industrial development, and there are many reefs and risks.

First, energy supply is highly dependent on externalization. Not only is the economic development highly dependent on foreign trade, the export dependence is nearly 60%, and 98% of the primary energy is also dependent on imports, while the source of the single energy market is relatively concentrated.

Second, the industrial structure is single and highly centralized, and the problems of imbalance and polarization are becoming more and more prominent. The electronics industry supports half of Taiwan's economy, and the economy mainly relies on the support of a very small number of industries such as electronics, and there are potential risks. In 2020, Taiwan's exports of electronic components and communication products accounted for 53.9% of total exports; in the same year, the output value of semiconductors was 3.22 trillion yuan, accounting for 16.3% of Taiwan's total GDP. The brilliant performance and development of high-tech industries such as electronics have covered up the difficulties faced by many traditional industries and tourism industries under the impact of the epidemic, and the upstarts in high-tech industries have also covered up the plight of ordinary people.

The third is the beautification of core technologies. The United States and Japan control the key technologies of Taiwan's industrial development and, to some extent, control the lifeblood of Taiwan's economy.

The fourth is the normalization of low wages. The problem of low wages has become a major problem in Taiwan's economic development in the past 20 years, economic development, especially the development of high-tech industries, only a few industries wage growth, most industries wages stagnated, 22K (monthly salary of 22,000 NT dollars, about 5,000 yuan) has become a symbol of the low wages of Taiwan university graduates.

Fifth, regional economic integration is marginalized. Due to political and cross-strait relations and other reasons, Taiwan is unable to effectively participate in regional economic integration, and is one of the major Asian economies with the lowest degree of participation in regional economic integration, facing the crisis of marginalization of regional economic integration.

Sixth, faced with the problem of insufficient important production factors such as lack of electricity, water, and labor, economic development has been restricted in the long run. For example, the drought that broke out at the beginning of the year had a major impact on Taiwan's economy and people's livelihood.

Finally, the situation in cross-strait relations is the biggest challenge facing Taiwan's economic development in the future. The DPP authorities' constantly aggressive "Taiwan independence" moves are pushing the two sides of the strait to the brink of danger, and once major changes occur in cross-strait relations, they will bring tremendous risks and even disasters to Taiwan's economic development. (The author is honorary dean of a pro-research institute on both sides of the strait of Minnan Normal University and professor of Yuanshan University)