Riding Taroko Gorge

Friday afternoon a group of us met at the Sincheng train station in Hualien County for another ride up Taroko Gorge. The plan this time was to bike the 25 kms from the train station to the Catholic Hostel at Tianxiang at 480 meters of altitude, overnight there, then bug out at 7 or so in the morning and climb 50 kms and 2100 meters to a hostel in Tayuling.

Betel Nut Culture in Taiwan

I'm off gallivanting around Taiwan this weekend and won't be blogging. So enjoy this piece on Betel Nut Culture in Taiwan, which has excellent photos from the awesome Tobie Openshaw.

Since the late 1990s, betel nuts became the second largest selling crop in Taiwan after rice. The betel nut industry in Taiwan is worth about $1 billion USD and grows about 140,000 tons per year.2 A reason that led to the success of the betel nut industry in Taiwan is the lack of regulations under the Nationalists administration since 1949, which helped turn betel nuts into a cash crop. For a long time, there were no laws or taxes placed on farming or selling betel nut, thus earning its nickname as “green gold.”3 As the betel nuts are sold fresh and must be processed within 48 hours of picking, there are no barriers between the wholesalers and the vendors.4 So far, aside from the betel nut girls, the wholesale marketing of betel nuts is practically free from corporate influence and governmental regulation.5 In addition, due to the lax regulation on betel nut farming, more people began to exploit the lands to create more betel nut farms and as a result, it has brought attention to a number of environmental issues, such as soil erosion and flooding.6

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[Taiwan] 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!

Early Harvest List Reaps Harvest of Sorrow

Formosa Plastics, one of the most powerful firms on the island, expressed unhappiness about the results of the recent round of ECFA talks. Those Planes Loaded With Cargo just can't seem to land....

The chief executive of Formosa Plastics Group, Taiwan's largest petrochemical conglomerate, expressed disappointment Thursday that the petrochemical sector was not included on the "early harvest" list under a proposed trade pact with China.

Wang Wen-yuan urged the government to pay more attention to the old economy industries and continue efforts to support the sector by winning consensus with China to include the petrochemical sector on Taiwan's list of items and services that will enjoy tariff waivers or an easier market access upon the signing of the economic cooperation framework agreement (ECFA) with China.

Taiwan and China wrapped up the third round of ECFA negotiations Sunday and reached consensus on the context of the pact, including the "early harvest" lists of each side.

A government official who demanded anonymity had said earlier this week that polyvinyl chloride and polypropylene have been excluded from the "early harvest" list.

Also not on the list were automobiles, which means that the rationale for the VW investment here in Taiwan just went POOF. Wang also said that the firm's rivals in Korea, Japan, and southeast Asia are expanding their capacities, meaning that brutal price wars are probably on the way, especially if the economy of China goes KA-BOOM. Which means that after capacity expansion to take advantage of government subsidies, Formosa Plastics will next scream either for more subsidies or protection. [sonorous voice] "The petrochemical industry is too big to fail...." The whole rationale for that brontosaurian industrial complex down in Mailiao with its steel plant and naptha cracker is the China market.....

REFERENCE: China Post article outlining the sectors covered. And don't miss these comments from Yen Ching-piao about economics and the environment.
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[Taiwan] 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!

US Navy Comander Blasts Chinese

When, on the other hand, I look at the rest of the world I am obliged to say: They were simply asleep while this miracle was taking place. Even today they refuse to grasp it. They do not realize what we are, nor do they realize what they themselves are. They go on like a figure of 'Justice' - with blindfolded eyes. They reject what does not suit them.

A US navy commander interviewed in a Japanese newspaper took a few shots at the increasingly (and needlessly) aggressive posture of the Chinese:

Repeated Chinese navy helicopter flights close to Japan's Self-Defense Force ships in the East China Sea and the Western Pacific in April were neither professional nor responsible, says the commander of the U.S. Pacific Fleet, Adm. Patrick Walsh. [blogged on a few weeks ago - MT]

......

Walsh expressed concern about China's increasingly aggressive behavior in the South China Sea.

He pointed out that in 2009 alone, China detained 433 Vietnamese fishermen who were working in waters where the territorial claims of both countries overlap.

He also said that China recently started describing the South China Sea as its "core interest." It is a term that China uses to explain its positions vis-a-vis Taiwan and Tibet.

"This is an issue that has us very, very concerned because, on principle, the interference with freedom of navigation in international water is a core interest for those who use the global commons," Walsh said.

"At the same time, this economic 'carotid artery' that runs through the South China Sea ... they are willing to put at risk over rocks, reefs and disputed claims."

While the United States has been trying to maintain a mature relationship with China in the economic sphere, he said, "the military representation of the People's Republic of China is one where we just lag any kind of mature relationship, and it's just fraught with the potential for misunderstanding."

.....

In reaction to China's disturbing behavior in the South China Sea, several littoral states such as Vietnam and Singapore are now purchasing submarines "as a way of protecting sovereign rights," Walsh said.

In an interview with a Japanese paper, Walsh blasts the Chinese Navy. If you were Japanese and seeking reassurance, you just might feel you got some.

The US navy has been a consistent supporter of bettering its relationship with China. Is this a sea change? Or just one man's opinion?

Walsh mentioned later in the piece that he has been visiting countries in the waters around China and they are all interested in closer cooperation with the US.

Of note in this is Walsh's statement that China is now using the term "core interest" to refer to its expansion into the South China Sea, the same one it uses to define its attempt to annex Taiwan and its annexation of Tibet. Those of you wont to say that Taiwan is "the last piece of the puzzle" have been comprehensively proven wrong by China's desire for Arunachal Pradesh, the Senkakus, and now this. China just made "the puzzle" bigger by thousands of islands.

