Monday, March 30, 2009

Economic Round Up

I was just finishing Jon Adam's article at Global Post on the use of a GPS chip in the Matsu statue so believers could locate and follow the annual Matsu procession as it snakes its way around Taiwan, when my friend Mu flipped me the China Post piece on our MOEA head who says our economy will grow if only we have ECFA:
Yiin Chii-ming, minister of economic affairs, said yesterday the economy will grow next year if an economic cooperation framework agreement (ECFA) is signed between Taiwan and China. Without the ECFA, Yiin warned, the economy will shrink.

He told a seminar on regional economic integration and economic cooperation across the Taiwan Strait that the gross domestic product will increase by 1.374 percent in 2010 when the ECFA goes into force.

“If not,” Yiin predicted, “our GDP will shrink by at least one percent.”

The rise or fall in GDP depends on whether the ECFA is in effect on January 1, when the ASEAN-plus-One free trade zone is formed. Ten member states of the ASEAN (Association of Southeast Asian Nations) and the People's Republic of China form the zone, which will include Japan and South Korea by 2015.
It always must be pointed out: the government insists we sign ECFA to "save" our economy now even though it won't come into force until deep into 2010. Of course, it refuses to give any clues about what ECFA contains. We just have to trust that the KMT will guard our interests....

Mu observed sardonically in the email that the same people who utterly failed to predict our current economic catastrophe nevertheless feel confident in assuring us hoi polloi that the economy will be spurred by ECFA. I had to laugh; Yiin's calculation is exactly 1.374% -- not 1.373% or 1.375%, but 1.374 exactly. With precision like that, how can he possibly be wrong? Taiwan's 2007 GDP was US$371 billion at the official exchange rate, so .oo4% works out to something like US$1.5 million, I think. The Taipei Times report on this added that Yiin was amenable to a mechanism for leaving ECFA, should it turn out not to be beneficial for Taiwan.

Kyodo ran a piece on the entry of Next Media into the Taiwan market. Recall that Jimmy Lai, the driven, energetic Hong Kong-based owner of Apple Daily had claimed that too many media outlets were coddling China here in Taiwan, and he was going to shake things up. He then appointed King Pu-tsung to head up the operation. Who is King?
King Pu-tsung, Taiwanese President Ma Ying-jeou's ''most trusted confidant'' and CEO of Next Media's two planned TV channels on the island, will give the company the credibility it needs -- especially with Ma's ruling Nationalist Party (KMT) -- for market inroads, Lai said.


With King, 53, on board, ''the KMT will perceive us as more legitimate, more credible and they will be more receptive,'' Lai said. ''In the media, your reputation -- how people perceive you -- is very important, especially in terms of advertising.''
Well, Lai might be in with the KMT, but it is hard to imagine how having Ma's right-hand man run the media business will make his media group a more credible news source -- or a less pro-China one. Still, Lai has a reputation for being critical of Beijing:
''I'm sure some people, especially in China, don't want become the biggest media group in Taiwan,'' he said, adding, ''What the trend will be is Taiwanese businesspeople in China going back to Taiwan to buy media -- like Want Want -- to get good standing with the Chinese government or better status in China.''

Undeterred, Lai made public in February plans to launch two TV cable news channels in Taiwan -- one for general news and one for financial news. But this time Lai, 61, came armed with cash and King, renowned for his political savvy and closeness to Ma.

King served as Taipei's vice mayor under Ma 2004-2006, the last two years of Ma's eight-year mayoral stint. King later managed Ma's presidential campaign but shrugged off a Cabinet post last year, preferring instead to serve as a visiting scholar at the Chinese University of Hong Kong, where he cemented ties with Lai.

Ma took office May 20, while King, who holds a Ph.D. in journalism from the University of Texas at Austin, began his half-year stint in Hong Kong in July.

''[King and I] were always together talking and I mentioned to him, 'If you're not going back into the government, maybe there's something we can do together because we're starting a TV station,''' Lai said.

Lai plans to spend roughly US$200 million to kick-start the channels, which -- with King's help -- could be launched from scratch or more likely remade from existing channels.

