Taiwan exports to China not getting boost like they should from ECFA

The CNA reports that ECFA isn't all it was meant to be for Taiwan's exports to China....who could have predicted that?

Although Taiwan has the advantage of tariff incentives in its trade with China, which South Korea and Japan do not have, those two countries still posted higher export growth rates than Taiwan during the first seven months of 2011, Vivien Liou, deputy editor-in-chief of the Taipei-based Business Weekly, said in a press conference in which the poll results were announced.

Between January and July this year, exports to China of the 539 items covered under the early harvest list totaled US$11.8 billion, up 14.4 percent from the same period of last year.

That was lower than the 17.5 percent compound annual growth of the same group of exports to China between 2006 and 2008, before the global economic tsunami hit, Liou said, and also poorer than other countries in the region without ECFA benefits.

According to the weekly's figures, Japan and South Korea saw exports of the same group of products to China grow at rates of 14.96 percent and 28.91 percent, respectively.

But exports of products covered by the ECFA did benefit to some extent, according to CNA calculations, based on Chinese customs and Business Weekly figures. ulations, based on Chinese customs and Business Weekly figures. Their 14.4 percent export growth to China was nearly double the 8.7 growth of exports from Taiwan that were not covered under the early harvest list.

Haha --- exports to China grew more rapidly under Chen Shui-bian than post-ECFA. That's actually to be expected -- as volume rises, relative gains become more difficult (it is very easy to grow 10% if your trade is only a million bucks, but if it is a billion, a 10% gain represents a much larger absolute figure that the economy must generate). China said that its data showed manufacturing expanding for the first time in four months; the recent slowdown in China is likely impacting Taiwan export growth more than ECFA. Another factor might be the appreciating yuan which is hitting re-export of Taiwan products imported into China for assembly.

Note that the data come from the PRC. I wondered why the CNA had calculated the data in such a strange way, so I bopped over to the MOEA website in Taiwan but the search interface is clunkier than a crippled elephant at a ballet try-out. Then I knew.....

The CNA piece also says:

Shih Hui-tzu, a researcher at the Chung-Hua Institution for Economic Research, was quoted as saying that if South Korea, Taiwan's principal trade rival, were to sign a free trade agreement (FTA) with China, it would be "the most powerful rival" for the ECFA.

Shih also pointed out that it will be very difficult for Taiwan to sign FTAs with the European Union, the Association of Southeast Asian Nations and the United States in the short term, which means that the Chinese market, therefore, is "Taiwan's only chance to beat (South Korea)."

Taiwan's obsession with South Korea here is combined with the fear that dominates so many comparisons in Taiwan -- the fear of being weeded out of the competition, as well as the island nation's obsession with rankings. "We must beat South Korea!" as if somewhere, someone is keeping score.

Again one must ask: Where are the FTAs we were promised?
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