Observe also the progressive upgrading of claims. Just as the claim to Taiwan has fostered a claim to the Senkaku Islands, and the annexation of Tibet has led to the claim to Arunachal Pradesh, so what started as claims to some islands in the South China Sea has just become a "core interest." It's not going to stop until there's an armed confrontation somewhere.

UPDATE: See Thomas' excellent comment below.

Meanwhile, back within the Beltway, Senate Intelligence Committee Chairman Diane Feinstein (D-China) claimed that US arms sales to Taiwan were hurting ties with China. She also said:

Senate Intelligence Committee Chairman Dianne Feinstein told Gates that Chinese leaders had offered to reposition at least some of their military forces opposite Taiwan. An aide said she was referring to an offer that was made in the past and was no longer on the table.[UPDATE: "redeploy the missiles" appears to be confusion based on a misquote]

Feinstein's husband Richard Blum is a major investor in China. Not by coincidence, Feinstein has argued for closer connections to China. One of Blum's old business partners is Peter Kwok, who is involved with the current sale of the Nanshan unit in Taiwan. Have fun with searches on Google and see what else those names uncover.

Yes, that's right. The head of the Senate Intelligence Committee is married to a man who has extensive business interests in China. Brrrr.....
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Daily Links:

• Taiwan Matters on a land grab by the KMT magistrate in Miaoli
• Welcome to the 14th century: it's not sexual harassment if you only put your arm around her waist. Waists aren't private parts.
• Jens Kastner correctly interprets the Ma request for fighters as designed to make Ma look less subservient to his allies in Beijing. Ma can request the aircraft confidently knowing that the request will never be approved, though it will always be on the verge.....
  

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[Taiwan] 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!

Taiwan News: Don't lower standards for the Taishang

Taiwan News hit another high note today with its response to the suggestion that the economy be dumbed down for returning businessmen from China...

Even though it is questionable whether the "cost-down" mentality or even "sweatshop" management practices, which were fostered during four decades of KMT-imposed martial law rule, have truly left Taiwan, it is indeed critical to Taiwan's economic future to block a "return immigration" of the draconian factory management and low wages and "cost - down" strategies.

The key issues is what will such Taiwan companies and investors do now that they must confront the visible limit point of the viability of this exploitative model in, at least, the coastal zones of the PRC and what will be the policy of our government.

Unfortunately, successive Taiwan governments, whether under the KMT or the centrist Democratic Progressive Party, have been unwilling or unable to wean most Taiwan companies from their addiction to low wage and cost-down business strategies and adopt strategies aimed at boosting value added and total factor productivity, quality, environmental protection, creative designs and brand name marketing that could promote high wage and quality employment.

The latest wave of upward wage pressure in the PRC has again led to calls by many Taiwan conglomerates and "market fundamentalist" economists for the KMT government to attract Taiwan businesses (often known as "Taishang") to "return home" with "favorable conditions."

Revived 'social dumping'

Such incentives include lower corporate income taxes, lower inheritance and gift taxes, favorable rents in industrial zones, streamlined entry into "free trade port zones" and expanded quotas for the use of foreign labor and, by no means least, the publically voiced possibility of "delinking" the wages of foreign labor from Taiwan's basic wage of NT$18,400 a month as mandated by the Labor Standards Law.

Despite statements by MOEA officials urging Taiwan companies to invest in high technology or environmentally friendly "green" products and services, the structure of such perks too clearly presuppose assistance to Taiwan companies in maintaining "cost down" business strategies if they return home. Indeed, the "Cross-Strait Economic Cooperation Framework Agreement" pushed by President Ma Ying-jeou's KMT government also falls into this dilemma by focussing government attention on tariff cuts instead of industrial upgrading.

In our view, Taiwan companies which aim to bring back "cost-down" and "low wage" production methods should be politely encouraged to invest in Southeast Asia or Central and South America or South Asia and help diversify our export markets.

The fact of the matter is that the only and short-term "benefit" of allowing Taiwan companies to bring back this "successful model" will be statistical as positive "multipler" effects for our domestic economy will be minimized if wages are kept specially low in such special zones.

Even more worrisome is the likelihood of further delays to Taiwan's urgent project of industrial upgrading due to the "opportunity cost" imposed by the granting of official incentives to "cost-down" business operations and the resulting squeezing out effect on assistance to high-value added operations.

However, the gravest damage would come if the KMT government caves into pressure from pampered conglomerates and agrees, despite current denials, to directly or indirectly delink the wages for foreign workers in free port zones or elsewhere in Taiwan from the basic wage.

The government's mentality is that it must compete by slashing costs -- labor costs, specifically. It's a move toward the future, if the future is the 1980s, another of the many status quo policies of the KMT Administration. Yes, it is 2010 and we're exporting petroleum products to China, made out of government subsidized oil, with subsidized water and electricity, in factories with the most limited environmental oversight, owned by firms whose taxes just got slashed. Welcome to the free market: what we're really exporting to China is our tax dollars.

Several articles in recent years have pointed out the growing soft power of Korea (2007, 2008, 2010) -- with its TV shows and songbirds (like the Wonder Girls and Girls Generation about whom a local newspaper remarked "they could conquer North Korea with their legs"). Taiwan has nothing like this; its music culture at best is parochially focused on the Chinese speaking world and its talented film culture is tragically undersupported. Yet rising Korean soft power will help drive acceptance of Korean exports all over Asia. Branding and R&D and low labor costs just aren't enough for the 21st century -- the government needs to be taking a much bigger hand here....
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More Daily Links:

• Special Investigative Unit, which was mega-slapped by the Court, to appeal Chen Shui-bian ruling
• Volkswagon to set up assembly plant in Taiwan to take advantage of ECFA early harvest items BUT reports are confused on whether autos will be on the early harvest list.
  
