[Outlook]Cooperating with Taiwan

The March 22 presidential election in Taiwan ushered in the first political change in eight years. The people chose Ma Ying-jeou of the Nationalist Party, or the Kuomintang, because they desperately want to revive their economy. The election result is an order not to let ideological differences worsen ties with mainland China, which is crucial to Taiwan’s economic growth.
The new government must mend ties with China using new policies for economic development.
Cross-strait relations, however, are too complicated to be mended quickly, as China and Taiwan have different ideologies and systems. The United States also wants to maintain Taiwan as a buffer zone. But economic exchanges between Taiwan and China, which are already at a significant level, can grow even further depending on political wills and policies.
Businessmen in Taiwan have long maintained that economic exchanges with the mainland should increase regardless of ideology.
The Democratic Progressive Party can’t be fully blamed for a downturn in Taiwan’s economy. But the DPP, which pursues independence, has maintained for the past eight years that increasing economic dependency on China would lead to Taiwan’s eventual political subordination. The DPP saw China as a threat to be on guard against.
The insecurity in cross-strait relations makes it difficult for Taiwan to secure its status in international society.
Taiwan investment in China was appreciated when the mainland first carried out reforms and opened its doors, but the value of Taiwan has depreciated while the DPP was in power.
Conflicts in cross-strait relations had a negative impact on Taiwan’s economy, which used to be the world’s 12th largest. Taiwan also used to be the world’s second-largest holder of foreign reserves.
At this moment, President-elect Ma and the Nationalist Party have proposed a cross-strait common market in an attempt to improve ties with China and increase economic exchanges.
This was proposed earlier when Lien Chan, who was chairman of the Nationalist Party at the time, visited mainland China at the invitation of Hu Jintao, the general secretary of the Communist Party of China.
A cross-strait common market is more than a free trade agreement, which is simply aimed at removing obstacles for trade and the service industry. In a common market, not only will tariffs be removed but also both Taiwanese and mainland Chinese people will have the guaranteed right to carry out cross-strait economic activities as if they were in their own countries. The proposal is to form an economic bloc, like the European Union.
President-elect Ma said that in preparation for establishing a common market, he would work for direct charter flights, direct trade and direct postal services in an effort to enhance trade cooperation between Taiwan and China.
It is said that China has also decided to extend the Closer Economic Partnership Arrangement that it signed with Macao to Taiwan.
If the stagnant economic ties between Taiwan and China improve and a foundation for active exchanges is prepared, Korea’s economy and industries will be affected as well.
If Taiwan and China form a common market, logistics costs between the two will be reduced significantly, and products made in Taiwan will have more price competitiveness. Particularly, as Taiwan and Korea are rivals in information technology, the competition in this field will become even fiercer. Taiwan won’t cede its information technology competitiveness easily.
Because China has begun regulating labor-intensive industries and industries that consume a great deal of energy and damage the environment, cooperation with Taiwan in information technology could be a new avenue of Chinese growth and threaten Korea’s hold in the market.
Meanwhile, with the Nationalist Party taking power again, Korea’s relations with Taiwan, its fifth-largest trading partner, are expected to improve. Considering China’s nature, it won’t be easy to improve political relations with Taiwan, but economic exchanges are expected to increase for pragmatic reasons.
President-elect Ma will pursue pragmatic diplomacy, just like President Lee Myung-bak of Korea, and has declared a “633 plan,” just like Lee’s “747 strategy.” By 636, he means 6 percent growth, national per capita income of $30,000 and an unemployment rate lower than 3 percent. In a press conference after being elected, Ma said he intended to learn from Korea’s experience in overcoming a financial crisis.
In this atmosphere, Koreans have an opportunity to cooperate with Taiwanese businessmen, who entered China following sound business principles, to produce a joint strategy for breaking into the Chinese market. We can create a win-win situation.

*The writer is a professor at the Graduate School of International and Area Studies of Hankuk University of Foreign Studies. Translation by the JoongAng Daily staff.

by Kang Jun-young