1 Looks Back and Looks Ahead of Taiwan and Chinas Economic
Linkage March 25 2013 Wuu-Long LIN ( ) [email protected]
Slide 2
2 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
China- Taiwan economies with about 1800 pages.
Slide 3
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 better- off now? 5/7 Future economic
integration: Will next generation be affected? 6/7 Political
economy/Uncertainty. 7/7 Recommendations 3
Slide 4
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
Slide 5
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
Slide 6
Some Unique Features of Taiwan Economy (3) Export Process
ZoneBy 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 worlds share: Mask ROM, Notebook,
Cable CPE, Tablet Personal Computers, Motherboards. 6
Slide 7
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
Slide 8
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 worlds historical record on GDP growth.
It also means growing marketing potentials, predicting to consume
2/3 of worlds luxury products such as watch, perfume by 2015. *
Note: Provincial GDP reports have been questioned overestimate. The
so-called Premier LI Kequiangs 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 3 rd quarter of 2012. (Wall Street
Journal). 8
Slide 9
Some unique features of Mainland China economy (2) FDI inflow
to China with $59 billion in the 1 st half of 2012 surpassed U.S.
as top FDI destination. China official estimate of total export and
import in 2012 ($ 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 122 th 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
Slide 10
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 Chinas gold reserve is only 13 % of U.S.
in 2010. 10
Slide 11
Some unique features of Mainland China economy (4) The U.S.
assets in China are more than Chinas 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
Slide 12
Some unique features of Mainland China economy (5) * The 18 th
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
Slide 13
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. ( ) ( ). 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
Slide 14
Some unique features of Mainland China economy (7) (1) Chinas
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
Slide 15
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
Slide 16
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
Slide 17
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 1.0 in 11/2011. 2010 6 2012 11 9.3% 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
Slide 18
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, Chinas
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
Slide 19
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
Slide 20
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
Slide 21
21 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 increase.
Slide 22
22 Major Development of Cross-Strait Economic Relation (2)
Taiwans FDI as a ratio of Mainland Chinas 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 Chinas economic growth in that period. High
dependence on Mainland China. 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.
Slide 23
23 No Haste, Be Patient (1) Sept. 14 1996 by then President LEE
Teng-hui Taiwans 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.
Slide 24
24 No Haste, Be Patient (2) Its objective is to prevent
hollow-out of Taiwans 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.
Slide 25
25 4/7 Present Cross-straits Economic Cooperation Framework
Agreement (ECFA, Not Arrangement as preferred by China ) 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. 3. Aug. 9 2012 will not
have an i nternational arbitration by World Bank, WTO
Slide 26
ECFA vs. FTA ECFA includes both trade and investment; FTA
includes mainly trade. ECFA ; expecting to encounter more
difficulties in the course of implementation. FTA ; enjoying
sweeter with more implementation 26
Slide 27
Cross-Strait Economic Cooperation Committee (ECC) (1/5/2011).
Not Government to Government . Taiwan : Straits Exchange
Foundation. . Mainland China : Association for Relations Across the
Taiwan Straits. . , . .. , (World Bank, WTO) 27
Slide 28
28 Advantages of ECFA (1) Strengthening Taiwans competitiveness
& avoid Taiwans 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 ), (0.2%) , . (Not good outcome by now) Expecting to start
negotiation by March 2013 (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.
Slide 29
29 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). : US $122.6 million in 2011,
estimating $ 330 million in 2012. No tariffs started Jan.
2013.
Slide 30
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 49 th 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
Slide 31
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
Slide 32
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
Slide 33
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
Slide 34
Advantages of ECFA (7) , 50 . 100 , . (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 banking opportunities in
China. 34
Slide 35
35 Against on ECFA (1) Opposition parties, (Democratic
Progressive Party, DDP) against it for its fear of trap on Taiwans
merge into one China. Sacrificing political autonomy. Former
President LEE Teng-hui criticized ECFA in that it will fall into
Chinas plot of hijacking Taiwan economically to force political
unification. No direct talk with China until it has
democratized.
Slide 36
36 Reasons Against ECFA (2) Ultimate goal of Mainland Chinas
united front ( ) is unification without consideration of price.
