Friday, February 15, 2008

Ma: Win, Place, or Siew?

Unreal City
Under the brown fog of a winter noon

Wow! So cold it is, the papers reported yesterday that fish were dying in the waters off the Penghu islands in the Taiwan Strait because the sustained cold had lowered ocean water temperatures too much. I've decided the weather gods have ceased to exist, incinerated by our curses last week, and we're stuck with this cold forever...

...spent much of this week up in Taipei talking to media people and absorbing the alarming insularity of the capital. Everywhere I went people assured me that Ma would win, which ordinarily would give me great hope for Hsieh, given the way Taipei has no clue what goes on south of the Lungtan Exit on Highway 3, but one excellent predictor also goes Ma: the election "market" run out of the Center for Prediction Markets of National Chengchi University. That market is uncannily accurate, and it is predicting a Ma victory at this point, as Max Hirsch of the Kyodo News reminded me. I also had the pleasure of finally meeting Katherine Hille of the Financial Times, who turned out to be formidably tough, intelligent, and extremely well-informed.

Lots of stuff coming up in the Presidential Election. On Feb 24 Ma and Hsieh have their first debate. The 28th, of course, is the 60th anniversary of the 2-28 revolt and massacre. That will be followed the very next week by the Party Congress in China. On March 15 falls the anniversary of the Anti-Secession Law. On the 22nd is the election. Coming so close to the election, these may help to create a bounce for the DPP. The DPP also has a history of making up ground in the final weeks....still, the perception in the capital is that Hsieh is running a lackluster campaign.

Some statistics to ponder. In 1996, when Lee Teng-hui won the first Presidential election, turnout was 76%, there were 117,160 invalid ballots with a total of 10,766,199 valid ballots cast. The KMT took 5,813,699 votes (54%), the DPP 2,274,586 (21.13%), the remainder being split between two separate KMT spin-offs, the reactionary Hau Pei-tsun, and Chen Lu-an (2,677,834). In 2000 Lien Chan of the KMT collected only 2,925,513 votes (23.1%), James Soong obtained 4,664,972 votes (36.84%), and Chen got 4,977,697 votes (39.3%). 12,664,393 valid votes were cast, there were 122,278 invalid ballots, and turnout was 82.69%.

In 2004 the KMT conducted a sustained campaign to reduced voter turnout, since turnout favors the DPP. That consisted of a multi-pronged strategy, including getting voters to cast invalid ballots as a "protest" against politics, and the constant propagandizing that politics is pointless and people shouldn't bother voting, an anti-democracy theme that is still prominent in the media, on talk shows, and so forth. Invalid votes tripled to 337,292. There were 12,914,422 valid votes, representing a turnout of 80.28%. Chen Shui-bian took 6,471,970 votes (50.11%) and Lien Chan received 6,442,452 (49.89%).

Let's look at the trend:

1996:
KMT 5,813,699 + (2,677,834) = 8,491,533 Blue
DPP 2,274,586

2000:
KMT 2,925,513 + (4,664,972) = 7590,485 Blue
DPP 4,977,697

2004
KMT 6,442,452
DPP 6,471,970

I have the legislative numbers from the last few elections in a blogpost. I can't see any relationships in all these numbers yet, and because the legislative and presidential elections are usually staggered, there doesn't seem to be any way to compare one to the other. Still, the number of invalid votes should return to previous levels (dropping roughly 200,000), and turnout should exceed 80%. Despite the incredible spin coming out of Taipei ("It's the economy, stupid") the Blues have not added any new legislative votes -- 5.3 million in 1998, 5.1 million in 2001, 4.5 million in 2004, and 5.2 million in 2008. I suspect stagnation there equals stagnation at the Presidential level. If that is the case, then (1) if there is 80% turnout; and (2) the number of invalid votes falls: Hsieh will win by 150,000 votes.

