Looks Back and Looks Ahead of Taiwan
and China’s Economic Linkage
兩岸經貿的回顧與前瞻
國立東華大華 經濟學系
March 25 2013
Wuu-Long LIN (林 武 郎)
wuulong@yahoo.com
1
Education and Experience
• Stanford Univ. Ph.D.
• National Taiwan U., National Sun Yat-sen U.,
Beijing U., Harvard U., Rice U., Kansas State U,
U. of the West (present Adjunct Professor).
• Former Chief of Enterprise Management
Research, United Nations (24-year). Visiting
Mainland China about 20 times and about 40
countries to promote economic development.
• Publication of 27articles/reports on ChinaTaiwan economies with about 1800 pages.
2
Seven Themes
1/7 Some unique features of Taiwan economy.
2/7 Some unique features of Mainland China economy.
3/7 Past economic relation: Can history teach us a
lesson?
4/7 Present economic cooperation: Are we betteroff now?
5/7 Future economic integration: Will next
generation be affected?
6/7 Political economy/Uncertainty.
7/7 Recommendations
3
1/7 Some Unique Features of
Taiwan Economy (1)
• During 1970s-1980s, the fastest growth in the
world, average of real GDP annual growth 9.24
%. GDP per capita increased from US $ 231 in
1952 to $ 20,920 in 2012 (estimate).
• The best development performance in the
world: high growth, stable price, low
unemployment rate, fairness of income equality.
But it is deteriorating now, caught in the so
called “high-income trap” (high-tech side effect
and big corporation evil. Paul Krugman).
4
Some Unique Features of
Taiwan Economy (2)
*GDP per capita in PPP (Purchasing Power
Parity with 1.93) in 2011 was $39,976, being
ranked as 28 th in the world (surpassed
United Kingdom, France, Japan since 2010).
* The best successful model of the recipient of the
United States foreign aid with $ 1.5 billion in
economic aid during 1951-1965, being accounted
for 40 % of domestic investment and imports, and
6% of GDP. (additional Military aid $ 2.5 billion).
5
Some Unique Features of
Taiwan Economy (3)
• By learning from the U.S. experience, Taiwan
was the first one to create/innovate two external
development models which have been adopted
by many countries: Export Process Zone in
NanZi/KaoHsiung and Industrial Park in
HsinChu.
• Very successful development in IT industries. The
following products (including offshore production)
accounted for more than 80 % of world’s share: Mask
ROM, Notebook, Cable CPE, Tablet Personal
Computers, Motherboards.
6
Some Unique Features of
Taiwan Economy (4)
• Cross road for further development:
1. Risk of hollowing out industries due
to too heavy dependence on China
economy.
2. Difficulties of globalization (sustainable
& comprehensive).
3. Slow innovation for further
development.
7
2/7 Some unique features of
Mainland China economy (1)
*Very high growth rates (9-10 % yearly) for 3 decades
since open door policy 1978/9, breaking the world’s
historical record on GDP growth. It also means growing
marketing potentials, predicting to consume 2/3 of
world’s luxury products such as watch, perfume by 2015.
* Note: Provincial GDP reports have been questioned
overestimate. The so-called Premier LI Kequiang’s GDP
computation is based on 3 indicators of electricity,
railroad transportation and bank loans. Its GDP estimate
was 3.4 percentage points lower than government report
of GDP 7.4 % in the 3rd quarter of 2012. (Wall Street
Journal).
8
Some unique features of
Mainland China economy (2)
• FDI inflow to China with $59 billion in the 1st half of 2012
surpassed U.S. as top FDI destination.
• China official estimate of total export and import in 2012
($ 3.86 trillion) was second to U.S.($ 3.88 trillion).
• Total GDP is No.1 in Asia, and No.2 in the world. Will
surpass U.S. as No. 1 in 2016 (by OECD), and by 2030
(by U.S. National Intelligence Council). Surpassed
European Union in 2012.
• GDP per capita ranks 122th lowest in the world in 2011
( US $8,400 in PPP 1.57, being only 17.4 % of the
United States). To be No 1 during 2050-2103, predicted
by Stanford Prof. Morris. (Say No by Harvard Prof. Nye).
