Taiwan needs a capitalist party | Taiwan News
Taiwanese voters refused in a referendum to ban a coarse-sounding pork additive in a move meant to maintain good trade relations with America. They also rejected other voting measures, including one that would have made importing natural gas more difficult. However, the votes were more aimed at rejecting a coup by the opposition party KMT to embarrass President Tsai Ing-wen than at facilitating business in Taiwan.
In reality, trade relations with America are not going anywhere fast. Despite their decision, voters still know that President Tsai and her government got nothing in return for accepting ractopamine in imported American pork.
This act of preemptive surrender – conceding a trade issue not only without concessions on the other side but in the absence of even serious trade negotiations – has shown how lost the government is when it comes to economic policy. However, the problem goes beyond one person or one party: Taiwan lacks persuasive voices for capitalism anywhere on the political spectrum. This dismal situation encompasses both major parties.
A trade deal with Taiwan was never in sight in Washington, which some of us have tried unsuccessfully to explain to Taiwanese officials. Donald Trump may have been skeptical of the Chinese government, but he was never pro-Taiwan and only favored trade deals if they revised previous deals to the advantage of the United States. .
Trump’s trade representative Robert Lighthizer has ignored Taiwan. The same goes for Lighthizer’s Taiwanese-American successor, Katherine Tai. Taiwanese officials profess an excellent relationship with the Biden administration and go to great lengths to woo progressive America. Everything is perfect until you ask them to do something for Taiwan.
This reality is the result of economic policies that pay too much attention to trade deals that are elusive and would pay little and not enough attention to pro-capitalist reform that could make Taiwanese richer and therefore more formidable.
Taiwan’s tax rates for top earners are not particularly attractive, especially compared to large centers like Singapore and the United Arab Emirates (UAE). Even before the pandemic, Taiwan had a reputation for being uncomfortable with businesses in need of migrant labor. The United Arab Emirates offers 10-year visas for foreign professionals that renew automatically and do not require a corporate sponsor; such innovations are not even debated in Taiwan.
Manufacturers need cheap and reliable electricity. While costs are still low in Taiwan, companies are concerned about future costs and reliability. The Taiwanese government has been the victim of extremely optimistic projections for a green energy transition. This has contributed to decisions to curb nuclear power, meaning that money that would have been left in Taiwan will now go to foreign energy exporters.
The US State Department to sum up other issues: “Structural barriers in Taiwan’s investment environment include: excessive or inconsistent regulation; the market influence exerted by state and public enterprises (SOEs) in the utilities, energy, postal, transport, finance and real estate sectors; foreign ownership limits… ”The M&A market in Taiwan is also immature and is hampered by regulatory and cultural bottlenecks.
Perhaps worse than any of these individual problems is the tone of this DPP-led government, which has prioritized progressive cultural and economic fashions over practical measures to help businesses and their workers win. more money. The KMT opposition should come up with an alternative message based on capitalism, but instead it is hopelessly lost. Its singular objective seems to be to appease Beijing, and there is nothing capitalist about it. On most matters, the KMT has nothing to say and no one to say.
Both sides are complicit in Taiwan’s conversion from its initial success in the fight against COVID-19 to failure. Inapplicable restrictions on international travel that have lasted two endless years will prompt more and more businessmen, academics and artists to deregister Taiwan.
What is the real impact of the lack of voice and of capitalist reforms? Most alarming is that Taiwan has the lowest fertility rate in the world. Taiwanese women have an average of only 1.07 children. The fertility rate necessary to maintain a population without immigration is 2.1 children. This reality is a stern indictment against Taiwan’s economic and political situation; couples have more children when they feel secure and are optimistic about the economy and the future.
Taiwan’s economy is relatively stagnant and no one calls it a “tiger” anymore. The economy grew only 2.2% in 2019 before the pandemic disrupted economies around the world. Later, faster growth is probably an aberration. Real per capita income calculated using market-based exchange rates is only around $ 27,000, well below its peers. Taiwan risks stagnating just above the “middle income trap” that plagues many developing economies.
The country has less need of politicians favoring a few industries like semiconductors. Instead, Taiwan needs a level playing field for all businesses. More than a simple change of political platform or the victory of a single election, the fundamental change needed to make this shift will require new voices and a strong message for growth. The alternative is stagnation and decline.
Christian Whiton was a senior advisor to the State Department in the George W. Bush and Trump administrations.