''We haven't talked seriously with any channel yet; we're still in the process of setting up a studio, hiring and training people and creating content,'' Lai said. Still, he hopes to launch both channels ''in the first quarter of 2010.''

But while King's connections may give Next Media ''a better reception'' -- vital to launching the channels by early next year -- Lai said King will not actively seek benefits from those connections.

''I think it would be a drawback if we had any dealings with the government,'' Lai said, adding, ''You can't hide anything because (King's) so exposed -- if he gets some advantages for us, everybody will know it.''

For his part, King has vowed journalistic fairness as CEO of the future channels, according to a report last month in the Taiwan edition of Apple Daily, the island's best-selling daily.

And already, some of Lai's toughest and most influential critics -- many of whom are friendly to China -- are warming to his plans for Taiwan's TV market.

Among them is Taichung Mayor Jason Hu, a former Foreign Minister and KMT heavyweight whose wife was photographed by an Apple Daily reporter in 2006 after a traffic accident that nearly killed her. The next day, the daily ran on its front page a large photo of Hu's blood-soaked wife -- an editorial move that sparked protests from privacy advocates at the newspaper's Taipei headquarters.

''I still have my reservations about Jimmy Lai...but [King] is no puppet; I have the utmost confidence in King,'' Hu told Kyodo News in an interview last month.

Typically a bellwether for KMT sentiment, Hu's remarks bode well for Next Media, whose habit of confronting Chinese leadership has scared off much potential advertising business in recent years for the Hong Kong editions of Apple Daily and Next Magazine, said a Next Media employee.
Taiwan's 24 hour cable news market is completely saturated, so it appears that a bitter war for audience eye time may well be in the making.

Don't miss the comments below! And check out my blog and its sidebars for events, links to previous posts and picture posts, and scores of links to other Taiwan blogs and forums!


Anonymous said...

What the hell is Jimmy Lai thinking? Dong-sen, New ERA, and CTV are dead men walking for cable news in Taiwan. If he wants to do anything innovative in the Taiwanese market, he needs to have an internet strategy.

reeb said...

@MT: Of course, it refuses to give any clues about what ECFA contains.

I keep thinking wtf is the real issue. I suspect its something to do with the banks and payment in RMB for Chinese goods. Gordon Chang has an interesting piece in the 03-25-09 issue of Forbes: China's Assault On The Dollar

Moreover, Beijing just entered into swap arrangements involving Indonesia and Hong Kong, and both deals contemplate the use of renminbi. ..And some think Beijing will expand the issuance of "panda bonds" as a way of popularizing its currency.

Also interesting:

China and Argentina have agreed to set up a 70 billion yuan ($10.24 billion) currency swap system that will enable trade between the two nations to be settled in the Chinese currency, the state-run Xinhua News Agency reported Monday...The agreement marks Argentina as the fifth nation to sign currency swap agreements with China following similar agreements with South Korea, Malaysia, Belarus and Indonesia. China ranks as Argentina's second-largest trade partner.

China, Argentina to settle trade in yuan: Xinhua

I have to wonder if maybe Taiwan is thinking about dumping their dollar based assets before TSHTF? Perhaps with China's financial protection, they have room to do this? A few months ago Taiwan was the first country to cease buying any US agency paper. Now maybe its no more Treasuries as well? Perhaps they believe its better to invest in RMB assets? (especially since they are not getting their military?)

Sorry, It's late and I'm rambling, its just a thought. Lastly, three other interesting links:

Singapore May Devalue Currency in April, Survey Shows

Part 5 of this 2005 Dutch youtube called Worst Case: The Day The Dollar Falls mentions the one issue that I've been worried about for some time, that is; if there is a dollar crisis, then the airlines stop flying.

Unrelated - Here is a podcast from Gordon Chang on North Korea. This 22min podcast is from 2006, but it's still worth a listen to understand the NK issue. (history, pov of SK/JPN/CN, etc.)

Dezhong said...

"I had to laugh; Yiin's calculation is exactly 1.374% -- not 1.373% or 1.375%, but 1.374 exactly. With precision like that, how can he possibly be wrong?"

When I read this I couldn't help but think: From the same people who brought you 6-3-3...