9
Some unique features of
Mainland China economy (3)
• Income per capita in PPP will reach $ 15,000 by 2018
(Expecting to become democracy based on international
experience).
• World No. 1: China reserves of foreign exchange (98.2%) and
gold (1.8 %): $ 3,213 billion in 2011 (8.2 times of Taiwan with $ 391
billion, world no. 6.) (See cia.gov FactBook).
• Note: It is irony that U.S. borrowed money from China,
$1.2 trillion (owning 26 % of U.S. foreign debt), but U.S.
is building up military in Asia, a kind of containing China.
China earns trade surplus from U.S., but buys fighter
aircrafts from Russia.
• But China’s gold reserve is only 13 % of U.S. in 2010.
10
Some unique features of
Mainland China economy (4)
• The U.S. assets in China are more than China’s
assets in the U.S. The net debit of China to
the U.S. was estimated with at least $750 billion
in 2011. The assets include: bonds, stocks,
foreign direct investment (FDI), air planes
leasing, banking, etc.
• Dividend earnings by China government for
owning U.S. bonds are lower than commercial
earnings by U.S. private investment in China.
Who is smarter?
11
Some unique features of
Mainland China economy (5)
* The 18th National Congress of the
Communist Party of China in Nov. 2012 set
a goal of doubling total GDP from
RenMinBi(RMB) 40 trillion in 2010 to RMB
80 trillion in 2020, implying an annual growth
rate of 7.2 %. It is reachable based on
experience of Japan in 1970s, and Taiwan
and South Korea in 1980s. Strategy:
Evolution not Revolution.
12
Some unique features of
Mainland China economy (6)
• The 2020 goal is to succeed (phrase used in
the past “construct”) as a well-to-do/comfortable
society. 建成(過去用詞”䢖設”)小康社会(這個詞是
鄧小平提出來的).
• Disposal income per capita will reach US $
6,000 in 2020 (based on current exchange rate
and inflation adjustment), being a middle
income class in the world.
• Can low-and-middle income class double their
income share ? Not easily/likely.
13
Some unique features of
Mainland China economy (7)
• (1) China’s household Gini index increased rapidly from
0.41 in 2000 to 0.61 in 2010 (0.4 as a warning sign in
international standard) , being one of the highest
income inequality in the world. Beijing GDP per capita
with more than $10,000 reached the same level of some
developed countries. However about 183 million (13 %
of China total population) are under one dollar a day.
• (2) The highest 10% household income group owns 57%
of income (40.6% in the U.S.).
• (3) The 400 richest persons own 10.45% of GDP in 2010
(10% in the U.S. in 2011)
14
Some unique features of
Mainland China economy (8)
• (4) Caught in so called “low & middle income trap” (low
labor productivity/wage, increasing social welfare).
• (5) 3-in-1 approach. (a) Government: Reduce increase
in public spending/tax. Transparency. (b) Enterprises:
Privatization. Divert subsidy fund from public enterprises
(PEs) to small and medium enterprises (SMEs), thus
benefiting the working class. Increase PEs payment to
Government from present 5-10 % to 25-30 %, revenue
increase RMB 340-450 billion. Increase 1 % interest rate
in saving deposit will increase people earning RMB 400
billion. (c) People: reduce tax on SMEs and low &
medium income group. Social welfare. Government
support on SMEs operation and marketing efficiency. 15
Some unique features of
Mainland China economy (9)
• (6) Bottom-up is important in reducing income
inequality. While rich people spend limited amount of
money on consumption, poor people have few money
to spend. Good strategy : high growth for low income
group, middle growth for middle income group, low
growth for high income group.
• China should play a larger role/duty in
globalization (sustainable & comprehensive).
Among others, (a) RMB exchange rate be
changed from present government
management to free market floating.