Against One China under (1992 Consensus, a terminology created Dr.
SU Chi in 2000, a kind of strengthening mutual confidence). Simply
based on one-way 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).
Slide 37
Reasons Against ECFA (3) Too heavy economic dependence on
China. Good or bad ? (1) 2010 1 10 (the 1 st year ECFA), 8 551 More
than 10 times of 1996, peak year in 1990s during Economic Relation
period. (2) Taiwans approved FDI in China as a ratio of FDI in
other countries was 134 % in Jan.-Oct. 2011. 37
Slide 38
Reasons Against ECFA (4) ( 3) Taiwans 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
2002- 2009 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
Slide 39
Reasons Against ECFA (5) Although Taiwans 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%. Taiwans 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
Slide 40
40 Reasons Against ECFA (6) Annual net average of Taiwans
global capital flow (FDI & stocks) was negative: US $-13.2 bil.
during 2000-2007 and $-20.1 bil. during 2008- 2010. 2011 was the
worst in recent years, -46.5 bil. in the 1 st 3-quarters.
Disadvantages to small and medium enterprises, unemployment in some
sectors. Difficulty in job relocation, especially senior workers
and farmers in remote areas.
Slide 41
Reasons Against ECFA (7) * Competing our venders for living. .
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 enterprises for overseas business. 41
Slide 42
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
Slide 43
43 The Cross-Strait Common Market Foundation ( ). (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 Chinas official
statement on one China).
Slide 44
44 The Cross-Strait Common Market Foundation ( ). (2) 1 st
stage: Promote normalization of economic and trade relations.
Cooperation mechanisms. (similar to present ECFA). 2 nd stage:
Develop a system of economic conditions for both sides to follow.
Economic integration. 3 rd stage: Develop comprehensive economic
tasks. Common currency. Political integration. Each country
sovereignty.
Slide 45
45 6/7 Political Economy/Uncertainty Sleeping in the Same Bed
but hiding with Different Dreams : Chinas strategy: Politics first
consideration and economy second consideration. Any economic
arrangement is to pave the way for unification; can not wait
indefinitely. Taiwans strategy: Economy first consideration and
politics second consideration. Unification must consider Taiwans
stability; majority of people not ready yet for unification.
Slide 46
46 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. , , . Dec. 2010. An authoritarian regime. . , 25
members (7 ). Good or Bad?
Slide 47
, Optimism ? Two historical failures of during 1922-1949:
1924-1927 and 1936-1948. tried to cope with dogged 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
Slide 48
48 Overseas China Experts Failed to Predict Major Chinas
Incidents 1. Cultural revolution, 1966-1976. 2. DENG Xiaopings
3-purge and 3-back. 3. Tiananmen Squares massacre on students
democracy movement, June 4 1989. 4. Missile attack on Kaohsiung
harbors 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 ?
Slide 49
49 Challenge Tasks/Questions ? Short run vs. Long run (1)
Taiwan economy. In long run, Taiwan economy will heavily depend on
China. Good or bad? In short run, many people will face difficulty
in job relocation. Taiwan sovereignty. In long run, Taiwan will
lose its sovereignty. How soon? To what extent? In short run, it
will cause internal political and social instability.
Slide 50
50 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) ?
Slide 51
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
Slide 52
Recommendations (2) ( 2) Implement monitoring information
system with data bank, a check list and warning signals on
preventing hollow-out of Taiwans capital and high-tech to safe
guard Taiwan economys security. (3) Formulate alternative
contingency plans in the case of Mainland Chinas 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
Slide 53
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. 53
Slide 54
References 1.Wuu-Long LIN ( ), 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. 2.Wuu-Long LIN ( ), Pros, cons of a cross-strait ECFA,
Taipei Times (Taiwan), Dec. 27, 2009. 6 pages. 3.Reporter Interview
. . http://www.youtube.com/watch?v=tnf-N0btIS8&feature=related
http://www.chinesedailyusa.com/person/Interview-c10076.aspx
http://www.chinesedailyusa.com/person/Interview-c10076.aspx
4.Wuu-Long Lin ( ), 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
Slide 55
55 Thank You
Slide 56
56 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.
Slide 57
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