• Taiwan What's Up latest issue
• WTF?: US passports' key tech is outsourced to Thai manufacturer.
• China. Water. Tibet. India.
• Explaining the world economic collapse in 3 minutes. Too painful not to laugh. (h/t to JE).
  

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[Taiwan] 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!

US China Policy: Opposite Poles II

Defense News weighed in one the recent "outburst" of a Chinese general directed at the American delegation in their trip to Beijing. In the key section, Defense News quotes several analysts:

"There is no evidence that the Chinese military takes forward-leaning positions ahead of, much less counter to, the PRC civilian leadership," said Dean Cheng, a China specialist at the Heritage Foundation. "I believe that Gates is being ill-served if he is being advised that there is some kind of factionalism, or that the PLA is operating 'off the reservation.'"

Another China-watcher, Larry Wortzel of the U.S.-China Economic and Security Review Commission, noted the PLA makes few foreign-policy decisions of its own, but rather, acts within the broader foreign policy guidance of the Central Military Commission and the Politburo Standing Committee.

"Generally, the approach seeks to take advantage of American eagerness to 'engage' and the naïveté of senior U.S. officers and civilians that drinking tea and looking at bases changes approaches fundamental to national interest. For the Chinese, it does not," Wortzel said.

To be certain, senior U.S. officials want to move on from basic functions to substantive discussions about, say, freedom of navigation in the South China Sea.

But to the Chinese, even launching discussions about such matters would constitute "yielding or compromising on strongly held general principles, so they don't engage," Wortzel said.

In their drive to kill Taiwan's request for new F-16s, China is ignoring direct dialogue with senior U.S. defense officials, preferring instead to influence Washington through retired U.S. generals, Wortzel said.

"The Chinese side understands that the United States participants are now senior retired officers with deep ties to major corporations and boards that do business with China," Wortzel said.

The ironic thing about noting that the Chinese, in attempting to influence US policy, connect with individuals with deep ties to the corporate universe, is that above the Defense News pieces cites Bonnie Glaser:

"There are certainly different points of view in China on how China should respond to U.S. arms sales to Taiwan and other steps by the United States that challenge China's core interests," said Bonnie Glaser, a China specialist at the Center for Strategic and International Studies (CSIS) in Washington, who attended both the U.S.-China Strategic and Economic Dialogue (SED) and the Shangri-La. "Those who are confident about China's power position relative to the United States and are deeply suspicious of U.S. intentions toward China are willing to stand up to the United States and demand concessions."

Note how Glaser describes it as if there a strong divisions and these divisions represent major factions. The reader might be tempted to conclude that Glaser is mainstream, because the piece then cites Larry Wortzel of the US-China Economic and Security Commission, and then Dean Cheng of Heritage, who are clearly "right-wing", and argue that actually the anti-US noises represent PRC policy (aside: consistent with the Chinese practice of letting underlings bitch truth at you while the great men stand benevolently above such needful vulgarities). If you dig around on Google for a moment you'll find that Wortzel has a Heritage background as well. Obviously it is a case of mainstreamers vs right-wingers, right?

Think again. Who does Glaser work for? CSIS. CSIS speaks for the pro-China corporate point of view, which favors "engagement" with China. Speakers for CSIS detest the pro-Taiwan side in Taiwan's politics and have frequently painted it as a troublemaker (example 1, example 2, example 3). CSIS' report on what the US should do in China policy is written by two businessmen in the China trade. In other words, if you want to claim that Heritage is anti-China, you'd have to admit that Glaser's team has a quietly powerful pro-Beijing stance. Excellent work by the Defense News writer in correctly setting these two sides in opposition to one another.

But never mind that. The article's key point is its focus on the use of the generals-turned-corporate officials to influence US discourse and US policy. Brrr....

One other thing. The Taipei Times ran an article on the Afghan mineral riches today. At the end, it said:

China and India have bid for contracts to develop Afghan mines, with the Chinese winning a huge copper contract. An iron-ore contract is due to be awarded later this year.

A new minerals rush could pit US and Chinese interests against each other. Some critics in Washington grumble that China is reaping rewards from the copper mine while US troops are heavily committed against the Taliban.

That's what I've been saying for ages now: US troops are dying to make Afghanistan safe for Chinese expansion. Only Beijing will win the Afghan War.
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Daily Links:

• 6 worst parts of being Chinese-American from Cracked
• Let the hilarity ensue: Taiwan's journey to peacemaker.
• FAS has CRS report on Taiwan's Democracy
• Israel and Taiwan sign joint R&D agreement
• NYTimes article on our awesome local whisky distillery
  

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[Taiwan] 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!

Daily Links, June 14, 2010: Non stop rain edition

Here's a man who successfully found a moment out of the rain. The rest of us suffering under the Deluge can only find refuge on the blogs this week.