16
Some unique features of
Mainland China economy (10)
• Note: The U.S. did not put China as government
manipulation on exchange rate (Nov. 2012), but
emphasizing the need for further appreciation. 6.2223比
1.0 的歷史最高點 in 11/2011. 根據美方估算，從2010年6
月到2012年11月，人民幣兌美元名義匯率升值9.3%；考
慮通脹因素，實際升值12.6 %.
• Note: As a low-middle income per capita,
precautions must be made on currency
appreciation to avert severe side effects such as
price inflation, hurting export.
17
Some unique features of
Mainland China economy (11)
• (b) Play WTO rules. No government subsidy
to PEs so as to have a fair competition in doing
international business.
• In many cases, China’s tricky/tactical way of
indirect/implicit government subsidy to PEs is
to get loans from public owned banks with low
interest and become bad loans later. (Not
against WTO rules ?).
• Enterprises loans as a ratio of GDP was 107% in
2011(90% as a danger point based on OECD).
18
3/7. Past Economic Relation
• No contact: 1950s, 1960s, early 1970s under
the martial law. Exception: Chinese herb,
smuggle.
• Martial law repealed on 7/15/1987(by then President
Chiang Ching-kuo). Taiwan official term Economic
Relation was used after repealing the “period of
mobilization for the suppression of communist rebellion”
on 5/1/1991(by then President LEE Teng-hui).
• Taiwan policy coincided with China Open Door policy in
1978/9 (attracting foreign investment, particular Hong
Kong and Taiwan business in 1980s & early 1990s).
19
Semi-official Trade
(1) Taiwan official term “indirect” trade, mainly
through Hong Kong. (Causing unlawfully to
bypass Hong Kong, cheated shipping route
diary).
(2) “unilateral” economic transaction, not
“bilateral” agreement duly signed by both
governments.(Causing unclear statistics).
(3) Taiwan export to Mainland China was OK,
import to Taiwan was mostly restricted,
thus increasing trade surplus.
20
Major Development of Cross-Strait
Economic Relation (1)
• Taiwan trade surplus from Mainland China as a ratio of
Taiwan total trade surplus was nil in 1970s, a peak 281%
in 2008, 177% in 2011 (a much higher ratio if including
Hong Kong, 294 % in 2011). That is, Taiwan was trade
deficit if without trade with Mainland China.
• Taiwan exports to Mainland China and Hog Kong as a
ratio of Taiwan total export increased from 3.8% in
1980-1993 average to about 40 % in last 10 years; being
more than 10 times increase between two periods.
• Mainland China exports to Taiwan as a ratio of
Mainland China total export, increased from 1.1 % in
1980-1993 average to 2.3% in 2010; being 2.1 times
21
increase.
Major Development of Cross-Strait
Economic Relation (2)
• Taiwan’s FDI as a ratio of Mainland China’s actual FDI
utilization increased from nil in 1970s to peak 11.3 % in
1993, only second to Hong Kong, 62.8 %. A total of both
areas was 74.1 %, being a great contribution to
China’s economic growth in that period.
• High dependence on Mainland China.台商登陸投資金
額占對外投資金額 increased from nil in 1970s to 10% in
1991 and 384% in 2010 (ECFA signed in 2010).
• The so-called “sun set” industries in Taiwan revived in
Mainland China. My earlier study challenged fear of
hollowing out of industry in Taiwan. End result was
upgrading in industry and technology in that time.
22
No Haste, Be Patient 戒急用忍 (1)
Sept. 14 1996 by then President LEE Teng-hui
Taiwan’s policy restrictions imposed on
Mainland China. (We agree in principle, but
disagree in practice).
1. Ceiling of FDI US $50 million per project.
2. Limitation of high-tech FDI.
3. Limitation of long-term FDI in
infrastructure such as power plants,
railroads, airports.
23
No Haste, Be Patient 戒急用忍 (2)
• Its objective is to prevent hollow-out of
Taiwan’s capital and high-tech to China.
• This policy has been modified/relaxed
periodically since its implementation
in1996 in accordance with mutual respect
and without hostility.
• Note: U.S. and many countries have
imposed restrictions on foreign trade &
investment for national security, particular
to unfriendly countries, including China.
