Just as the mechanisms of the Economic Cooperation Framework Agreement are gradually being put in place, word comes from the Ministry of the Interior that the number of people in Taiwan living below the poverty line—108,000 households, or 260,000 individuals—has reached an all-time high.
Some have suggested that the signing of ECFA and the latest MOI findings are closely related. But the increase in the number of those in poverty has nothing to do with opening the doors of cross-strait trade. In fact, trade between Taiwan and mainland China will help to reduce poverty; for it to end up having the opposite effect of increasing poverty is simply impossible.
But an important issue remains, namely, that the benefits of cross-strait trade do not appear, as of yet, to have been distributed evenly among all social classes. More specifically, the government has failed to make good use of cross-strait trade to reverse the current M-shaped trend, whereby the middle class is shrinking, and the number of the very wealthy and the very poor is increasing. This is something that the government will have to address now that ECFA has been ratified by the Legislature.
To put it another way: as a result of cross-strait trade, Taiwan’s economic pie will become larger, but the government must pay attention early on to how the pie will be divided.
A simple example is tourism. Beginning this year the number of tourists from the mainland has increased sharply. The business opportunities resulting from this new influx of tourists—money spent on food and accommodations, shopping, transportation and so on—must not be controlled by only a few wealthy corporations, with the result that smaller businesses are completely excluded. If some groups are monopolizing the mainland tourist market, the government must act forcefully to ensure that everyone is given a fair chance of competing.
To give another instance: Several mainland procurement groups have placed orders in Taiwan for goods worth a great deal of money. But whether these orders have benefited the public as a whole is debatable. The problem is that the products purchased by the procurement groups are not necessarily made in Taiwan. If the Taiwan-based companies receiving these orders have operations in the mainland, and if they ship their goods directly from there, then the benefit of these orders for the people of Taiwan is likely to be very small.
In this regard, the government must examine why the public is unable to enjoy the fruits of these orders that Taiwanese businesses worked so hard to win. It might be that Taiwan’s chain of production is out of whack. The government has been saying for many years now that Taiwanese businesses should return to Taiwan. It is time for it to show some results.
There is also room for improvement when it comes to mainland-bound agricultural and fishery products. Of all the products Taiwan sells to the mainland, these are the ones whose provenance is most strongly emphasized—and this is because mainland consumers are especially fond of Taiwan-grown fruits and aquaculture products.
Therefore, the selling of these products to the mainland ought to be a golden opportunity for the nation’s farmers, both traditional ones and those in aquaculture. But again the government needs to pay attention to the degree to which farmers are benefiting from these transactions. If middlemen are siphoning off all the profits, the government should step in—otherwise the growing wealth gap will not improve at all.
What the government has to do now is to put cross-strait commerce in order, so as to eliminate interference in the workings of the market by individual groups. In this way all levels of society will be given a chance to participate, and will be able reap a share of the profits.
No matter what happens, the unequal distribution of wealth must not be allowed to continue as a result of cross-strait trade liberalization. The cross-strait market, however, is enormous, and there is plenty of room for certain groups to advise the government; and thus it cannot be denied that those with very deep pockets will have an easier time competing. Even so, the government must work hard to ensure that smaller business entities and individual job seekers can prosper in this vast market.
In addition, the government should use ECFA as an opportunity to attract investors from both the mainland and the world over to invest in Taiwan, so that a new type of manufacturing system, one spanning all the counties and villages on the island, can be created. In this way the “dividends” of cross-strait commerce can be spread to every county and city throughout Taiwan, and those citizens having a hard time surviving financially will get a chance to improve their economic standing.
In the past, the economies of the coastal areas in mainland China were transformed completely thanks to investments by Taiwanese businesses. Of these the most well known are Dongguan City in Guangdong Province and Kunshan City in Jiangsu Province. Thanks to massive investments by Taiwanese firms, these cities have been transformed from agricultural into industrial zones. The wealth of their citizens has grown dramatically as well.
Such an experience ought to be replicated in Taiwan today, meaning that as cross-strait commerce develops, the economically worse off citizens of the nation should also benefit.
To help reach this target, the government has to direct and regulate things on a massive scale. It must not think that after signing various cross-strait agreements it can afford to ignore the important task of distributing wealth equally. If it chooses to ignore this task, cross-strait economic cooperation will still cause the overall wealth of Taiwan to grow, but the gap between the rich and the poor will continue to widen. As this is a matter that concerns the long-term stability of Taiwan society, the government must treat it seriously. (HZW)
(This commentary first appeared Aug. 22 in the Commercial Times.)