Speaking of turnout, Taiwan Journal has an article on the youth vote discussing the recent roundtable at Soochow University. In every country the young don't vote; Taiwan is apparently no different (despite this widespread observation, I'd still like to see survey data). The article says that turnout in the Jan 12 legislative election was low -- it as 58.25%, collapsing all the way from 59.35% in 2004. In 2001 it was 66.31%, 68% in 1998, and 67% in 1995. Legislative turnout may be falling in the long-term, but it can hardly be described as "low" for an election that has never attracted more than 68% of the voters to the polls. Interestingly, lowest turnout in this election was in Jinmen, Hualien, Taitung, Penghu, Keelung, and Ilan -- all Blue areas. High turnouts occurred in the North, where the proportion of the young in the population is large, (Taipei city and county both saw turnout higher than average, but Taoyuan was lower at 56%...). Turnout was also high in Tainan city, Pingtung county, Changhua, Taichung city, and Kaohsiung city and county. What's the pattern? You tell me....

What can we expect from a Ma presidency? This was the subject of much speculation in venues formal and informal that I hung out at this week. Asia Times has a neat article this week on the restrictions on Chinese brides in Taiwan. Little stuff like that will be relaxed. There will also be a deal on tourism, and people have explained to me that perhaps some carefully controlled transshipping will take place -- sea cargo -- in Kaohsiung. Some sources say that over time Ma will relax all restrictions on Chinese investment, and that this will cause property prices in the north to skyrocket, since that is the likely destination for any Chinese investment. Restrictions on Taiwanese businesses moving to China will likely be lifted. Eventually mainland labor will be invited over, and the Chinese will absorb Taiwan much the same way they have absorbed Inner Mongolia -- a divided nation if there ever was one -- and Tibet: demographically. That sort of controversial move will probably not happen until a second Ma term.

All of this will make the Taiwanese working class scream, so I suspect a key move of the Ma presidency will be to buy off the working class by turning back on the infrastructure taps. Once the money starts flowing down to our currently bankrupt local governments, this will raise local incomes -- convincing voters that the economy is back on track. It will also give the KMT a chance to tap those flows and replenish the Party coffers. (Note that, as infrastructure spending has been starved by the KMT, it has simultaneously claimed that it has become impoverished. See the connection?). With the working class safely bought off, Ma can..... well, no need to complete that thought.

UPDATE: Don't miss the great comment below on the election market.

19 comments:

Anonymous said...

"Eventually mainland labor will be invited over, and the Chinese will absorb Taiwan much the same way they have absorbed Outer Mongolia -- a divided nation if there ever was one -- and Tibet: demographically."

I think you are referring to Inner Mongolia, which is a Chinese province. Outer Mongolia is usually taken to mean the independent nation of Mongolia, which broke free of Chinese rule in 1911 (though I believe the R.O.C. has never officially accepted that fact), and sided with the USSR during the Sino-Soviet split.

Anonymous said...

"What can we expect from a Ma presidency?..."

A tough view. I like to be optimistic, but hmm... Then again, China's future is hardly certain.

Anonymous said...

So what's your position on mainland brides in Taiwan? Should they be given the same treatment as brides from other countries in the name of fairness or should the restrictions continue in the name of Taiwan's security?

I'm interested in hearing your opinion as you appear to be a foreign-born spouse yourself.

cfimages said...

Was there any discussion or speculation about whether there'll be any changes to work rights and permits for non-Chinese foreigners? Right now I'm faced with the situation of needing open work rights but having to wait another 2 years until I can qualify for an APRC under the 7 year rule. I am hoping Ma and the KMT make it a little easier for people like me to get open work rights.

Tommy said...

The more Taipei residents who think Ma will naturally win, the better it is for Hsieh. This sounds like a great recipe for voter apathy, and apathetic voters stay home. The question is, how successful has Hsieh been in convincing traditionally green voters to vote for him. If he could build their interest while sustaining a lack of interest in Taipei, it might give him quite a boost. I think the debates will help too.

Michael Turton said...

Sorry, Craig, didn't hear anything. But Ma makes a point of treating foreigners well. Perhaps the complaints of AmCham and so many other foreign groups will finally bear fruit in more liberal visa laws.

Michael

Anonymous said...