24
4/7 Present Cross-straits Economic Cooperation
Framework Agreement (ECFA, Not Arrangement as
preferred by China ) 海峽兩岸經濟合作架構協議
Effective 9/12/2010.
1. “Similar” to Free Trade Agreement (FTA) on export
tariffs privilege. Not the same as equilateral basis of
WTO principle (China officials have recently
complained its unfairness to China)
2. Under a WTO special article, Taiwan joined it as an
economic region (not as country). It should be agreed
by China, explicitly recognizing one China policy.
will not have an
international arbitration by World Bank, WTO
3. 簽署投保協議 Aug. 9 2012
25
ECFA vs. FTA
• ECFA includes both trade and investment;
FTA includes mainly trade.
• 在執行策略上，ECFA為架構性的協議，僅先制
定架構與目標，分段執行完成，可提供國內凝聚
共識和調整政策之彈性; expecting to
encounter more difficulties in the course of
implementation. 而FTA則是立即與全面性的
開放，一次到位; enjoying sweeter with
more implementation。
26
Cross-Strait Economic Cooperation
Committee (ECC)兩岸經合會
• 成立兩岸經合會(1/5/2011). Not Government to
Government 仍在兩岸兩會架構下運作.
Taiwan : Straits Exchange Foundation.海基會.
Mainland China : Association for Relations
Across the Taiwan Straits.海協會.
• 運作規則不明確, 經合會面臨挑戰. 大陸學者：經
合會不能照搬國際慣例.
. 大陸方面有意利用經合會, 協調具兩岸特色的糾紛
仲裁機制，而不願引進國際仲裁 (World Bank,
WTO)。
27
Advantages of ECFA (1)
• Strengthening Taiwan’s competitiveness & avoid
Taiwan’s further marginalization when Association of
SouthEast Asian Nations (ASEAN) 10 plus 3 signed an
FTA with China in 2010. Taiwan with about 40% of
exports to Mainland China & Hong Kong will pay 5-10 %
tariffs above ASEAN without ECFA.
• Prospect of FTA with other countries such as Singapore (3.6% of
Taiwan foreign trade, expecting completion of negotiation by June
2013 ), 澳洲、紐西蘭 (0.2%)、日本、東南亞, 歐盟. (Not good
outcome by now)
• Expecting to start negotiation by March 2013台美復談舉行貿易暨投
資架構協定 (Trade and Investment Framework Agreement, TIFA). A
long way to go based on U.S. and S. Korea 6-year negotiation
starting 2007, further delay by US Congress approval and
international politics. Effective 3/15/2012.
28
Advantages of ECFA (2)
• Before ECFA, Jan-May 2009, Taiwan economic
bottleneck, GDP growth -10.78 % , exports growth
-34.84%, 50-year worst in Taiwan.
Immediate After ECFA, in 2010, higher GDP
growth,10.7%,24-year high (-1.8 % in 2009). Lower
unemployment rate 5.2 % (5.9% in 2009).
(But, in 2012, GDP growth 1.25 % (estimate), implying
ECFA not a panacea).
• 降稅利益 : US $122.6 million in 2011, estimating $ 330
million in 2012. No tariffs started Jan. 2013.
29
Advantages of ECFA (3)
• Benefit to Taiwan: textiles, plastics, steel,
petrochemicals, petroleum, machinery etc.
• Expanding Taiwan economies of scale for
further development. With 23.2 mil. population
(rank 49th in the world), domestic demand is not
sufficient for higher growth, thus the need for
external market.
China with 1.343 billion population ( 4.3 times
of U.S., 314.16 million in Aug. 2011) is the great
attraction for consumer market.
30
Advantages of ECFA (4)
• Facilitating Taiwan businessmen in China to
return-back Taiwan on investment, reached NT$
51.8 billion in 2012, more than the target NT$
50.0 billion. 2013 target NT$ 100.0 billion.
• Note 1. Many Taiwan businessmen in China have
encountered difficulties in running business due to rapid
increase in wage and tax (even higher than Taiwan for
some sectors), unexpected changes of government
policies, high competition by local businesses, thus
facing bankruptcy. Thus, they have diverted investment
to Vietnam, Cambodia (labor intensive enterprises), and
to Taiwan (capital intensive enterprises).
