Taiwan need to place focus on its place in a changing world
The China Post news staffAs China hastens its pace in opening up its domestic markets and establishing free trade agreements with a number of countries, the government of Taiwan should quickly untangle itself from its current political quagmire, so that it may find ways to better cope with a new international reality.
October 17, 2013, 12:03 am TWN
In its latest forecast, the Chung-Hua Institution for Economic Research (CIER) adjusted its 2013 GDP growth forecast down 0.27 percentage points, from 2.28 percent to 2.1 percent. This pessimistic view corresponded with the International Monetary Fund's early October economic forecast of Taiwan: a 0.8-percent downward adjustment to a 2.2-percent GDP growth in 2013.
Taiwan's exports unexpectedly dropped 7 percent year-on-year in September. Statistics showed that Taiwan's exports to mainland China dropped to below US$10 billion. If exports drop again in the fourth quarter, like they did in September, the year's GDP growth might be pulled downward even further.
China's leadership has begun to adjust its economic structure, so that it will rely more on domestic consumption instead of exports for economic growth. This is likely to impact Taiwan's exports in the long run.
Chinese enterprises have become more competitive in the global market. For instance, PC maker Lenovo's global sales topped well-known brands such as Hewlett-Packard and Panasonic to become No. 1 in the third quarter.
The Shanghai Free-Trade Zone was launched on Oct. 1. It will inevitably compete with Taiwan's free economic pilot zone. In addition to studying the feasibility of joining the Trans-Pacific Partnership, China also recently announced its intention to join a U.S. and Australia-led service trade agreement.
It appears that China is ready to enter a new era of “opening up,” which is bound to impact Taiwan's economy. While Taiwan's financial policies and level of market openness still lead China, Taiwan's policy implementation is not as efficient as that carried out with China's more authoritative government.
In addition to establishing a free-trade zone, China is involved in striking a free-trade agreement with South Korea, and a deal may be reached by as early as 2014. The Middle Country is also active in forming a free-trade agreement with South Korea and Japan, and has set a goal to reach an agreement by 2015.
The negotiation of Regional Comprehensive Economic Partnership (RCEP), which includes countries from 10 ASEAN member states as well as Australia, China, India, Japan, South Korea and New Zealand, may be reached by the end of 2015.
China has also kept an alert eye on Transatlantic Trade and Investment Partnership, a trade agreement between the eurozone and the U.S.