Exciting times for Taiwan

Taiwan President Dr. Ma Ying-jeou is seeking a second four-year team and is running against his main opponent DPP Chairperson Dr. Tsai Ing-wen. Even though the polls post a three-way contest, it is largely a two-way one as the PFP candidate, Dr. James Soong, would likely be engaged in a tug-of-war with the KMT electoral base (pulling away a lot of undecided voters), rather than hurting the decidedly DPP-camp voter. Ma Ying-jeou’s campaign is largely driven on the plank of economic gains promised to the people of Taiwan, chiefly through the signing of the Economic Cooperation Framework Agreement (ECFA) in July 2010 (tariff reductions beginning w.e.f. January 2011) between the People’s Republic of China (PRC) and Taiwan. It is true that Taiwan, like many other countries, has faced the double-dip recession in the US and Europe with creditable success, and the ECFA was responsible for some of this economic gain. Taiwan’s real GDP grew by 10.72 per cent in 2010 (believed to be the highest GDP growth rate since 1987), and the growth rate for the first half of 2011 was 5.54 per cent. Steps such as permits to Mainland tourists brought in over $2 billion into Taiwan in tourism alone. Despite lagging global recovery, the Directorate-General of Budget, Accounting and Statistics projects the economic growth forecast for 2012 at 4.19 per cent, with per capita GDP at $20,472.

However, the implementation of the ECFA early harvest programme in the last year has included only a limited set of products, and the real effects of the agreement would only be realised in the second stage which commences this year (tariffs on 94.5 per cent of listed items would be reduced to zero by the end of the year involving 437 of the 500 Taiwan product categories). Also, the 2010 growth figures belie the low baseline of the 2009 growth statistics from a post-recession year and hence should not be overhyped. Recent surveys such as the one by Commonwealth Magazine indicate that 45.5 per cent of Taiwan’s top 1000 CEOs surveyed believe that the ECFA has not yet had any influence on Taiwanese companies but is expected to help in the future; 34.9 per cent said ECFA has had no impact on gains for Taiwan. With or without the ECFA, there have been no noticeable gains on gathering more economic and political space internationally – relations with ASEAN, and with other countries outside the region have been in the ‘business as usual’ mode.

There is also a feeling that the KMT has sacrificed Taiwan’s leverage on the “1992 consensus”1 and that too without commensurate gains for Taiwan. The KMT would face tough questions on this matter. However, keeping the sensitive issue of political marginalization aside, it must be noted that the KMT has been able to deliver on a more peaceful Cross-Strait setting.

The DPP has also evolved its strategy from 1996 (when it first lost democratic elections). The realization of higher gains from economic interdependence with the PRC is also manifest in its overall acceptance of the need for a studied approach to greater Cross-Strait economic ties. Closer economic ties with the Mainland were the hallmark of the two terms of the DPP President from 2000 to 2008. Dr. Tsai Ing-wen has raised the issue of social inequality more effectively, reflecting a certain angst in the Taiwanese middle class that the perceived benefits from Cross-Strait engagement are not distributed equitably in society. It is true that for young Taiwanese the starting salary has declined, as has the availability of jobs (real wage has stagnated for at least ten years). In many ways, the largely peaceful Cross-Strait setting today is also reflective of the maturity of electoral politics in Taiwan. However, it seems that the DPP has not managed to allay the worries of the United States that it has toned down the degree of brinksmanship with China. Nonetheless, the two parties are evenly poised and even the dosage of the anti-DPP corruption propaganda by the KMT has diluted in strength since 2009, when Taiwan’s ex-President Chen Shui-bian received a jail-term for cases relating to corruption. Surprisingly, there were allegations against Ma Ying-jeou recently that (similar to the pre-1987 years), the KMT was using state agencies for receiving information on the DPP Chairperson’s poll strategies and movements. Ma Ying-jeou has denied this.

When some Taiwanese jokingly quip that the sky is mostly blue in Taiwan, there is an acceptance of peace as a welcome consequence of the status quo in Cross-Strait relations since 2008. However, many others feel differently. A recent study by the Election Study Center of National Chengchi University commissioned by the Mainland Affairs Council noted that of a total of 1,069 effective samples, 51.5 per cent believed that the Mainland government’s attitude toward the Republic of China (Taiwan) government is “unfriendly”; only 31.2 per cent believed it was “friendly”. Moreover, regarding the Mainland government’s attitude toward the Taiwan people, 44.7 per cent of the sample believed that it is friendly, while 41.5 per cent believe it is unfriendly. It is important for the PRC to take note of such nuanced public responses. The latter findings are extremely revealing as far as the future treatment of elected governments in Taiwan is perceived by the electorate and may be a crucial indicator for the PRC in its posture towards legitimate democratic actors such as the DPP. As some sort of premonition, the PRC has been relatively silent about overtly indicating its preference (or threats) for any specific political dispensation in Taiwan in these elections. Or could it be that the KMT is relaying the PRC’s warnings on rescinding the benefits from Cross-Strait ties if the “1992 consensus” were not accepted by the DPP? Did the Taiwan Affairs Office (TAO) request Taiwanese business associations to support Ma, or negotiate with Chinese airlines for charter flights for the Taishang (Taiwanese businessmen on the Mainland) to return for voting? Some of the answers may not be clear. However, the scope of the ECFA in 2012 clearly involves a focus on the agricultural sector in Taiwan, which has traditionally supported the DPP (both fishing and farming). The carrot to wean away DPP voters couldn’t have been sweeter for this election year in Taiwan.