31
Advantages of ECFA (5)
• Note 2: Many inland provinces are successfully attracting
their migrant workers in coastal areas to return back
home. This factor and booming business in Guangdong
province, for instance, will cause labor shortage more
than previous years’ 0.4 million after 2013 Spring
Festival. Thus, companies will have to increase workers
wage, and government will have to consider further
raising the minimum wage.
• Note 3: More than 40 thousands Taiwan businessmen in
China closed business and were jobless. Many dared
not to return back Taiwan partly due to their bad debt in
Taiwan.
32
Advantages of ECFA (6)
• FDI from China to Taiwan was US$ 0.328 billion
in 2012, more than the target US$ 0.2 billion, 6.5
times increase from 2011. But being a very
amount in a comparison with FDI from Taiwan to
China (see PPT 37).
• Expecting More FDI (from other countries) in
Taiwan with better protection on intellectual
property. Production in Taiwan, marketing in
Mainland. FDI in Taiwan was US$ 10 bil. in
2012 (But not so promising by now).
33
Advantages of ECFA (7)
• 台灣企銀與北京銀行合作, 北京銀行承諾給予台商放款額
度總計50億元人民幣. 同時台灣還有中小企業信保基金、
國發基金100億元投資,協助企業取得所需之營運資金.
(Mainland China business men complained
their government policies in favor of Taiwan
business men).
• Service sector in GDP is 68% in Taiwan and 43
% in China. Taiwan has more competitive
advantages in service sector (not really in every
industry sector) than China, particularly in
banking and finance. Taiwan can explore
34
banking opportunities in China.
Against on ECFA (1)
• Opposition parties, 民主進步黨(Democratic
Progressive Party, DDP) against it for its fear
of trap on Taiwan’s merge into one China.
Sacrificing political autonomy.
• Former President LEE Teng-hui criticized
ECFA in that it will fall into China’s plot of
hijacking Taiwan economically to force
political unification. No direct talk with
China until it has democratized.
35
Reasons Against ECFA (2)
• Ultimate goal of Mainland China’s united front (統戰) is
unification without consideration of price. Against One
China under “九二共識”(1992 Consensus, a
terminology created Dr. SU Chi in 2000, a kind of
strengthening mutual confidence). Simply based on oneway correspondence and its reply. No legal biding; Not a
memorandum nor a treaty.
• Increasing Hollowing-out risks of Taiwan industry,
particularly capital & high-tech (core-periphery theory).
(1) During 2011 & 2012, high unemployment 4.3%, low
domestic investment/GNP 19.9%, low GDP growth
2.6%. (2) Compared with 1.8%, 22.5%, 8.7% during
1971-1992).
36
Reasons Against ECFA (3)
• Too heavy economic dependence on China.
Good or bad ?
• (1) 國台辦資料，2010 年1～10月份(the 1st year ECFA),
台商投資中國大陸已經超過8萬多個項目，投資中國的金
額已經達到551億美元。More than 10 times of 1996,
peak year in 1990s during Economic Relation
period.
• (2) Taiwan’s approved FDI in China as a ratio of
FDI in other countries was 134 % in Jan.-Oct.
2011.
37
Reasons Against ECFA (4)
• (3) Taiwan’s foreign trade balance as a ratio of
from other countries was 177 % in 2011.
• (4) About 75 % of Taiwan economic growth is
presently from China. (China strategy to Taiwan:
Economically buying Taiwan is easier than
military defeating Taiwan).
• Investment/GNP ratio: less than 20 % during 20022009 in Taiwan (diverting to Mainland China); (lower
than 25 %- 30 % in South Korea). Decreasing annual
average : 28.0% (1990s), 21.5% (2000-07), 20.2%
(2008-11), 17.1% in 2009 ( historical lowest).