Personally, I still think the spending (budget) problems have something to do with Chen being a bad president :P. Just like Bush said he will veto any FISA bill without retroactive immunity. So Ted Kennedy said: "The President has said that American lives will be sacrificed if Congress does not change FISA. But he has also said that he will veto any FISA bill that does not grant retroactive immunity.

No immunity, no FISA bill. So if we take the President at his word, he’s willing to let Americans die to protect the phone companies."


I think the same logic applies to "I do not get why you blame KMT for lack of budget :)," while it is the president's job to make, to modify, to compromise, and to get the damn budget through. If you don't like it, I dear you to veto it.

Btw, it doesn't look like Bush is going to veto it. Democrats have called his bluff.

Oh, also restrict trading with one of the largest export countries because of political reasons just freaking stupid.

Eli said...

On the issue of youth involvement, Freddie Lim from Chthonic and others have set up a youth outreach center in Gongguan, right next to the Taipower building, actually very close to where I now live. It looks more like a youth activity center, with concerts, talks, exhibits, and other performances.

Looks pretty interesting. Check out the website (though there is no English):

http://blog.roodo.com/freddyaction/

Michael Turton said...

I think the same logic applies to "I do not get why you blame KMT for lack of budget :)," while it is the president's job to make, to modify, to compromise, and to get the damn budget through. If you don't like it, I dear you to veto it.

Arty, the government budget is under the control of the legislature. It is not being hung up by Chen. It is being hung up by the KMT.

Btw, it doesn't look like Bush is going to veto it. Democrats have called his bluff.

That's good. I hope they go on to impeach, and then hand the bastard over to the ICC for trial and imprisonment.

Oh, also restrict trading with one of the largest export countries because of political reasons just freaking stupid.

Dunno how things are on your planet, but on mine, every single country that trades with China places restrictions on both imports and exports, as well as technology transfer and factory relocation. I guess only you're smart, and the rest of the world is stupid.

Michael

Anonymous said...

Likelihood Ma will be president:
http://nccu.swarchy.org/contract_groups/73?cnt_id=522
Currently 77%

Percentage of vote for Ma:
http://nccu.swarchy.org/contract_groups/74?cnt_id=525
Currently about 60 Ma vs 40 Hsieh

I find it hard to believe that Hsieh is going to get a lower percentage of votes than he did in the Taipei mayoral election.

I would just read it as a better poll than Apple Daily, China Times, UDN, etc. Hillary was 70-30 up over Obama about a month ago too. Does Hsieh have the same magic and the time to turn things around?

Hsieh has continued his talk of reconciliation and it is noteworthy his primary spokesperson is waisheng.

I strongly prefer Hsieh's economic policies. Taiwan's strengths are not large international corporations, finance, media, etc. It is small and medium businesses, tech, and as of the last three four years is becoming a good research and development center.

Michael, I would urge you to research beyond ordinary Taiwanese media. Really there aren't many restrictions left on investment. For the pro-Blue readers, if the 40% cap were such a big deal, give me a list of companies affected by the cap and clamouring to go to China. They can and have gone.

Both candidates want transportation links (which are a true issue), but the whole problem is the ball is in China's court. China refuses to negotiate with Chen's administration, and it may very well continue to refuse to do so regardless of who the next president is.

One thing that is interesting to watch is China's economy is sort of slowing its growth a little bit, its stock market has taken a huge beating, its inflation has been out of control for a long time, and their new tax and labor laws (you know, that they are actually going to start collecting taxes and actually start forcing unemployment worker compensation... basics) are forcing up to 50% of Taiwanese factories in southern China to close. Many overseas Taiwanese businessmen are closing up shop and returning to invest in Taiwan.

And yet Taiwan's economy continues to chug along at around 4% growth while the US and much of the developed world has the danger of recession. Very interesting how the heck Ma and his supposed economic expert Siew (remember this guy was Prime Minister for 3 years from 1997-2000... Taiwan's economy sucked then) are going to explain all this.

Anonymous said...

Arty, the government budget is under the control of the legislature. It is not being hung up by Chen. It is being hung up by the KMT.

I could be wrong about this, but if Taiwan is like the US. Legislature only approve the budget submitted by the President. It has the power of approval as part of balancing act, but the ultimate control is still at President's ability to talk to the legislature, or lack of.