BLOGS:

• David's letter in the Taipei Times about the death penalty.
• Rain video from Nascent
• Drew on bikes, ECFA, and mythology
• Sponge Bear says expats who like Taiwan beer are delusional and have been in Taiwan too long.
• Is China moving against Taiwanese and Japanese corporations?
• Ben observes the "collective wisdom of the Chinese nation" in Ma's discourse. Note how it too stinks of the Chinese-barbarian dichotomy in the first link in the media section.
• Taiwan Air on the Lungkung Air Station in Chungli, now abandoned.
• Wandering Taiwan on the Penghu fireworks festival
• Pat on biased media coverage on ERA cable of the world cup.
• Taiwanonymous looks at translations. I have often seen the same problems, good spot.
• Hear in Taiwan interviews local professor on wage hikes.
• Todd with pics from the Taichung Photowalk
• Joshua busts someone selling illegal birds.
• Demo! says Taiwan should expand connections with Ukraine
• China, India, Coal, Emissions.
  

MEDIA:

• Resurrecting the China-Barbarian dichotomy. Power has not made China more cosmopolitan in its thinking, argues the writer.
• KMT does well in local township elections.
• Much donated blood in Taiwan is unusable thanks to high lipid levels.
  
• Labor unrest continues to "spread" in China. Yet all the plants mentioned are foreign-owned.
• Danny B says Y2K bug looms over the ROC.
• AIG agrees on terms for Taiwan unit.
• 2009 sex ratio for births was 109 to 100 in favor of males.
  
• MOEA trying to lure Taiwan firms home.
• Taiwan students protest pro-China bullshit at their university. A Vice-President of I-shou University mentioned in the article was the KMT candidate against Chen Chu in Kaohsiung last election cycle.
• Taiwan. Oil. Belize.
• Sun Moon Lake wants another cable car.
• Rupert Hammond-Chambers with excellent piece on taking China out of the US-Taiwan equation.
• DPP says government oversimplifying ECFA with Taiwan.
• CALL CENTER gang busted in Bangkok.
  
• UDN on why new townships have failed.
• Chen Shui-bian is so f*cking awesome, he can get the Vatican to canonize the saints he desires. No, seriously, Beijing is completely insane about Chen Shui-bian.
  
• Brookings with a transcript of the May 18 event, assessing Ma Ying-jeou at mid-term.
• JapanFocus on the alternate narrative to the main gov't one on South Korean ship sinking allegedly due to N. Korean torpedo. Don Kirk has a response in Asia Times: if you don't believe a report unsupported by evidence from nations still at war with N Korea and contradicted by one of its investigators, you're obviously a conspiracy theorist.
  
• When you look at the Establishment writing on the lost Afghan conflict, which only benefits US military contractors and China, you hear the echo of the Japanese at the end of WWII, refusing to surrender even though the war was lost. Each government and its supporters are totally irrational. Greenwald captured the essential hypocrisy of our foreign policy in nifty post on John McCain the other day.
• NASA: Hottest spring, Jan-May, and 12 months on record, even as sun is at minimum.
  

RIDES & BIKING :

• UPCOMING:Several of us are biking the Central Cross Island Highway from Sincheng in Hualien to Puli on the other side this weekend, Sat-Sun, overnighting near Tayuling where 8 and 14 meet. Drew has details. Weather looks good at this point.
• Michael C did Taipingshan this week. Awesome ride.
• Cycling Satin Sestina with a marvelous musing on loving one's bike
  

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[Taiwan] 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!

ECFA Agreement reached

Welcome counterfeiters and smugglers! ECFA is in the house! Media organs began reporting last night that negotiators for the CCP and the KMT had reached agreement on 200 items from China to Taiwan, and 500 from Taiwan to China. Bloomberg reports:

China and Taiwan said they reached a basic agreement on tariff reductions in a third round of talks to boost economic and trade relations.

“We are still working on details, but the basic agreement has been reached,” Tang Wei, head of Taiwan, Hong Kong and Macau affairs at China’s Ministry of Commerce, said late yesterday after talks in Beijing with Huang Chih-peng, director- general of Taiwan’s Bureau of Foreign Trade.

An agreement would lower tariffs on more than 200 items exported from China to Taiwan including car parts, petrochemicals and machinery, the officials said. The exact items have yet to be decided, and Tang said he hoped that Taiwan would export textiles and car parts to China. An accord would allow service providers to compete in the two markets, he said.

The report is entirely one-sided, but it does note that:

Any accord “will boost market sentiment and confidence,” Tony Phoo, an economist at Standard Chartered Plc, said by phone in Taipei yesterday. Still, “the preferred-tariff treatment won’t happen at least for the next one to two years.”

One to two years? Just like the financial agreements, the effects are in the future.

Kyodo, and this report above, also hint that the agreement is about having an agreement -- yesterday Kyodo said that negotiations remain to "confirm" the list. As AFP reports, negotiations had stalled. Further, the "early harvest" list had been dropped entirely. It looks like they agreed to simply announce an agreement, so the KMT wouldn't lose face, and then hammer out the details over time. Taiwan News reported:

The administration of President Ma Ying-jeou wants to sign the accord before the end of June, but Premier Wu Den-yih for the first time threw doubt on that timetable Saturday when he said the negotiations were stuck in differences over the early harvest list.

Taiwan’s chief negotiator, Huang Chih-peng, said at the start of the talks Sunday that both sides had largely agreed on the text of the ECFA and on the basic principles for the early harvest list. Taiwan and China had also largely agreed on other items such as measures to solve trade disputes, he said.

Huang is the director-general of the Bureau of Foreign Trade under the Ministry of Economic Affairs. His counterpart at Sunday’s talks was Tang Wei, the head of Hong Kong, Macao and Taiwanese affairs at China’s Commerce Ministry.

During the morning, negotiators discussed the wording of the accord itself, according to statements made to the media during the lunch break.