38
Reasons Against ECFA (5)
• Although Taiwan’s international competitiveness
increased from no.18 in 2007 to no. 6 in 2011,
its annual decrease of FDI inflow was 51%, 33%
and 29% during 2008-10. With ECFA effective
since 2011, it increased only 8%.
• Taiwan’s share of global FDI decreased annually from
0.37% in 2007 to 0.31%, 0.25% and 0.20% in 2010,
being the lowest of 4-Asian Tigers, and less than one
half of Vietnam.
FDI in Taiwan was US $10.0 billion in 2012 (realized US
$9.721 by November end). 2013 target US $ 10.5 billion.
39
Reasons Against ECFA (6)
• Annual net average of Taiwan’s global capital
flow (FDI & stocks) was negative: US $-13.2 bil.
during 2000-2007 and $-20.1 bil. during 20082010. 2011 was the worst in recent years, -46.5
bil. in the 1st 3-quarters.
• Disadvantages to small and medium
enterprises, unemployment in some sectors.
Difficulty in job relocation, especially senior
workers and farmers in remote areas.
40
Reasons Against ECFA (7)
* Competing our venders for living. 陸資來台開
「永和大王」 賣牛肉麵. NT $ 5 million. (news
report).
• Negative impacts on some sectors: electronics,
agriculture, timber, transport equipment, etc.
• Small vs. Big. Small and medium enterprises in
Taiwan are about 98 % of total. Big state
owned enterprises in Mainland China are more
than 50 % of total, politically influenced by
Chinese Communist Party. Permit only big
41
enterprises for overseas business.
5/7 Future Economic Integration
• Political economy ?
• Will history be repeated ?
• Will our next generation be
affected?
Think over by yourself for the
answer.
42
The Cross-Strait Common Market
Foundation (兩岸共同市場基金會). (1)
• Established by Vincent C. Siew in 2000 (before
his position as Vice President).
• Inspiration from early European Union (50-year
formation), focusing on commodity trade, tariff
reduction, common market, single currency
Euro, reduction/elimination of importance of
state boundaries. Step by step approach.
• Eventual goals: “Win-Win”, “Sharing of
sovereignty”, “Economic and political
integration”, “A Greater China” (not the same as
China’s official statement on one China).
43
The Cross-Strait Common Market
Foundation (兩岸共同市場基金會). (2)
• 1st stage: Promote normalization of
economic and trade relations. Cooperation
mechanisms. (similar to present ECFA).
• 2nd stage: Develop a system of economic
conditions for both sides to follow.
Economic integration.
• 3rd stage: Develop comprehensive
economic tasks. Common currency.
Political integration. Each country
sovereignty.
44
6/7 Political Economy/Uncertainty
• Sleeping in the Same Bed but hiding with
Different Dreams 同床異夢:
• China’s strategy: Politics first consideration
and economy second consideration. Any
economic arrangement is to pave the way for
unification; can not wait indefinitely.
• Taiwan’s strategy: Economy first consideration
and politics second consideration. Unification
must consider Taiwan’s stability; majority of
people not ready yet for unification.
45
Will China Honor ECFA Forever?
• Present negotiation was a kind of Chinese Nationalist
Party (Kuomintang) vs. Chinese Communist Party.
How long will be honey moon?
• Do not rule out comeback of Democratic Progressive
Party to be Taiwan president in future. If so, what might
happen on ECFA?
• China boycotted World Games opening session in
Kaohsiung, Taiwan on 7/16 2009 was a first warning
sign. 媒體披露,因中共施壓, 美國密蘇里州長暫緩台灣行.
Dec. 2010.
• An authoritarian regime. 集體領導. 中央政治委員, 25
members (7 中央政治局常務委員). Good or Bad?
46
國共和談, Optimism ?
• Two historical failures of 國共和談 during
1922-1949: 1924-1927 and 1936-1948.
中國國民黨 tried to cope with dogged 中国
共产党 which ultimately seized control of
China in 1949. The United States served
as a mediator.
• Now, Mainland China with an increasing
influence on world affairs will not give in
sovereignty.
47
Overseas China Experts Failed to
Predict Major China’s Incidents
• 1. Cultural revolution, 1966-1976.