Are you pulling a Republican by saying that 80s was a good time because of Regan. While during Bush Sr., it was bad because the democrat controlled house. And the great Clinton era has nothing to do with Clinton being the 2nd best president in the 20th centry (FDR is the best) because the house was controlled by the Republican and the economic growth is all due to the Regan's policies in the 80s. Give me a break, if legislature controls everything, why do we even need a president.

Dunno how things are on your planet, but on mine, every single country that trades with China places restrictions on both imports and exports, as well as technology transfer and factory relocation. I guess only you're smart, and the rest of the world is stupid.

Na, I am stupid. Yes, every countries have some form of trade restriction but they all resulted in increase in economy dead weight losses. The question is that could a country absorb the inefficiency in such case. Personally, I do not think Taiwan can afford such policy. It just like we try to forbid China buying our companies in the name of national security. Yet, there is no way we can balance the even larger trade deficits without doing so.

Tommy said...

"their new tax and labor laws (you know, that they are actually going to start collecting taxes and actually start forcing unemployment worker compensation... basics) are forcing up to 50% of Taiwanese factories in southern China to close."

This is currently a hot-button issue that is being quietly overlooked by many. The Chinese seem to be trying to downplay the situation (no doubt because they wouldn't mind if industry moved inland from Guangdong, although I am not really sure what services could take the place of manufacuring in GD in the short term). Perhaps it won't have the effect that some claim it will.

I read an article in the SCMP two days ago about a sudden rush of Korean companies out of Guangdong. Many small factories, fearing they can't afford to gracefully shut up shop, are secretly just closing their doors and heading back to Korea. Another article from a week before that was about real estate -- namely that all of the sudden, factory sites are going empty. The article forecast something around 30 percent of Guangdong factories closing their doors in the coming year (sounds a bit too high, but we'll see).

This may actually not be a bad thing. Guangdong has been having trouble finding skilled labour for a while. It seems manufacturing costs, combined with the rising RMB and the new tax law, may be just enough to push Guangdong's low-cost manufacturing sector over the edge.

Therefore, I wouldn't fear a bold Ma opening the doors to Chinese labour. Besides the fact that Taiwanese would go mental if he tried, since there is a perception of a limited number of jobs on the island already, the manufacturing jobs that remain in Taiwan mostly require more skilled labour. This is the direction Guangdong will be going. Note that GD factories already can't get enough skilled mainlanders without paying them much higher salaries.

If you are a skilled Chinese labourer, why are you going to want to move to Taiwan, where you are less in demand due to a competitive population that does not want you when you are still in demand in your own country? As for unskilled workers, about the only thing they could do is pick fruit and work in construction. There just aren't enough low-cost manufacturing jobs left in Taiwan.

So I wouldn't worry about Ma opening the doors to Chinese labour. The population in Taiwan would not favor such a move, and the social situation in China increasingly will not support it either, especially as time passes.

Michael Turton said...

Thomas:

Great comments. I've been following the story about China's labor and tax laws for some time. I suspect this is just the pause before the second wind -- China will pick up again. There were claims businesses were coming back to Taiwan, but it is probably more truthful to say, as you noted in another comment, that everyone who wants to go to China has gone.

I'm less optimistic about the labor issue and Ma because of the political dimension of bringing over Chinese labor.

Michael

Tommy said...

One more from the Standard, entitled "Factory Fallout". Supposedly experts are predicting around 20 percent of HK-invested factories in Guangdong (14,000 out of 70,000) will close their doors in the next few months, and 30 percent of workers may not return following the snowstorms. The workers can supposedly make 850RMB per month inland and 1,000 in Guangdong. However, Guangdong has higher living costs, and then there is the issue of being far from families.

Now imagine them going to Taiwan. They might be paid a bit more, but their cost of living would be much higher than in Guangdong, (Taiwan ain't cheap, although the gap is rapidly closing between GD and TW), plus rely on air links to get to Taiwan (which costs more than train tickets home during the CNY while you can't just jam-pack people in airplanes with zhanpiao). Many would not be able to get home. Cost wise, it just makes no sense for mainland labourers to WANT to go to Taiwan. It might have 10 years ago, when there was a larger difference in salaries. But I doubt it will in five years as salaries rise in China.

