Fruit Exports: the Pro-China parties foul up again

The Taipei Times hosted a commentary by a Tainan city councillor on the chimera of fruit exports to China.

Many readers will recall the sensation caused by fruit exports to China. In July, Beijing invited both the Chinese Nationalist Party (KMT) and the Farmers' Association of Taiwan Province (台灣省農會) to discuss this. Anyone of good sense could tell that this was a politically motivated move. Thanks to certain political parties, however, exporting fruit to China was publicized as the best way of boosting the income of local farmers.

As President Chen Shui-bian (陳水扁) repeatedly warned, food quarantine and safety standards are much lower in China. And, even though Taiwanese fruits were granted tariff-free status, they would have to compete with cheap products from Southeastern Asia. Once the novelty of fruits from Taiwan wore off, profit margins would be squeezed and our farmers would have no choice but to cut prices, the the Democratic Progressive Party (DPP) government warned.

The article goes on to observe that the fruit export policies were a failure:

Within six months, the pro-unification media were forced to eat their words and to admit that Taiwanese fruit fever in China had cooled substantially. Stands selling Taiwanese fruits in stores in Beijing were half the size they had been, and business was down by more than 50 percent.

Apart from the novelty having worn off, this was also the result of much fruit from Guangdong and Hainan Provinces having been labelled as being from Taiwan. Thus, the market was flooded with low-quality counterfeits. Even some wax apples exported from Thailand to China were labelled as coming from Taiwan. The Chinese government's failure to crack down on counterfeits and a lack of a classification system contributed to Taiwanese farmers being unable to secure a steady market.

The pro-China parties have simply shamelessly used the local farmers to score political points against the DPP and ingratiate themselves with Beijing. I am reminded of an Asia Times article on this topic I blogged on several months ago:

Reviewing the list of 18 kinds of fruit that China has opened its market to, Liu Jau-jia said, "It is nonsense from the perspective of marketing." Liu explained that two of Taiwan's top three fruits, bananas and lychees, were not granted tariff-free status, while some fruits that could be easily overproduced, such as oranges, could not even be exported to China. "The six kinds of fruit they announced later [on May 3] are even weirder. They are not even major kinds in Taiwan," Liu said, referring to coconuts, plums, peaches, persimmons, loquats, and prunes.

The Taipei Times article continues, noting that this comes against the backdrop of a recent request to lift investment caps:

In light of these developments, the executive should not be fooled into acceding to the Chinese National Association of Industry and Commerce's (工商協進會) request that it cancel the 40 percent cap on China-bound investment by Taiwanese companies (Taiwanese businesses are banned from investing over 40 percent of their net value in China). Rather, it should carefully consider the risks. For example, if the investment ceiling is canceled, how will the flood of business relocation affect Taiwan's unemployment rate? And how will the capital outflow to China further marginalize Taiwan?

The Asia Times also pointed out that the fruit policy had another thrust:

Beijing concluded last year that it should "do more work" for the citizens in Taiwan's south, the heartland of the pro-independence DPP and Chen, its leader, in response to suggestions from numerous Chinese academics. Liu Xiaoheng, an expert at the Chinese Academy of Social Sciences who has visited Taiwan more than 10 times, acknowledged that Beijing has realized "the problems" in Taiwan's south for a long time, but "China is a big country that usually takes a long time to shift its policy". Since Taiwan's entry into the World Trade Organization in 2001, the island's farmers have been suffering in a global marketplace where prices are on average 30% lower, while the inability of Taiwanese farmers to efficiently switch crops has led to oversupply of certain fruits. As a result, Beijing thought it saw an opportunity to pressure Taiwan's government.

If that was really part of the goal, it has failed mightily. The Asia Times article suggested that China was also interested in technology transfer from Taiwan to China, and has established agricultural zones aimed at Taiwan companies whose real purpose is to poach their technology. I suspect, though, that the whole fruit export fracas was simply an election ploy aimed at swinging Taiwanese voters to the dark side, and having performed its purpose, it will now be quietly forgotten.

[Taiwan] [China] [DPP] [Trade]