Taiwan Communiqué No. 102, September 2002

To link or not to link?

During the past months, the debate in Taiwan on direct trade and travel links with China has continued unabatedly. Business firms are often in favor, since they can make use of cheap labor in China, while political leaders in the DPP government and the pro-Taiwan media are concerned that it will increase China's stranglehold on the democratic island. Below we present two commentaries.

Say "no" to direct links with China

By The Liberty Times. This editorial first appeared in the Taipei Times on 17 July 2002. Reprinted with permission.

The direct links "One China" parrot

This past May Chinese Vice Premier Qian Qichen indicated to visitors from Taiwan that so long as the three cross-strait direct links are viewed as the domestic affair of one country, negotiations may proceed between authorized non-governmental organizations.

Qian also emphasized that direct links are an economic issue, and should not be influenced by political factors. Qian's painstaking emphasis on the point that direct links are an economic issue was of course especially made for the ears of visitors from Taipei who desperately pine for direct links.

He understood that these visitors have consistently called for the opening up of direct links in Taiwan on the grounds that "economic [issues] should be treated as such," believing that the current ban on direct links is political in nature and the cause of the current economic downturn in Taiwan.

Qian, of course, seized the opportunity to echo that stance, so that these Taiwanese businessmen would have be able to talk about it with a stronger voice, and pressure Taiwan's government after they get home.

For now, let us not talk about the threat to our country's sovereignty and international status that treating directs links as a domestic issue would bring. Instead, let us analyze the pros and cons of direct links from a purely economic perspective.

In the economic domain, people, unfortunately, will often accept certain opinions as the supreme truth without thinking critically about it. Millions and millions of innocent people have suffered as a result.

Communism is a most glaring example. Marxism stormed the world in 19th and 20th century. Sixty years ago in China, anyone who opposed Marxism was deemed an enemy of the people. However, the experience of Russia, Eastern Europe and China, shows that Marxism is a mistake because it overlooks the selfish and greedy nature of human beings. It eventually brought pain and suffering and massive loss of life.

In the past decade or so, some seemingly correct yet off-the-point economic ideas have surfaced in Taiwan. Among them are "economic [issues] should be treated as such," and "save Taiwan with cross-strait direct links."

The relationships between the economy, politics and human nature are an everlasting truth across times and cultures. Yet, there are still those who insist that politics and economy should be treated as independent subjects. They elaborate extensively on the theory and extend its application indefinitely.

If this theory is right, then the US' embargo against Cuba, and the termination of air links between Israel and Arab states would all be short-sighted government policies.

In recent years, these people have also called for the opening up of cross-strait direct links. They use theories on the mutual benefits of trade and different economic models to make the point that direct links would be beneficial to Taiwan. They seem to have either forgotten the fact that the other side is much bigger than us in terms of political and economic resources.

They ignore the other side's obvious attempt to engulf Taiwan, and the lack of national identity in Taiwan. The various models of economic predictions they use do not take into consideration these factors.

Therefore, if conclusions are made purely on the basis of economic models, then the fatal mistake made by Karl Marx will be repeated. Irreparable damage to Taiwan's economy will result, causing harm to everyone in Taiwan. Will direct links be good for Taiwan's tourism? Our countrymen must understand that China is not yet a free country. The number of tourists from China that can come to Taiwan will be determined strictly by Beijing.

In the year and a half since the opening of "small direct links," several thousand people have traveled from Kinmen to China. However, the number of tourists traveling from China to Kinmen is zero. This proves that whether tourists will come and how many of them will come are uniformly determined by Beijing's policies. Once direct links open, tourists from China may come, because it is compatible with Beijing's policy of engulfing Taiwan.

But, even if the number of tourists from China to Taiwan reached 500,000, the number of Taiwanese traveling to China will probably be between 1.5 million to 2 million. Obviously, while direct links will bring some business for a few tourism agencies, in the grand scheme of things, Taiwan will still be on the losing end. This is true especially in view of the fatal blow to the tourism industry caused by a decline in domestic travel by Taiwanese.

Will direct links benefit the real-estate industry in Taiwan? The government is also considering the possibility of opening up the real-estate market to Chinese capital. Once direct links begin, perhaps some Chinese will become media darlings by buying property in Taiwan. But, the people of Taiwan must realize that China imposes strict foreign exchange controls.

