Publications Topics Archive Topics Archive 2009 Vol.39- No.9 Brief | Brief |
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MACROECONOMICS
CROSS-STRAIT
DOMESTIC
INTERNATIONAL
BUSINESS
MACROECONOMICSABOUT TO TURN THE CORNER?Taiwan may be on the verge of recovery from the enormous knock it took from the global financial crisis. Although the export-dependent economy’s performance continued to be dismal throughout July and early August, signs of improvement began to appear. The economy shrank in the second quarter, the government’s Directorate General of Budget, Accounting and Statistics said on August 20, but the drop was not as drastic as in the first quarter. Real GDP contracted by 7.54% in the second quarter compared with 10.24% in the first quarter, the statistics bureau said, while the export of goods and services declined by 18.36%, compared with the previous quarter’s fall of 27.15%. “Since the world economy will begin its recovery in the second half of 2009, Taiwan’s exports are anticipated to regain momentum somewhat,” the DGBAS said in a statement. Private domestic consumption, however, will slip back into a “gloomy state” as a result of Typhoon Morakot, it said, and the consumer price index will inch slightly upward for the year. DGBAS also forecast that the economy will shrink by 3.52% in the third quarter before growing by 5.49% in a rebound for the fourth quarter. The bureau was also more optimistic than before about the outlook for 2009 as a whole, saying that GDP this year will decline by 4.04%, an improvement over its previous estimate of negative 4.25% announced in May. Standard and Poor’s in late August also predicted that the Taiwan economy, in the best-case scenario, will shrink by 4% this year, the local media reported. The ratings company said Taiwan and other regional economies were benefiting from the strength of the turnaround in China. July's export orders, an indication of shipments in the next one to three months, amounted to US$28.6 billion, a drop of 8.77% from the same month last year, the smallest decline in nine months. The figure had decreased by 20.14% in May and 10.91% in June. Economic analysts said exports were being buoyed somewhat by China’s implementation of an enormous US$585-billion stimulus package and by U.S. consumers gradually starting to spend again on Taiwan’s consumer electronics. Exports in August, at US$19.01 billion, were 24.6% lower than the same month last year, around the same level as July’s drop of 24.4%, but better than June’s minus 30.4%, the Ministry of Finance said. Imports have hovered at about the same level for the past three months; they were down by 32.3% in August (at US$17.04 billion) compared with drops of 33.5% in June and 34.1% in July.
CROSS-STRAITDALAI LAMA VISITS TAIWANPresident Ma Ying-jeou risked seeing his policies of creating closer business ties with China go up in smoke when seven opposition Democratic Progressive Party (DPP) county and city chiefs from Taiwan’s south, led by Kaohsiung City mayor Chen Chu, presented him with a fait accompli in late August: they publicly announced that the Dalai Lama had accepted their invitation to visit Taiwan to pray for the souls of those who died during Typhoon Morakot. All that was needed, they announced, was Ma’s approval. Although Beijing loathes the exiled Tibetan spiritual leader, Ma was left with no alternative but to agree. He was facing plunging popularity over his administration’s slow handling of the disaster and public displeasure over the perception that his government had initially refused foreign aid out of a desire not to annoy Beijing. Ma could hardly appear to kowtow this time. Most importantly, after so many typhoon deaths in the southern counties, and with local elections coming up at the end of the year, he would have looked heartless to voters in that region if he had refused entry to the Dalai Lama. Many Taiwanese are Buddhist and the Dalai Lama is enormously popular here. BUT NO DAMAGE TO CHINA POLICIESFortunately for Ma, Beijing appeared to display a sophisticated understanding of Taiwanese political realities. In late August, Beijing twice said that it resolutely opposed the Dalai Lama's visit, but it directed its ire at the DPP political figures for “sabotaging” cross-Strait relations, rather than at Ma himself. Still, Taiwan was careful not to cross any red lines that might inflame Beijing. Thus, no meetings were scheduled between the Dalai Lama and Ma or other high-ranking government officials, and the Tibetan leader appeared keen not to offend anyone. “My visit here is of a non-political nature,” he said. “I am a Buddhist monk. It’s my moral principle to come if someone asks me to share sadness.” Kaohsiung accorded the Dalai Lama treatment normally afforded to a head of state. Hundreds of police watched as around 20 pro-unification protesters demonstrated outside his hotel. The Dalai Lama also traveled to the former village of Shiaolin, where an estimated 500 people had been buried alive in a landslide. He embraced weeping relatives of the villagers and prayed for the dead. Meanwhile, the Kuomin-tang dispatched an envoy to explain things to Beijing, local media reports said. An August 30 arrival press conference by the Dalai Lama was cancelled on short notice by the Taiwanese foundation that acts as his mission here. A speech scheduled for northern Taiwan was also cancelled and another in Kaohsiung was downgraded from the Kaohsiung Main Stadium, which can seat thousands, to his hotel, where only around 500 people could attend. The Dalai Lama’s nephew, Khedroob Thondup, told this reporter that Taiwan’s National Security Council had exerted pressure to limit the exiled Tibetan leader’s exposure. The Dalai Lama complied, Thondup said, due to his policy of respecting preconditions set by a host country. “The way they are treating His Holiness is unfair,” Thondup said. “Why are they so afraid for him to speak out?” On September 1, the Dalai Lama was able to make an appearance at the Kaohsiung Main Stadium, which was packed with some 17,000 Taiwanese from all over the country, for a prayer service in which the Tibetan leader chanted mantras for the typhoon victims. Later that day, he gave a lecture at his hotel urging the world’s peoples to peacefully coexist, and September 2 he held a religious discussion with Roman Catholic Cardinal Shan Kuo-hsi. Beijing made a few symbolic gestures to show its displeasure. A banking delegation led by Su Ning, deputy governor of China’s central bank, for example, was scheduled to arrive August 31 but the trip was postponed for a week.