• 2. DENG Xiaoping’s 3-purge and 3-back.
• 3. Tiananmen Square’s massacre on students’
democracy movement, June 4 1989.
• 4. Missile attack on Kaohsiung harbor’s off
shore, during then President LEE Teng-hui
campaign for presidential re-election,1996.
• What will be next trigger? When is the next ?
• Why Mainland China added 100/yearly short- and
medium-range missiles against Taiwan in recent few
years? About total 1400 by 2011. Why not shift to face
釣魚島?
48
Challenge Tasks/Questions ?
Short run vs. Long run (2)
• Which is better-off ? Better economy vs.
sovereignty.
• Per capita income in Taiwan as a ratio of Japan:
reached about 2/3 before World War II, about
1/3 in 1980s, (and 1.05 in 2010, 1.10 in 2012,
PPP 1.93 in Taiwan and 0.77 in Japan). Taiwan
people have had their own sovereignty now.
• What might be the outcome if Taiwan is
unified with Mainland China? Hong Kong
experience (better economy but less
sovereignty) ?
50
7/7 Recommendations (1)
Government of Taiwan has taken several
remedy measures. I would add-in and
emphasize some particular plans.
(1)Buy out disadvantage groups such as
senior/remote areas of farmers &
workers on some small and medium
businesses, though such measures as
pension, tax incentive.
51
Recommendations (2)
(2) Implement monitoring information system
with data bank, a check list and warning signals
on preventing hollow-out of Taiwan’s capital
and high-tech to safe guard Taiwan economy’s
security.
(3) Formulate alternative contingency plans in
the case of Mainland China’s economic
recession, its hostile to Taiwan economy. Noting
that most overseas enterprises as approved by
China government are communist party’ public
enterprises (political oriented if needed).
52
Recommendations (3)
(4) Promote merge and cooperation among
small and medium enterprises to increase
economy of scale both in production & marketing
such as holding company and strategic alliance,
thus increasing international competitiveness
(5) Build a harmony society. Majority should not
dictate minority, and minority should present
constructive counter proposals. Implementation
of ECFA is a good test of Taiwan democracy. 加
強合作，而不是漢賊不兩立。
53
References
1.
2.
3.
Wuu-Long LIN (林 武 郎), “Cross-Strait Economic Relations and its
Development of Economic Cooperation Framework,” Taiwan
Economic Forum (Council for Economic Planning and
Development, Executive Yuan, Rep. of China, Taiwan) Vol.7
No.11, Nov. 2009, pp. 40-61.
Wuu-Long LIN (林 武 郎), “Pros, cons of a cross-strait ECFA,”
Taipei Times (Taiwan), Dec. 27, 2009. 6 pages.
Reporter Interview 林武郎博士：全球經濟危機中的轉機. 台灣網站.
http://www.youtube.com/watch?v=tnf-N0btIS8&feature=related
http://www.chinesedailyusa.com/person/Interview-c10076.aspx
4. Wuu-Long Lin (林 武 郎), “A Query on the Existence of Hollowing
Out of Taiwan Industries,” (translated title from Chinese), Industry
of Free China, Vol. 80, No.1 (Taipei, Taiwan, Oct. 1993), Pp 1-4.
54
Thank You
55
The United States Position
• Welcome present rapprochement
between Taiwan and Mainland China.
• A potential Trade and Investment
Framework Agreement (TIFA) between
US and Taiwan has no direct link with the
Taiwan-Mainland China ECFA.
• While TIFA between US and Taiwan is not
off table now, it is very difficult to achieve
at present, at least several years.
56
Impacts on Overseas Chinese & Foreigners
Doing Business in Mainland China
• Taiwan has tariff and other advantages
than overseas Chinese & foreigners to do
competitive business in Mainland China.
• Taiwan will attract more FDI. Wage is
cheaper in Mainland China, but labor
quality & protection of intellectual
property rights are better in Taiwan.
“Similar” case to (but different reasons)
more FDI in Mexico after 1994 North
American FTA of US, Canada & Mexico.
57