July 28th 2001

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Articles from this issue:

EDITORIAL: The message from Aston

COVER: Dumped imports threaten Golden Circle

Trade lessons for small countries

Straws in the Wind

Media: New program, same old ABC

ABARE's export figures 'fanciful' (letter)

Issues lost in barley debate (letter)

The good and bad of the US model

Children already have protectors - their parents!

The lessons of T.G.H Strehlow

Rearming school cadets

What Beijing Olympics Supporters Ignored

Adult stem cell research provides ethical genetic therapy

Taiwan wracked by political infighting

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Taiwan wracked by political infighting

by Jeffry Babb

News Weekly, July 28, 2001
Taiwan (the Republic of China) is celebrating the selection of Beijing to host the 2008 Olympic Games, in the belief that the Communist regime in mainland China won't dare to do anything threatening in the Taiwan Strait in the lead up to the games, as it will not want to alienate the United States. Whether this line of thought is valid is open to question, but the Taipei Olympic Committee was a strong supporter of Beijing's bid.

If this has turned out well for Taiwan, many other things have not lately. Taiwan has been hit by two typhoons in the last couple of weeks, causing widespread flooding and large losses to crops, especially in the south of the island. However, it is more the political typhoons that have been worrying the local population.

The Democratic Progressive Party (DPP) government of President Chen Shui-bian has been under pressure yet again on the nuclear issue. The DPP is a heavily factionalised, left-leaning party that promotes Taiwanese localism.

Taiwan has virtually no energy resources of its own and depends heavily on imported energy. To reduce reliance on coal and petroleum for power generation, the island has long had an extensive nuclear program. Chen cancelled the fourth nuclear plant - and then three months later reversed the decision. This caused massive losses for the Government in compensation claims, as well as bankrupting several subcontractors. Now, the anti-nuclear forces are pressing for a referendum to halt the nuclear power plant construction yet again.

Everyone knows such a referendum would at best get 30 per cent of the vote in favor of cancelling the fourth nuclear plant, but the diehards see it as a way of working towards a referendum on independence for Taiwan - which would certainly draw a hostile military response from Beijing.

The Chen Government has an uncanny resemblance to the Whitlam venture. Taiwan, which won the title of "Asia's economic miracle," is accustomed to continuous high economic growth, broken only by unavoidable crunches like the energy crises.

Now, the economy is dead in the water. Growth has slowed to almost nothing and the economic situation is getting worse. Sales of information technology - the backbone of Taiwan's vigorous export sector - have slowed.

The Chen Government has introduced new social welfare measures, at the same time that Mainland China is booming and luring Taiwan businesses across the Strait. Local reports indicate some 50,000 small and medium Taiwan enterprises have relocated to the mainland.

As the nuclear power issue indicates, the government of the Republic of China cannot even guarantee the high-tech sector basic inputs such as electric power.

The Taiwan Stock Exchange has fallen below the psychologically important 5,000-point barrier - less than half the level prevailing when Chen came to power. As the gambling-mad Chinese have nothing to bet on besides the stock exchange, this is very damaging to consumer confidence.

Instead of having a hostile Senate as Whitlam did, Chen has a hostile legislature to contend with. However, former Kuomintang (KMT) leader, Lee Teng-hui (himself President 1996-2000), will split off legislators hostile to the old line KMT leadership and form an alliance with the DPP, thus giving Chen a legislative majority. Lee has never been popular with rank and file of his own party, and his latest moves are driving the KMT loyalists into paroxysms of rage.

Lee was the first native Taiwanese ever to lead the Republic of China. He has recently emerged from political inactivity to return to the centre-stage. Lee's government was most notable for its emphasis on localism. The use of the Taiwanese language was encouraged and the Taiwanese were given preference in government and politics.

However, his legacy was tarnished by the introduction of the Triad gangs into politics, and now it is estimated that some 60 per cent of legislators have links with criminal gangs. Chen has been intending to crack down on the so-called "black gold" connection between the gangs and the government at all levels, but like most other things under Chen, it all depends on what connections you have. Independent civil servants and heads of government-owned enterprises are being replaced with DPP cronies who can deliver votes to Chen in the legislative elections, due later this year.

Political uncertainty has compounded Taiwan's economic problems and Chen's economic policies have done nothing to improve the situation. They are a direct steal from Japan, and consist of spending more money on unnecessary public works and propping up bankrupt enterprises with bank depositors' money. This so-called "solution" is sure to make things worse. Like the two main Australian parties, Chen is promoting a "knowledge nation" policy, which may work in the long term, but is not a short-term solution.

In all, like Whitlam, Chen has turned a bad situation into a disaster. Many commentators believe that the people of Taiwan will have to become used to slow growth and consistently higher unemployment - now, at 4 per cent, the highest in many years. In an economy with few welfare safety nets, this economic collapse is a recipe for social disaster.

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