You said there would be a second wind coming. I would agree with you that it is possible in the future. There are probably now enough single, educated workers in China to export them (unemployed youngsters are a headache). But Taiwan, as well as almost every developed country I have heard of, puts restrictions on immigration so as not to put its own population out of work. Ma would, at the least, have to keep these in place. He wants to make himself look good, and taking jobs away is not the way to go.

Have no doubt, I see Ma as nefarious. But I don't see how he could really "open" Taiwan to Chinese labourers in any way that would make economic or political sense. If Taiwan were Japan, with its declining population, therefore an increasing need for labour, there might be grounds for worry. Therefore, I still think Ma's main pitfalls rest in his apparant willingness to compromise on sovereignty (under any national name) to score political points at home. He won't be opening up the labour market because it just doesn't make sense. What would make more sense is for him to play the classic political role by telling locals: "Despite pressure, I am not opening up the labour market because I respect your jobs" in order to score political points for himself and his party across the board. And who could blame him?

Michael Turton said...

Those are good arguments. But the function of foreign labor is also to hold local wages down -- keep the local workforce politically divided and economically weak. Currently foreign laborers face many of the same issues you name -- for many they lose money on coming to Taiwan, yet still they come. That is why I am skeptical of arguments based on costs; real humans seldom think that way. Instead, they will see the intangibles ("If I escape I can start a business or get married there", "I can visit another country") or view it in a "that-is-not-my-fate" fashion -- others may suffer a loss, but I will not. Moreover, while wages may be high in Guangdong, they are not elsewhere in China.

Further, in such cost estimates, many costs are hidden from the laborer -- for example, the lawful wage for foreign labor is 18K/month but employers can usually suck back 8-10K of that every month by charging for housing, food, and issuing worthless company credits instead of real money. Hence, the usual problems of asymmetries of information will tell.

I understand the political calculus behind keeping Taiwan's market closed to foreign labor. But I tend to think that local businesses will want the labor to come out, irrespective of costs -- just like today there are many economic arguments that Taiwan should have no foreign labor at all.

Excellent comments, man. Many thanks.

Michael

Anonymous said...

@Michael+Thomas:

It is actually something of a socialist/populist position to advocate free movement of labor (i.e. capital moves freely, why can't my labor?).

In any case, there are a lot of problems with suddenly opening a market that had previously been segmented into two independent areas as allowing Chinese to work without restriction in Taiwan would be. Ma absolutely does not advocate free movement of labor. Actually, that's one of his biggest contradictions. He was last year talking about this ridiculous common market with China (a place with no intellectual property protection, weak labor laws that they only just started implementing), and when all the economists pointed out that the definition of common market is that you have free movement of labor, he basically said, oh I don't mean that, I meant 3 links.

So basically, he just used a big word that sounds like he really knows what he's talking about, but he doesn't. Ma knows the effect of free movement of labor would be a jarring shock to Taiwan's economy and wouldn't let it happen. But he's still an ass for trying to sound like he knows something about economics and then having to clean up after himself for it.

TicoExpat said...

Michael,

Sincerely, I hope Hsieh does not win. Why? With the Legislature current composition, if he does, we can expect, at best, the same stagnation as up to now, at worst, the handing in of this island in a silver plate to the other side.

As to Ma treating us furrunirs well, on the contrary. Talk is that there will be revisions on this opening up to "non-Chinese" and go back to the good old times where the party granted this favor only on blood basis. Such have been the comments made to me, urging me to do whatever paperwork now or else...

As to labor moving to Taiwan, I see it more like Tibet: moving along with their families, new colonization. repopulation, so to speak. Loyalist to the regime.

I do not know if it is the weather, but I see little hope here...

TC said...

"The 28th, of course, is the 60th anniversary of the 2-28 revolt and massacre."

You mean 61st, right? Since it happened in 1947.

Michael Turton said...

LOL. I'm STILL living in 2007.

Michael