Has the US maintained its neutrality on the Taiwanese domestic political scene? Some point to the Visa Waiver Program offered to Taiwan in this crucial election year as a hint of preference ranking for the US. Given that visa rejection rates from Taiwan are below 2 per cent, the offer is clearly, largely, symbolic. It may not be a vindication of US support for Ma but it certainly is some sort of a reward for the tenor of Cross-Strait ties in recent years. Meanwhile, the US has played the balancing act with the PRC on the issue of Taiwan quite well. In forums such as the Asia-Pacific Economic Cooperation (APEC), where statehood is not a requirement for membership, Secretary of State Hillary Clinton has declared Taiwan to be an important security and economic partner for America. However, outside of the APEC, there was not much being offered. Only an upgrade for the F-16 A/Bs was offered but no new aircraft. Likewise, the Trade and Investment Framework Agreement with the US is still pending. One would continue to see more of this US strategy in the coming years, namely that Taiwan’s participation in international organizations would be encouraged where membership is not possible (emphasis added).

The years ahead for Taiwan are truly dynamic. Demographic change is something both the KMT and the DPP need to factor-in in their future course of action, especially since the population growth rate will become negative after 2022. Particularly for the DPP, it must be noted that the primary sector of farming, mining, fishing, among others, would be necessarily managed by a smaller labour force. This means that it needs to devote energies beyond traditional vote banks and instead focus on more dynamic areas of Cross-Strait interaction. Similarly, for the KMT, the decreasing labour force availability for Industry in Taiwan should be a cause of worry. Taiwan’s interest would be better served when the future demographic outlook and the likely downsizing of industries in Taiwan is factored in Cross-Strait economic interaction. A studied balance on sources of economic growth in Taiwan vis-à-vis its interaction with Mainland China would serve the KMT better.

Taiwan also finds itself in a tricky situation on the issue of its claims on Islands in the South China Sea, as one of six claimants to the features and resources in that area. Officially, Taiwan claims the Nansha Islands (Spratly), the Shisha Islands (Paracels), the Chungsha Islands (Macclesfield), and the Tungsha Islands (Pratas), as well as their surrounding waters, seabeds and subsoil as an inherent part of its territory. As early as March 1993 the Legislative Yuan of Taiwan had adopted the “Policy Guidelines for the South China Sea” with these major claims. Prior to that, in 1990, the Executive Yuan had placed both Pratas and Taiping (in Spratly) Islands under the municipal jurisdiction of Kaohsiung (partly also to lower the military profile). Any adjustment of ROC’s territorial claims would not be seen kindly by the PRC, which claims all of Taiwan (and by extension lays claim to Taiwan’s claims). The Ma administration has not projected itself as a rival claimant to China – and to that extent Taiwan’s “cooperative framework” with Mainland China is maintained. The opposition DPP, one would assume, would rather re-enforce the de facto separateness from Mainland China by focusing more on cooperative mechanisms with the other regional claimants. Both the KMT and the DPP would be faced with more demands on articulating claims and counter-claims in the South China Sea in the coming years.

The dynamism of closely contested polls and the implications this has for the entire region would be interesting to watch and study in the coming years.

References

http://www.bloomberg.com/news/2012-01-10/ma-s-edge-over-tsai-in-taiwan-e…

http://www.csmonitor.com/Commentary/Opinion/2012/0105/Taiwan-elections-U…(page)/3

http://www.mac.gov.tw/ct.asp?xItem=99547&ctNode=6256&mp=3

http://www.mac.gov.tw/public/Attachment/1112811462994.pdf

http://www.taipeitimes.com/News/front/archives/2012/01/02/2003522189

http://www.csmonitor.com/Commentary/Opinion/2012/0105/Taiwan-elections-U…(page)/3

http://www.cepd.gov.tw/encontent/m1.aspx?sNo=0016318

“Crises and Chances: Year 2015, the first year of the “Taiwan Aging Power Era””, Ya-ling Kao and Shavonne Lin at http://www.ausmt.org/index.php/ AUSMT/article/view/97/19

http://focustaiwan.tw/ShowNews/WebNews_Detail.aspx?Type=aECO&ID=20111227…

http://www.state.gov/r/pa/ei/bgn/35855.htm
http://www.gio.gov.tw/ct.asp?xItem=101626&ctNode=2462&mp=807

http://www.mac.gov.tw/public/Attachment/1112811462994.pdf

http://taiwantoday.tw/ct.asp?xItem=183384&CtNode=436

http://www.cepd.gov.tw/encontent

http://www.kmt.org.tw/english/page.aspx?type=para&mnum=105

http://dpptaiwan.blogspot.com/

Footnotes

• 1. The “1992 consensus” refers to a tacit Cross-Strait understanding that there is only “One China”, and both Mainland and Taiwan could suitably interpret the meaning of “One China”. The KMT insists that the consensus is the foundation for improved Cross-Strait relations, but the DPP contends that the position is not derived from any consensus in Taiwan itself on the matter.