KMT officials had flown over to make one last desperate bid this weekend for an agreement after the early harvest negotiations collapsed. Looks like they succeeded in reviving an agreement. Or at least the appearance of one.

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[Taiwan] 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!

Early harvest with China Fails to reach Agreement

March 2, 2009: China Post

"President Ma Ying-jeou wants to reap an “early harvest” from economic cooperation between Taiwan and China, his spokesman Wang Yu-chi said yesterday."

July 9, 2009: CENS

"The Ministry of Economic Affairs (MOEA) has decided to put flat panel display (FPD) and FPD glass on the list of early harvest for the cross-Taiwan Strait Economic Cooperation Framework Agreement (ECFA), so that local manufacturers can expand their market share in China, capitalizing on the edge of free tariff over Japanese and Korean rivals."

September 15, 2009: CENS

President Ma Hopes ECFA to Be Inked by Early 2010

The government will try its best to sign the cross-Taiwan Strait Economic Cooperation Framework Agreement (ECFA) by the end of this year or early next year, said President Ma Ying-jeou yesterday (Sept. 14).

October 1, 2009: China Daily

"The government has completed a tentative early-harvest list to be included in the proposed cross-Straits economic cooperation framework agreement (ECFA). A spokesman says Taiwan is ready to negotiate details of the list with the mainland."

October 27, 2009: CENS

"Delegations from Taiwan and China will meet in Beijing next week for an unofficial discussion on Cross-Taiwan Strait Economic Cooperation Framework Agreement (ECFA), when both sides will exchange lists for early harvests for the first time."

November 12, 2009: CENS

Gov`t Confident to Sign ECFA With China Early Next Year

"The signing of the ECFA during the fifth Chiang-Chen meeting is our reasonable expectation," said Wu yesterday (Nov. 11).

May 11, 2010: Commercial Times

"The third round of economic cooperation framework agreement negotiations between Taiwan and mainland China has been postponed due to disagreements over early harvest lists."

May 20, 2010: Commercial Times

"The early harvest list in the pending cross-strait economic cooperation framework agreement is likely to include over 300 items, Premier Wu Den-yih said May 19."

June 2010: International Business Consulting

"There have been conflicting reports in recent days on the state of the negotiations between China and Taiwan on the proposed economic cooperation framework agreement (ECFA)."

June 1, 2010: China Post

"Whether the cross-strait Economic Cooperation Framework Agreement (ECFA) can be smoothly inked or not will hinge mainly on whether both sides can reach a consensus on the early-harvest list, or priority items for tariff cuts or market opening, in the pact, according to informed sources."

June 4, 2010: Taiwan Economic News

"Mainland China may make major concession in the talk for cross-Taiwan Strait Economic Cooperation Framework Agreement (ECFA) by expanding the early-harvest list, or priority items for tariff cut or market opening, to 500 items, rather than the expectation of 300, according to the Chinese-language Economic Daily News (EDN), sister publication of Taiwan Economic News (TEN)."

June 10, 2010: Taiwan News

"Taiwan's chief negotiator for a trade pact with China is visiting Beijing to discuss inclusion of several key industries in an "early harvest" program for concessionary tariff treatment, sources said Thursday."

June 11, 2010: China Times

"The third round of formal negotiations on the economic cooperation framework agreement between Taiwan and mainland China is scheduled to begin June 13 in Beijing, government officials announced."

June 10, 2010: Taiwan News

"The two sides of the Taiwan Strait will not exchange "early harvest" lists for a proposed cross-strait trade pact during a third round of talks on the deal, Minister of Economic Affairs Shih Yen-shiang said Thursday.

The cross-strait economic cooperation framework agreement's (ECFA's) early harvest lists of each side, which form the backbone of the pact, include items that will be subject to immediate tariff reductions or exemptions, or improved market access, upon the signing of the pact.

Shih also said he did not know whether there will be a fourth round of ECFA talks."

Related Links: Taiwan Today reports that the government is trying to entice Taiwan firms to return home. Labor unrest in China hits many Taiwanese firms. Taiwan News editorial argues that ECFA has no legitimacy without a referendum.

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[Taiwan] 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!

Properly Indoctrinated Chinese students to Arrive here

The Chinese State determines who studies in Taiwan, according to the China Reform Monitor:

Beginning in September, seventy-three private universities and vocational institutions in Taiwan will, for the first time, enroll students from mainland China. About 1,000 mainland students have already applied to study in Taiwan’s universities, which plan to recruit a total of 2,000 mainland students. Mainland students are eligible when their institution gives them a high political awareness certificate. The China Senior College Exhibition Organization Committee started processing the applications on April 1 and will finish at the end of May, the official China Daily reports.

Note that no national universities in Taiwan are included in this list -- 73 private and vocational universities -- mostly second tier colleges or worse. The KMT's logic is that Chinese students will make Taiwan's education system more "competitive." In local political discourse appeals to competitiveness by the KMT are now commonplace for all its programs, as if this closes all argument. In fact, I was fortunate to get a leaked transcript of the interrogation of the four police officers who were present at the shooting of a local gangster the other day in Taichung. Here it is for your reading pleasure:

INTERROGATOR: And the four of you were doing what with that gangster?
OFFICER 1: Playing Mah-jong. It makes us more competitive.
INTERROGATOR: More competitive! With who?
OFFICER 2: Other policemen sir, from other places in Taiwan and even in China. They all play mah-jong with gangsters too. Do you want us to lose all the time?
INTERROGATOR: I see. And the hitter came in, and told you all that this didn't concern you. His gun jammed for the first time. Did you do anything while he went outside to fix it?
OFFICER 3: No sir.
OFFICER 4: Non-action makes you more competitive. That is the essence of the Tao.
INTERROGATOR: What!
OFFICER 1: Sir, it is true! His gun jammed a second time and he stepped outside to fix it again. Can you not see the success of our non-action? It jammed his gun twice!
INTERROGATOR: Ok...Ok.... then he came in for the third time and shot the gangster. And you took a bullet in the leg, right?
OFFICER 2: Yes sir.
INTERROGATOR: What did you do then?
OFFICER 2: I quickly ran out the door, sir.
INTERROGATOR: You fled the scene.
OFFICER 2: Nossir, I ran with one leg wounded. This made me more competitive. Now I will surely win the 10,000 meter race in the next Police Games!*

Competitiveness has nothing to do with it -- the lower tier vocational schools are often run by local clans that have old connections to the KMT. Bringing in Chinese students is another status quo move that will preserve those schools, save them from elimination, essentially sending Chinese cash down KMT patronage networks. This makes the KMT more competitive.....

*Yes, according to news reports, that is exactly how it went down!
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Daily Links:

• Anthropologist Scott Simon with an interesting piece on indigenous rights in Taiwan
• Taiwan pulls eight films from China film festival over Taiwan, China fears
• Half Taiwanese becomes Japanese cabinet minister.
• Kids at elementary school taught to build own bikes (Chinese and English)
  單車、都蘭──我的夢
  http://www.dfun.com.tw/?p=9815
  都蘭山的單車夢，邀您一起參與！
  http://www.dfun.com.tw/?p=26977 單車、都蘭山─我的夢(第三期_2009立夏)
  http://garden91.pixnet.net/blog/post/28972951
• TOTALLY NOT TAIWAN: A very interesting article on Canada, the Northwest Passage, international sovereignty, and national identity.
  

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Taichung Metro Plan

Hat tip to Prof. Liu of Fengchia University for the pointer to this map. Here is the planned Taichung Metro. The route follows the main railway line through the city, which explains why there is so much construction on that line. The pink squares are existing train stations in Fengyuan, Tanzi, Taiyuan, Taichung, and Daching. They all appear to be stations on the new metro line, meaning that it links Fengyuan to Taichung city. Additional stations added to the metro line include Fengnan (southern Fengyuan), Toujia (between Tanzi and northern Taichung), Sungchu Rd, Chingwu Rd, and Wuchuan Rd. An additional line along the green dotted line appears to run down Wensin Rd and appears to meet the purple line at Daching. Evidently the green line will be extended out to the HSR station at some point, since the city is committed by MOU to run the metro out there.

Meanwhile looks like if you live in Fengchia area, up at Tunghai on Tatu Mountain, on the west coast, or near the mountains in Ta-ken, Wufeng or (heaven forbid) Taiping, you'll be fighting the morning traffic instead of riding the metro.
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China-US Military Ties (FAIL)ing

John Pomfret, one of the best Beijing correspondents, had a great piece in the Washington Post the other day on the strain between the US and China "caused" by China's imperialism and expansionism US weapons sales to Taiwan. Pomfret narrates:

On May 24 in a vast meeting room inside the grounds of the state guesthouse at Diaoyutai in Beijing, Rear Adm. Guan Youfei of the People's Liberation Army rose to speak.

Known among U.S. officials as a senior "barbarian handler," which means that his job is to deal with foreigners, not lead troops, Guan faced about 65 American officials, part of the biggest delegation the U.S. government has ever sent to China.

Everything, Guan said, that is going right in U.S. relations with China is because of China. Everything, he continued, that is going wrong is the fault of the United States. Guan accused the United States of being a "hegemon" and of plotting to encircle China with strategic alliances. The official saved the bulk of his bile for U.S. arms sales to China's nemesis, Taiwan -- Guan said these prove that the United States views China as an enemy.

U.S. officials have since depicted Guan's three-minute jeremiad as an anomaly. A senior U.S. official traveling on Secretary of State Hillary Rodham Clinton's plane back to the United States dismissed it, saying it was "out of step" with the rest of the two-day Strategic and Economic Dialogue. And last week in Singapore, Defense Secretary Robert M. Gates sought to portray not just Guan, but the whole of the People's Liberation Army, as an outlier intent on blocking better ties with Washington while the rest of China's government moves ahead.

But interviews in China with a wide range of experts, Chinese officials and military officers indicate that Guan's rant -- for all its discomfiting bluster -- actually represents the mainstream views of the Chinese Communist Party, and that perhaps the real outliers might be those in China's government who want to side with the United States.

As one of the sources later in the article commented, the Army follows the Party. Guan is not isolated in his thinking, but rather, mainstream. A neat equation is manifest here: victimization + expansion + nationalism + paranoia = war. That's where we're headed. It should be obvious that the path the US is heading down is delusional, though I suspect also that much of the "delusion" is due to the fact that so many policy-shapers are doing business with China. What we should be doing is pulling out of Iraq and Afghanistan, and refocusing on building our Asian trade, military, and diplomatic relationships, and pumping money into rebuilding the US infrastructure and industrial base. But Bush and Obama have us doing what's really important: spending hundreds of billions to make Central Asia safe for Chinese expansionism.

Hilariously, it is now 2010, we're on our second Administration attempting to work with Beijing on North Korea, Iran, and other issues, and yet observers are still writing phrases like U.S. officials have also expressed the hope that China would work harder to press Iran. You could change the date to 2005 and still be writing exactly the same line. For example, here's a WaPo piece from 2004....

