Thursday, June 09, 2011

AmCham: Taiwan too dependent on China

Those of us who have been following the American Chamber of Commerce's longtime advocacy of closer links between Taiwan and China and adoption of KMT talking points as "analysis" had a good laugh this week as AmCham released its latest White Paper (here) as its director kvetched that Taiwan was too dependent on China and that issues of importance to the foreign business community aren't getting resolved.

Who could have imagined that?

Laudably, AmCham called on Washington to move closer to Taipei and to either resolve or ignore the idiotic beef issue.

The Taipei Times reported:
“Taiwan should pursue greater balance by consolidating its economic connections with such other major markets as Europe, Japan, Southeast Asia and especially the United States, the world’s biggest economy,” AmCham chairman Bill Wiseman told a media briefing on the release of the organization’s annual white paper.

Wiseman’s warning came a few hours before the release of Taiwan’s latest trade data, which showed China accounting for 40.2 percent of exports last month, while the US took only 12.3 percent.

“Over-reliance on one market is always risky,” Wiseman said. “Taiwan should not turn away growth when it can get it, but it needs to lock in the future. It needs to go and start broadening its economic relationships beyond focusing so much on China.”

Taiwan is almost doubly dependent on China, which drove 47 percent of the country’s economic growth last year, sharply higher than the 25 percent average with the G20 nations, he said.
Over-reliance on one market is risky? No kidding? Wasn't that the warning sounded repeatedly by the pro-Taiwan side in the run-up to the 2008 election? Didn't we all know what would happen? Ironically Wiseman's remarks took place even as dependence on China actually fell quarter on quarter, 42.8 percent in the first quarter last year to 40.9 percent of Taiwan's trade over the same period in 2011 (here).

According to the AmCham press release, the White Paper recommended that Taiwan focus on developing its European, Japanese and US markets. But at the same time, it remains strongly supportive of ECFA and urged the government to continue selling out the island opening to China. Laugh at Amcham if you will (and I certainly am!), but it is important to note that in its restrained way AmCham is criticizing its darling Ma Administration for being too focused on China.

Who could have imagined that the Ma Administration would be too focused on China?

The other point they made, also a criticism, relates to the government's resolution of issues important to AmCham.
The organization found that of the 114 issues and sub-issues raised last year, only 14, or 12.3 percent, were resolved or showed satisfactory progress — the lowest in its history of tracking issues seven years ago.
Many of these issues have been around for years.

Time Travel: just for fun I searched my blog for some previous AmCham comments. I've been following AmCham's institutionally pro-KMT stance for quite some time. Remember when AmCham complained that the TSU was gettin' all in their face with ideology? That was in 2006...
The editorial in AmCham's latest issue of TOPICS magazine criticizing the TSU's opposition to closer economic ties with the mainland yesterday infuriated TSU politicians, who warned the chamber against interfering in Taiwan's internal politics.

The editorial even provoked comments from former President Lee Teng-hui according to local news reports.

Vuylsteke said the chamber's stance on closer ties with China was similar to views held by the majority of the public. He warned that too much economic isolation would make Taiwan a nation similar to North Korea or Burma.
Yes, with a million Taiwanese in China at that point, the head of AmCham was worried that Taiwan would become like North Korea or Burma.

From the 2008 White Paper, which was quite reasonable in many ways, came this scolding:
AmCham reiterated its long-held position in favor of eased economic interflows across the Taiwan Strait, with particular reference to expanded non-stop charter flights. If air travel between Taiwan and mainland cities becomes time-saving and convenient, more multinational – and Taiwanese – companies will choose to locate more key personnel and business units in Taiwan for reasons of quality of life, IPR protection, and other rule of law issues, it said. The Chamber called on Beijing to appreciate the special opportunity created by the current political environment in Taiwan, and therefore to respond positively to the Ma administration’s initiatives. In addition, it asked the Taiwan government to take action on measures that it could implement unilaterally, such as removing caps on direct Taiwanese investment in China and on mutual fund investments with China holdings, and eliminating “frivolous” items such as potato chips from the list of products banned from being imported from China.
In 2009 I asked when AmCham was finally going to learn. AmCham was complaining that the government's  plan to lower the cap on credit card rates. The Taipei Times ripped them because of course all of us who are familiar with the KMT's long-term behavior knew precisely what was going to happen. But in that post I quoted my 2007 post...
One of the major problems with Taiwan's economy, from outsider's perspective, is that it is often a game outsiders are not allowed to play. The Chambers of Commerce appear to be of the opinion that this will change if Ma is elected. Lotsa luck, guys. Because after Ma "opens" the economy, AmCham editorials are going to read like this:

"While in principle we welcome the new openness shown by Taiwan during the first two years of President Ma's administration, AmCham wishes to express its growing concern over the preferential treatment given firms from China....."
Daily Links:
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! Delenda est, baby.


MJ Klein said...

we discovered during our weekly trips to Costco, that US beef has been replaced with Australian beef.

Dixteel said...

AmCham is mostly right this time, but it is really kind of funny given its prev. stances. It really makes them look extremely dumb because anyone who has a basic understanding about Taiwan would know that AmCham's prev. advocation leads directly to today's result of too much dependence on China. Even some of the conclusion/recommendation of this new AmCham analysis today still sounds quite naive and lacks foresight.

I think it is most likely because AmCham lacks understanding on the political side of thing, and only looks at economic numbers, while China's policy toward Taiwan are mostly driven by political agenda.

Michael Turton said...

It is funny, Dix. But it is sad too.

Ben Goren said...

"I think it is most likely because AmCham lacks understanding on the political side of thing, and only looks at economic numbers, while China's policy toward Taiwan are mostly driven by political agenda."

You nailed it there Dix ...

Okami said...

I think Amcham wants to stop being screwed by the regulatory and bureaucratic regime of Taiwan and had hoped that they would take a more westernized approach rather than the traditional Chinese mandarin approach. They probably hoped that a closer China approach would cut down on their expenses by allowing them to merge operations. I can't see many making money out of selling things to Taiwanese or Chinese unless it's somehow specialized.

Unfortunately for them no one in Taiwan knows WTF is going on and they hoped that by joining closer to China, that would become more apparent along with Taiwan becoming more modern and westernized. Taiwan is unfortunately following a more insular path like Japan rather than a more outward path like Singapore.

This basically means we're screwed with an aging population with stagnant wages, overpriced housing and failing infrastructure. Then we get high debt rates that will probably mean more taxes(VAT and import/export duties) for the lower classes.

Anonymous said...

When I first saw this post, all the AMCHAM ECFA cheerleading articles popped into mind. I also remembered how they lavished their support on Ma Ying-jiu during the last election. I remembered talking with some of their reps and being criticized as an "isolationist" for raising the same concerns. I was told with that American assuredness that we've been hearing for two decades, "China is the future. Once they open up and see how great free markets and democracy are, they'll change."

Funny... in a sad way.