A Brief Assessment of Taiwanese Economy Under Ma Yingjiu

IITM CSC Article #47
8 February 2013

 

A Brief Assessment of Taiwanese Economy Under Ma Yingjiu

 

Taiwan is known to the world as one of the four ‘Asian Tigers’ and plays a very important role in global economy. Its total GDP in 2011 was estimated to be around USD 500 Billion but on the basis of purchasing power parity it doubles to approximately 1 trillion USD. Agriculture accounts for only 1.3% of the GDP while ‘services’ plays the most important role accounting for almost 67% of the GDP.

Taiwan is currently ruled by 63 years old, Mǎ Yīngjiǔ (馬英九) who was born in Hong Kong and primarily educated at Harvard and New York Law School in the USA. He also worked for several years as a legal consultant in the States.

Mǎ Yīngjiǔ was elected as the President of Taiwan with more than 58% of popular vote in 2008 and was re-elected as the 13th term President in 2012 with little diminished support of vote. Despite a series of controversies including holding of ‘US green card’, Ma was elected in 2008 riding on the support of common people aspiring for a better economic and social condition. Taking a cue from former South Korean President, Ma Yingjiu called for ‘633 pan’ to stimulate the economy of the state. Under this plan, he promised an economic growth rate of 6%, unemployment rate of less than 3% and per capita income of more than USD 30,000 for Taiwanese people. 

Because of the global financial crisis and several other factors, Taiwanese economy grew by only 0.7% in 2008 and in fact it contracted by -1.8% in 2009. In 2010, because of Ma’s favourable policy towards mainland China, the economy grew significantly by over 10% but the growth rate has once again slowed down in the recent couple of years. Per capita GDP on the basis of current prices is still way behind promised USD 30,000 and the unemployment rate never touched the pledged 3% mark. It has been around 5.9% in 2009 and has been coming down but still hovering around 4%.

In the last five years, considerable disappointment and pessimism has permeated among the business people and common citizens and the ‘misery index’ does not paint any glorifying picture ahead as well. Common mass have been clamouring against corruption and low wages. In fact, the wages of people have shrunk to the level of almost 13 years ago of 2000 now; while the inflation has been continuously on rise. Failure of the materialization of ‘633 plan’ has attracted huge criticism and opposition parties—mainly DPP has been vehemently opposing Ma’s policies. People from mainland China have ridiculed that basically ‘633 plan’ in reality means—6% of unemployment rate, 3% of economic growth rate and annual income of only 30,000 RMB not USD!

During the first 5 years of Ma’s administration, the economy grew by average 1.73% much below the overall average growth rate of 4.71% of 8 years of rule of the former President Chen Shuibian (陳水扁). In fact, Taiwan has performed very miserably in the second half of the 2012. Among the major 12 Asian economies, it is the only economy which has seen a negative growth rate, hovering around -0.18%. In some of the speeches, Ma himself admits his failure and says that unemployment situation during his tenure has indeed worsened than the time of his predecessor Chen Shuibian of opposition Democratic Progressive Party.

Although in his speeches Ma says for the transformation of industrial structure, improving salary levels, eliminating investment barriers, expansion of employment opportunities, the right of defending its sovereignty and fisheries, promoting regional peace, deepening of democracy and endorsing cross-strait development, support level of Ma Yingjiu has gone considerable down and less than 20% of the Taiwanese people are in support of Ma’s administration, while more than 90% of Taiwanese have a very pessimistic outlook for their economy.

However, the current government is refuting these kinds of allegations and suggests that the ‘Misery Index’ of Taiwan is the lowest compared to the other three Asian Tigers. The government has laid a long term plan for the economy and in its’ blueprint; the administration is looking forward for maintaining an average annual growth of at the least 5% for the economy during Ma’s administration.

Taiwan’s economy is mainly export-oriented and specializes in the production of electronics and machinery. In fact, Taiwan is one of the world’s largest suppliers of computer chips, LCD panels, DRAM computer memory, networking equipment and consumer electronics. Textile production, although already in decline, is another major industrial export sector.

Ma has been defending himself with his arguments that because of global financial crisis, economy of Taiwan has smarted a lot but the question remains when all the other Asian economies are also affected in the same manner from the crisis, why only Taiwan is shrinking?

 

By: 
Yukteshwar Kumar,
Affiliation: 
Course Director, Chinese Stream, University of Bath, UK Former Associate Professor, Delhi University & Visva-Bharati
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