DOMESTICMORAKOT DEATH TOLL PUT AT OVER 600Typhoon Morakot, which pummeled the island from August 7 to 9, caused the worst flooding the island had seen in half a century. The Ministry of Interior’s National Fire Agency has put the number of confirmed deaths at 619, with 76 people still listed as missing as of early September. The typhoon also inflicted massive damage to infrastructure in southern Taiwan, including many bridges and 260 segments of road. The total damage is estimated at NT$110 billion (US$3.36 billion), including agricultural losses amounting to NT$13.4 billion. Kao- hsiung, Pingtung, Hualien, and Taitung Counties were the hardest hit. Throughout August, thousands in the south were trapped by mudslides and disruptions to land transport. Rescue of those stranded was made difficult as the surrounding roads had been destroyed, and access by helicopter was slowed by the horrendously rainy conditions. Due to the rough weather, one such rescue helicopter ferrying supplies crashed in Pingtung, killing three crew members. The military sent more than 13,000 servicemen to southern Taiwan to help search for survivors and clean up debris. The government also announced it would provide NT$1 million per family of those who died or are missing. PREMIER RESIGNS, MA’S POPULARITY DROPSMa, who before the typhoon had sailed through Taiwan’s often fractious politics and faced a skeptical public more or less unscathed, for the first time saw his popularity plummet dramatically as he received harsh criticism over his administration’s slow response to the disaster. An opinion poll in mid-August by TVBS showed a dramatic drop in his approval rating: it had plunged 25 percentage points since June to an all-time low of 16%. Other polls give him somewhat higher ratings but show a comparable decline. As a further sign of Ma’s fall from grace, angry survivors in Shiaolin and other disaster-stricken areas heckled an awkward and wooden Ma when he visited them after the typhoon. A further source of public outrage was the Ma government’s initial decision to refuse foreign aid in the few days immediately after the typhoon. The widespread public perception was that this was intended to please Beijing, but analysts said the real reason more likely was bureaucratic inertia. Some bloggers even compared the administration with the military junta in Myanmar, which blocked foreign humanitarian groups from helping after Cyclone Nargis devastated the country last May. As a result of the administration’s political travails, three senior officials offered their resignations. The first to offer up his political head was Vice Foreign Minister Andrew Hsia, who took responsibility on August 17 for the rejection of foreign offers of assistance. Two days later, Defense Minister Chen Chao-min and Cabinet Secretary General Steve Hsieh also offered to resign. But the biggest surprise came on September 7, when Premier Liu Chao-shiuan announced that he was quitting his post. The Presidential Office immediately named KMT Secretary General Wu Den-yih, a former mayor of Kaohsiung, as the new premier, with Taoyuan County Magistrate Eric Chu, who is also a KMT vice chairman, appointed vice premier. A partial reshuffling of the Cabinet followed (more details in next month’s TOPICS).
INTERNATIONALPOST-TYPHOON AID POURS INThe first U.S. military plane to land in Taiwan in a decade arrived in mid-August with building materials to help with reconstruction, as the world’s nations offered relief assistance to Taiwan. The C-130 cargo plane flew to Tainan in Taiwan’s south from its base in Okinawa, Japan, the first such flight since the deadly earthquake that struck in September 1999. The United States also provided heavy-lift helicopters to carry construction equipment deep into the mountains. The Ministry of Foreign Affairs said that as of September 1, some 44 countries had donated a total of more than NT$385 million (US$11.8 million) and 13 countries had contributed relief supplies. The United States, Japan, Korea, the European Union, and the United Nation’s Office for Coordination of Humanitarian Affairs all dispatched relief teams to Taiwan to carry out evaluation or rescue tasks. China was also quick to respond, not only expressing sympathy for the people it refers to as “compatriots,” but as of mid-August also providing US$29 million worth of relief funds, prefabricated houses, sleeping bags, and sanitation supplies.
BUSINESSCABINET APPROVES RECONSTRUCTION BILLThe Cabinet in early September approved a four-year NT$120 billion (US$3.68 billion) special budget for the reconstruction of areas ravaged by Typhoon Morakot. Vice President Vincent Siew told the media that reconstruction would probably take at least three years. The budget, fully funded by debt, allocates NT$41.4 billion for this year to rebuild homes and infrastructure. In addition, NT$49 billion was allocated for next year, with the rest to be spent in 2011 and 2012. AU OPTRONICS CHAIRMAN ACQUITTED OF CHARGESK.Y. Lee, chairman of AU Optronics Corp. and Qisda Corp., in late August was acquitted of six charges, including insider trading, stock manipulation, and embezzlement after a two-year trial. Lee, 56, was cleared by the Taoyuan District Court of using insider information to trade Qisda stock before the public disclosure of financial statements. He was indicted two years ago when Qisda was known as BenQ, then Taiwan’s biggest maker of mobile phones. The company had lost NT$32.84 billion (about US$1 billion) in 2005 and 2006 after buying Siemens AG’s unprofitable handset unit. Lee was also acquitted of various other charges, including money laundering and forgery. SILICONWARE TO INVEST IN TAIWAN MEMORY CO.The board of Siliconware Precision Industries, a local chip packager, resolved on August 13 to invest between NT$1 billion and $2 billion in the planned Taiwan Memory Co. (TMC), making it the first company to announce support for the government-created memory chip company. TMC was officially set up in late July, to help consolidate the island’s floundering DRAM sector, which has been losing money due to oversupply and a poor economic environment. TMC plans to partner with Elpida Memory of Japan for its technology.
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