Friday, May 22, 2015

ECFA Really so awesome?

Coast_April_23
Sympathetic magic as public policy: if we make the smokestacks cute, they won't be harmful.

I had a few minutes today so I thought I'd check out the trade figures for China pre and post ECFA, which I posted on several years ago. Then I said of the 2010-11 figures:
I had Excel put in the trend line on this quick-n-dirty chart. It's obvious even to the Mark I eyeball that the numbers for 2010 and 2011 and 2012 lie on the trend line (in fact slightly below where we would have been had the trend for 2004-07 continued). If ECFA were really that awesome what we should see is a spike after 2010, with the years 2005-2008 lying clearly below this simpleminded trend line
I spent some time today at the Bureau of Foreign Trade, which has a great database system which can be downloaded as Excel files.

First, here are the numbers for the total trade figures for China only from 2000 to 2014.

China Only Total Ex/Im Imports from China Surplus/Deficit Annual Rate of Change
00 10,440,540,918 6,223,111,811 -2,005,682,704    0.819
01 10,798,076,970 5,902,784,486 -1,007,492,002   -49.768
02 18,495,033,007 7,968,294,793 2,558,443,421   -353.942
03 33,907,784,754 11,017,481,839 11,872,821,076    364.064
04 53,140,562,278 16,791,537,670 19,557,486,938    64.725
05 63,736,408,872 20,093,086,019 23,550,236,834     20.415
06 76,590,504,462 24,782,325,696 27,025,853,070   14.758
07 90,430,526,782 28,014,115,689 34,402,295,404   27.294
08 98,273,497,890 31,390,466,074 35,492,565,742   3.169
09 78,670,764,058 24,422,662,822 29,825,438,414   -15.967
10 112,879,654,027 35,945,078,516 40,989,496,995   37.431
11 127,555,177,571 43,595,777,610 40,363,622,351  -1.527
12 121,621,186,471 40,907,429,723 39,806,327,025  -1.381
13 124,376,057,324 42,588,412,443 39,199,232,438  -1.525
14 130,158,219,397 48,038,896,032 34,080,427,333   -13.058

It's a bit wonky, but you can see that our trade surplus with China only has been falling. In fact it is down 13.3% again the first three months of this year. ECFA was supposed to buoy our trade with China. Just the opposite has happened since it was signed.

The data below is for the China, Hong Kong, and Macao.

China, HK, and Macao  Imports Surplus/Deficit Annual Rate of Change
00   44,322,830,265   8,455,926,708   27,410,976,849  23.72
01    41,904,357,865    7,999,571,603   25,905,214,659   02    -5.493
02    53,689,295,915    9,914,356,923   33,860,582,069   04    30.71
03    67,025,011,837    12,964,443,215   41,096,125,407   21.369
04    88,696,335,831    19,133,872,975   50,428,589,881   22.709
05    100,237,776,611    22,235,386,509   55,767,003,593   10.586
06    116,139,937,773    26,688,448,674   62,763,040,425   12.545
07    130,642,313,459     29,866,598,811   70,909,115,837   12.979
08    132,890,050,715      32,912,808,344   67,064,434,027   -5.422
09    109,557,179,579     25,560,602,695   58,435,974,189   -12.866
10    152,632,897,958     37,591,908,057   77,449,081,844   32.537
11    169,546,957,259     45,290,463,268   78,966,030,723   1.959
12     162,388,783,057     43,579,102,256   75,230,578,545   -4.73
13  165,613,353,823     44,257,780,261   77,097,793,301   2.482
14  174,528,005,846     49,732,434,501   75,063,136,844   -2.639

Same general trend. Back in 2012 I noted that the trend was clearly showing a pronounced change beginning in 2010, as Fig. 1 below shows. Several things happened, among them ECFA, but also the Great Recession and the follow on austerity and other collective elite madness in Europe and the US.

Fig 1. Total trade with Hong Kong, Macao, and China. 2000-14 Data source: BFT

I just eyeballed the trend lines, so they are not exact. But they should be clear. The purple line beginning in 2010 is nowhere near as steep as the growth of the Chen Shui-bian era. If ECFA was supposed to make things boom beyond the dreams of the Chen Shui-bian era, it has been a total failure. Indeed, as the trade surplus numbers show, the surplus has fallen each year and returned to 2007 levels in 2014. In 2015 it will likely be smaller. Extrapolating from the first quarter, it will check in around $30 billion. There are many reasons for the shrinking surplus, but the numbers show that ECFA does not appear to have had any discernable effect.

It should also be obvious what will happen to the trade surplus with China if we sign that god-blighted services pact.
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2 comments:

J said...

There shouldn't be trade surpluses at all, except the cost of holding wages down. Surpluses, especially with the US, are a product of monetary policy that holds domestic wages down and forces savings rates to be high and capital to be exported.

If worker productivity is going up, ideally, domestic consumption should go up commensurately. What happens now is worker productivity goes up, wages stay the same, and the excess capital is invested abroad. One day, Taiwan will be forced to reevaluate the NT and all those great "foreign exchange reserves" will take a huge loss.

It is an investment tautology: if the Central Bank is long the US dollar (forex reserves), then it is necessarily short Taiwan. Let that sink in for a second. Yep, the bank bets against the average wage earner and aids domestic investors (財團). Is this really the tradeoff you want or Taiwanese people would want if they were made aware of it?

Kyle Kuan said...

The conclusion is clear -- KMT suck, they are not bad guys, but they suck.