Friday, May 08, 2015

Ex-Im News + Fun with WSJ

A fighter comes in for a landing in Taitung.

A friend alerts me: Great decline in Taiwan exports and imports last month. From the Ministry of Finance:
"For the month of Apr. 2015, total exports contracted 11.7% year on year to US$ 23.49 billion. However, total imports fell 22.1% from a year earlier to US$ 18.73 billion. The trade balance of this month was favorable, amounting to US$4.76 billion."
Exports to Europe and ASEAN-6 fell, reflecting the slower growth in both regions.
In Apr. 2015, comparing with the same month of last year, exports to Japan and U.S.A. rose by 9.3% and 1.2% respectively, however exports to Mainland China and Hong Kong, ASEAN-6 and Europe declined 12.2%, 18.9% and 21.6% separately.
But particularly interesting, my friend notes, is the 12.2% drop of exports to China and the 10.2% drop of imports from China. Combined with the "unexpected" fall of 6.4% in exports and 16.2% imports in China (via Reuters), the not-so-smooth landing of the Chinese economy is starting to have some serious effects.

But as my friend points out
Yet the imports from China drop less than from other regions, meaning that ECFA did its job in replacing ever more Taiwan local production and imports from elsewhere with made-in-China products.
I've reproduced Table 5 showing imports....
I note that imports from China for the first four months also decline the least. This has an interesting effect -- if everyone else is declining faster, China's share of Taiwan's import market is rising even when overall imports are declining. ECFA not only buffers the fall in Chinese exports to Taiwan, it also ensures that China's market share grows even in periods of decline. There's a reason why the public rejects these bullshit "free trade" agreements...

My friend then observes that this new economic reality of Chinese slow down is the reason that the CCP and KMT are pushing to move from the "economic benefits" phase of the KMT's China engagement to the "political talks" phase. The economic benefits, which went only to big businesses anyway, are gone. If economic benefits were the reason to annex Taiwan to China, there's no reason now, and no support for it among the populace. "Peace accords" --likely annexation in all but name -- will be next.

Just think about it an alternate universe where Lien-Soong wins in 2004. The 2004-8 period was the golden age of Taiwanese investment and manufacturing in China. Imagine what treaties they could have passed then, when things were booming. Chen Shui-bian's victory in 2004 was a major turning point in Taiwan history, probably saved Taiwan from a much worse fate than the ugly ECFA agreement.

WSJ "blog" with piece on how opposition to "free trade" is hurting Taiwan's exports. Can we stop writing as if this simpleminded dichotomy "for free trade or against the services pact" is really something other than ideological spew? To wit:
Taiwan’s exporters could soon face another challenge: local opposition to further free trade with China.

Taiwan already is heavily dependent on China, which sucks in 40% of its exports. Many Taiwanese work on the mainland. Currently, the territory has a limited free-trade agreement with its neighbor, which the ruling Kuomintang party wants to extend to cover up to 5,000 items and services.

But protests against the deal last year, led by students, shut down Taiwan’s parliament and put such trade liberalization on the backburner. Many in Taiwan feel further dependence on China will erode its independence and give ballast to China’s claims on Taiwan’s sovereignty.

The problem for Taiwan is that rivals like South Korea are pushing ahead with their own deals with Beijing. Southeast Asia and China already have a trade pact.
What silliness! Everyone on the island is pro-trade liberalization. In the real world, some pacts are good and some are not. Claiming that being against the services pact is the same as being against free trade is like arguing that because I dislike Risk I must hate boardgames. What kind of world is it where this has to be explained? Srsly!

The purpose of ECFA and the services pact are to hollow out the Taiwan economy and boost exports from China to Taiwan, as well as provide a channel for Chinese people to flood into Taiwan. It's not difficult to figure out that these are not "free trade" pacts. The island's exports are in the doldrums because the US and Europe are down, not because the services pact -- a trade treaty so crappy even legislators from its own party wouldn't support it and the KMT had to try to get into law without a vote -- was blocked by the students.

Note that the WSJ blames the students. It says nothing about the opposition from within the KMT. That's another political fallout of this mindless four legs good, two legs bad kind of thinking: it covers up the fact that the treaty was supported by the KMT leadership and big business and nobody else. Indeed, neither ECFA nor the services ever achieved majority support in credible independent polls. But why let facts stand in the way of ideological posturing?

Finally, the clearest marker of ideological blindness: the writer presents no concrete evidence that defeating the services pact has negatively affected Taiwan's external trade. Ma himself said it would create only 12,000 jobs, while the Chung-hua Institute for Economist Research said GDP would grow by an awesome 0.025-0.034 percent. What a shame those anti-free trade students are preventing us from getting those incredible benefits, eh?
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Mike Fagan said...

"A fighter comes in for a landing in Taitung."

An old F5. It's amazing that those things are still being flown, when half of them are now museum pieces scattered around in public parks and other outdoor areas up and down the country.

Brian Castle said...

Perhaps the WSJ is excluding the middle by implying that you're either for the ECFA or you're against any free trade with China. But I think you also exclude the middle when you claim as a retort that "Everyone on the island is pro-trade liberalization." Isn't it possible that many or most people support free-trade in general but make an exception for China? I think if I were Taiwanese that would be my position.

les said...

Pretty sure the F5 is now just used as a trainer.

Michael Turton said...

Isn't it possible that many or most people support free-trade in general but make an exception for China?

That would make everyone pro-trade liberalization. My reading is that they'd all support trade treaty with China too, if they got a fair treaty that China adhered to.


Anonymous said...

They, relatively recently, had a few of the F-5s outfitted as light reconnaissance platforms with camera pods.

Mike Fagan said...

According to the wiki entry, those F-5s in the reconnaissance role were replacing the F-104s, which were basically just rockets with a couple of fins attached to reassure the pilots that they could actually be flown. At Nanhua reservoir there is an open air exhibit in which an F-5 and a Starfighter sit on plinths next to each other. It is disturbing to stand there looking at that gutted rickety old F-104 and think of how fast it was once flown.