The number of Chinese coming to Taiwan to buy real estate will be limited. However, if the number of Taiwanese traveling to Shanghai increases as a result of direct links, the number of Taiwanese businessmen buying property near West Lake in China will sharply increase. Then the price of real estate in Taiwan will decline. The wealth of Taiwanese will depreciate in general.

It would certainly be a disaster for both the banking and real estate sectors. Under the same logic, the stock market would also lose its vitality.

The decline in real estate prices and the stock market would without question cause domestic consumption to fall, affecting nearly all industries in Taiwan. More businesses would be forced to relocate to China. Production would fall and unemployment rise, further accelerating decline in consumption. By then, "keep [one's] roots in Taiwan" will truly become an empty slogan. Businesses in Taiwan will wither, while Taiwanese businesses in China will thrive thanks to the lower labor costs there.

The former will shut down one by one. This is how Hong Kong's economic downturn has unfolded over the past five years. Ever since Taiwan's government allowed investments in China by Taiwanese business in 1990, Taiwan has suffered the pain of economic marginalization in the form of low economic growth, stagnant cash flows and excessive bank loans.

The pain has increased along with the Sinization of Taiwanese businesses. In view of Hong Kong's experience, opening up direct links will surely increase the severity and the speed of Taiwan's marginalization. To the people of Taiwan, this would of course be very damaging.

Obviously, the ban on direct links in the past have inconvenienced Taiwanese business with ambitions in China. However, the ban has also served as an economic safety valve and an insulator against threats from China.

At a time when China is using its economy and military to intensify its unification rhetoric, Taiwan's government should give top priority to the interests of everyone in Taiwan. Do not forget that the biggest responsibility of a government is to defend the country and protect the welfare of the people. The interests of the businesses come second.

Fools are rushing in

This editorial first appeared in the Taipei Times on 27 June 2002. Reprinted with permission.

No sooner did the Legislative Yuan go into recess than the great China rush was on. The KMT's John Chang and Ho Chih-hui and the PFP's Liu Sung-pan are in China, heading up three separate delegations that want to discuss trade and "direct links." Lawmakers from the DPP's "60 Society" are planning a cross-strait trip for next month. It seems every politician wants to promote direct links across the Taiwan Strait. Most, however, appear motivated more by a desire to grab a slice of the cross-strait trade that direct links would bring than by concern for their constituents' interests.

Beijing clearly knows its best hopes of breaking down Taiwan's defenses is the Trojan-horse gambit, its "united front" offensive. Apart from using Taiwanese businesses as leverage, getting Taiwanese legislators to pressure Taipei is key. The KMT and PFP are pushing for direct links by trying to get the Statute Governing Relations Between the People of the Taiwan Area and the Mainland Area amended.

Lost in the lawmakers' euphoric dreams of gold and glory is the harsh reality of Beijing's unwavering insistence that any negotiations must be conducted according to its "one China" principle — and its plan to turn Taiwan into another Hong Kong or Macau. There was a timely reminder of just what that means yesterday, when the South China Morning Post reported Chinese Vice Premier Qian Qichen as saying there was no need for Hong Kong to move toward democracy, since it would be inappropriate for one of China's special administrative regions to copy the political system of another country.

Chen Yunlin, director of China's Taiwan Affairs Office, has reiterated this stance time and time again. He says cross-strait air links are domestic links, not international ones. Chen says negotiations on direct links may be conducted between private or professional organizations from the two sides, which could sign "summaries" or "arrangements" and then take such documents back home to have problems of ratification and implementation resolved.

The tussle over direct links is a fight over Taiwan's sovereignty and national identity. Even though President Chen Shui-bian has said that direct links are inevitable and that he would not rule out delegating private parties to negotiate on the issue, he stressed that that Taiwan must not be belittled, marginalized or treated as a local government in such negotiations. This is the bottom line for negotiations.

As lawmakers sing the praises of making peace with Beijing, they must not forget to seek equality and dignity in negotiations or any talks will be little more than a surrender and betrayal. Although some local companies will gain from direct links, such benefits will eventually sacrifice the interests of the people of Taiwan. Direct links will shake the national identity, the beliefs of the people and Taiwan's democratic system. Direct links will cause a further outflow of businesses and capital and a hollowing out of local industries. The day direct links are established will be beginning of Taiwan's absorption into China.

It is unwise for Taiwan's lawmakers to rush to the forefront of the direct links lobby and jeopardize the government's strategies. How true the adage that fools rush in where angels fear to tread.