"We are engaged in a continuous dialogue with China about what I think is a commitment at the top levels of the Chinese government to prevent the spread of weapons of mass destruction," Bolton said at a news conference here after the first of two days of talks with Chinese officials.

2004! And the continuing dialogue....continues. Result? China is still happily shipping nuke parts to Iran, a cheap and profitable way to rivet US attention on a region of the world that is less important than Asia. And the US is still pushing China to come on board. When will US officialdom wake up?

Trivia question: which nation is the largest source of foreign investment in Iran? (answer and here too.)

Bonus Question: what year was this written:

US State Department Spokesman Nicholas Burns ("STATE DEPARTMENT NOON BRIEFING) responded to a question.... "I don't have a particular comment to make on that," Burns said, although he added that "we've had a variety of discussions with the Chinese on that particular issue." Burns said that Assistant Secretary Lynn Davis, on her recent trip to the PRC, had "good discussions" that "focused on proliferation concerns." "We believe that China has made important commitments to the United States concerning missile non-proliferation. In the coming year, we would like to build on the commitments that China has made, and that is why we'll continue to raise the specific concerns we have and look for ways to resolve these issues through negotiations and discussions," Burns said. "Secretary Christopher, I'm sure, will be raising some of these issues when he sees Vice Premier Qian Qichen during his trip to Beijing."

The answer is 1996. Plus ca change....

Longtime Taiwan stalwart, John Tkacik, writing in the Washington Times, has additional information on the Pomfret piece:

The problem, according to officials close to the program, is that the United States sees the exchanges as a way to develop friendly relations, while China's military has used the exchanges for intelligence-gathering and technology identification for its major military buildup.

"The Pentagon is totally naive about this relationship," said a defense official involved in the program.

An annual Pentagon report to Congress on military exchanges with China's People's Liberation Army reveals that the Chinese military has been granted access to U.S. military expertise despite a legal prohibition on exchanges that could bolster Beijing's power projection capabilities.

The exchanges also provided Chinese military visitors with a look at key strategic communications, logistics and supply capabilities, management methods and tactical combat operations, as well as nuclear policy and strategy, according to a review of the programs.

It's just a classic case of the Chinese willingness to use the American desire for a "relationship" as leverage to make concrete gains. While they derive concrete benefits, we have a "relationship." Lucky us.

It should also be noted that the recent weapons sales were proposed a decade ago. The media never mentions that China is peeved about weapons that have taken nearly ten years ago arrive, delayed for years by the KMT in the Taiwan legislature, by the Bush Administration, and by the bureaucracy in both countries. Omissions like this make the Chinese reaction seem more "reasonable" than it actually is. Reality? The Chinese complaints about weapons sales to Taiwan are pure theatre designed to separate the US from Taiwan -- an excellent example, as Pomfret clearly describes, of China's long-term plan is to sever that relationship.

The reaction to the decade-old weapons sales also shows how China consistently moves to transfer the tensions it creates with Taiwan to the US-Taiwan relationship. Chinese "anger" is a policy it uses to manage its relationship with the US. People who write that "tensions have eased" between China and Taiwan are simply missing how they've been transferred to the China-US and the US-Taiwan relationships. Tension with China is never eased; because China uses tension to manage its relations with other nations.

One other point to make. Pomfret writes:

More broadly, many Chinese security experts and officials view the Obama administration's policy of encouraging Chinese participation in solving the world's problems -- including climate change, the global financial crisis and the security challenges in Iran and North Korea -- not as attempts to elevate China into the ranks of global leadership but rather as a scheme to enmesh it in a paralyzing web of commitments.

It can't be said enough: as this paragraph makes clear, China doesn't want in. It doesn't want to play in the world system that Washington organizes, and it is simply going to ignore it except where it can derive benefits. US policymakers who continue to push this mad dream that China can be brought into a global system run by the US are delusional. Period.

UPDATE: Gordon Chang makes the same point in a good piece in the Jamestown Brief.

Yet Beijing has moved in the opposite direction in the last two years. American “engagement” policy, however, has remained unchanged. Washington officials talk to their Chinese counterparts almost every day, conducting dozens of bilateral forums each and every year. The two nations, however, are moving further apart on the issues that count. And as disputes between them arise and worsen, Washington will have to consider the possibility that no amount of dialogue, however structured, will convince Chinese leaders to calculate their interests in the way we think they should.

MEDIA: A point to make with the Pomfret article. The narrative framework uses the usual unthinking formulaic phrases to add drama. These are invariably Beijing-centric: China's nemesis, Taiwan: Taiwan is not China's nemesis. Nothing Taiwan does threatens China. The threats all run from Beijing toward Taipei. Time to stop writing like this, folks.
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Chen Shui-bian, wife, have sentence reduced

With the news this week of former President Chen Shui-bian found not guilty of embezzling diplomatic funds, everyone was looking to today's verdict in his appeal of his convictions in the corruption cases. Instead, as major news media reported, President Chen and his wife Wu Shu-jen had their life sentences reduced to 20 years each. The court also reduced fines for the couple from NT$200 million (about $5.2 million) to NT$170 million for Chen and from NT$300 million to NT$200 million for his wife. A friend of mine summed it up with a pithy analysis:

It keeps the name in the media, it validates their persecution of the first family, but allows them to save face internationally, with a lighter sentence, and it keeps the issue running through the next election cycle. It draws attention away from the KMT's own troubles with organizational corruption. It validates their lengthy detention of him.

The judge deferred his decision on their bail until next week. I'm seriously curious to see what choice they will make. If I were the KMT I'd let him out, so he can make trouble for the DPP and also to end the international criticism of Chen's obviously political detention. The KMT news service reported Chen's lawyers' arguments:

In addition, with regard to Chen Shui-bian’s detention, his attorneys yesterday afternoon filed a petition to the appellate court, stressing that the funds the Chen family deposited in several overseas banks had been transferred back to Taiwan and that Chen Shui-bian would not flee from justice. They argued that Chen Shui-bian should be released because the rulings of the courts of first and second instances had been handed down, and there was no reason to continue to detain Chen Shui-bian by citing the risk that Chen would collude with other witnesses or destroy evidence.

The political nature of Chen's detention is revealed by a simple fact: the judges made him the only individuals in Taiwan ever detained during appeal for the crimes he's accused of because he could collude with witnesses, destroy evidence, and was a flight risk. So they claimed. But his wife Wu Shu-jen remains out -- yet there is no reason that she could not do those things -- their cases are joined. Chen was detained purely to punish, no other reason.

On a hilarious note, the Special Investigation Unit (SIU) continues to waste the public's time and money on the fantasy that Chen Shui-bian had himself shot in 2004 in order to get elected. Today they dragged the President in for questioning in the "case." Because of the questioning, he did not hear the decision in the appeal until this evening.
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Taiwan Communique #128 out!

Gerrit at TaiwanDocs.org sent this around:

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Below please find the table of contents. The electronic versions will be uploaded to our websites www.fapa.org and http://www.taiwandc.org/twcom/index.html The hardcopy will be sent out to those who are on our mailing list at the end of next week.

CONTENTS Taiwan Communiqué no. 128
June / July 2010

The ECFA battle continues
Into China's orbit or broadening ties? ........... 1
FTA's with the US and other countries? ........... 2
Referendum proposal rejected ..................... 2
International scholars express concern ........... 4
"Big Five" elections coming up
DPP and KMT nominate candidates .................. 8
Elections could change political landscape ...... 10

Change we can believe in?
Something new, but also repeating old mantras ... 11

International space for Taiwan?
World Health Assembly: more form than substance . 13
Meaningful participation in ICAO? ............... 15
Ambassador Bellocchi: Taiwan needs a place ...... 16
Erosion of justice and democracy
Verdict on former President Chen coming up ...... 18

Report from Washington
Congressional briefing on FTA and ECFA .......... 19

Book Review
How Taiwan became Chinese, by Tonio Andrade
Reviewed by Gerrit van der Wees ................. 21

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As wages rise in China, Taiwan firms to head elsewhere?

A flurry of stories about China and its Taiwan businesses this week. First, the Epoch Times detailed how the "Foxconn suicides" are neither, but look instead like a media construction to enable China to lever out firms that compete with its own national firms.

Foxconn responded to the negative publicity by raising wages, which inspired a number of articles. However, few of these articles noted that the raises were vapor. Why? Because, as Eastday chronicles, Foxconn wisely instituted a three month probation and review period for its Shenzhen workers. In other words, assuming anyone actually gets a raise, it will be months from now. "You didn't pass the review" is likely to be the new mantra over at Foxconn's HR unit for the next year or so.

In fact, while the local press has trumpeted Foxconn's announcement to move his factories back to Taiwan, this article at Taiwan Today claims Gou was working on that for the last months. All the Foxconn talk is just theatre. China attacks Foxconn with theatre, Foxconn replies with theatre. Not for nothing does "PRC" begin with "PR"....

That same article also says that wages for foreign workers in Taiwan are going to be lowered by adminstrative sleight of hand, which will help local firms return here and attract outside investment, which will mean greater demand for the taxis local workers are now all driving. Isn't that great?

Businessweek chronicled how rising wages, starting with the reforms of 2008 that note only pushed up wages but also ended certain export breaks, are putting pressure on Taiwan firms in China:

Recent wage hikes in China could force Taiwanese electronics firms operating there to relocate to other Asian countries, a Taiwanese industry leader has said.

Chairman Arthur Chiao of the Taiwan Electronics and Electrical Appliances Association said his group is assisting China-based Taiwanese companies to seek out new manufacturing sites in India, Indonesia and Vietnam in the wake of steadily rising labor costs on the mainland.

Another article noted that the Minister of Economics in Taiwan promised to put in place a set of policies to help Taiwan firms move south. The southward call was highly ironic, since diversification of investment to Vietnam and elsewhere was a staple of DPP policy (please, will somebody start looking at India?). Arthur Chao further said:

However, companies whose main markets are in the United States and Europe should consider relocating as soon as possible to places with better potential for development and profit making, Chiao said.

Meanwhile exports hit the largest percentage rise ever to reach the fifth highest monthly total ever. Looks like Taiwan's economy is on the rebound.

And back in China? The strikes at several foreign owned firms have apparently triggered other strikes, many at foreign owned factories, at least according to Epoch Times. Spreading strikes.... Looks like China has attempted to call up the demon of mass action and may now have great trouble getting it stuffed back into the bottle again.
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Daily Links

• Taiwan mountain biking video at Taiwan in Cycles.
• Police officer uses geomancy in police work.
• In response to the gangster killed in front of policeman in Taichung, Ma calls for stepped up police work and stuff. Because this approach worked so many times before. The government even plans to crack down on gangsters for a whole three months.
• MUST READ: John Pomfret's excellent piece in WaPo on the outburst of a PRC Admiral at the US for frustrating China's aggression and imperialism threatening its core interests. It really strikes to the heart of the kind of self-deception the panda huggers are engaging in.
  

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