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Publications Topics Archive Topics Archive 2007 Vol.37- No.2 Taiwan Briefs
Publications Topics Archive Topics Archive 2007 Vol.37- No.2 Taiwan Briefs | Taiwan Briefs |
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BLUE LIGHT, BUT CEPD SAYS NO RECESSION Although Taiwan's monitoring index of leading economic indicators flashed a blue light (which by definition points to an economic downturn) for December, the Council for Economic Planning and Development (CEPD) accompanied its release of the information in late January with an explanation that Taiwan was not heading into a recession. Rather, the blue light - the first since the outbreak of SARS in June 2003 - was a statistical anomaly resulting from comparisons with the exceptionally brisk economic performance in December a year earlier, the Council said. The CEPD uses a five-color system to gauge the state of domestic health. For the six-month period prior to December, the index had been in the yellow-blue range indicating a slowing down of economic growth. Meanwhile the Taiwan Institute of Economic Research (TIER) adjusted its GDP forecast for 2007 to 4.07%, down from the 4.11% it projected in November, citing anticipated slow growth in the United States and the European Union. TIER said it expects exports this year to increase by only half of last year's growth rate. But in more cheerful news, it said domestic consumption would improve, showing 2.83% growth, up from 1.36% last year, due to an easing of the credit-card crisis. In addition, unemployment in December remained close to its lowest point in six years, the government's statistics bureau said in mid-January. The seasonally adjusted unemployment rate rose slightly to 3.92%, from 3.89% in November. The figures were only marginally higher than the 3.84% recorded in September and October, the lowest since February 2001. Meanwhile, the Rebar scandal (see below) took its toll, with Taiwan's consumer confidence index (CCI) dropping in January to the lowest point since December 2001, National Central University's Research Center for Taiwan Economic Development reported. Analysts quoted by local media said the scandal had influenced people's outlooks on both job opportunities and the overall domestic economic outlook. CROSS STRAIT TAIWAN SEES RED OVER CHINA'S ORANGE BUYING Beijing in mid-January announced that it would help alleviate a Taiwanese orange glut by buying up 1,200 metric tons of the fruit at prices well above the domestic market price, a move slammed by some government officials as a ploy to lessen local farmers' support for the pro-independence ruling party. The deal, worth around US$840,000, was inked between Taiwan fruit-grower associations and marketing organizations in Shanghai and Xiamen. Last October, China purchased 2,000 tons of surplus Taiwanese bananas. LEE SHIFTS HIS STANCE, OR DID HE? Former President Lee Teng-hui gave an interview to Taiwan's sensation-seeking Next magazine, after which he and his associates spent more than a week scrambling to clarify exactly what Lee meant in his remarks. The magazine had quoted Lee as saying that he had "never advocated Taiwan independence" nor thought it necessary to do so. In the interview, Lee also referred to the independence versus unification debate as a "false issue," advocated easing of restrictions on the entry of investment and tourism from China so that the capital flow is not just one-way, and expressed interest in visiting China. Pundits speculated that Lee was trying to push the Taiwan Solidarity Union (TSU), a small political party he helped to found, towards the political center in anticipation of the December legislative elections. But the comments attributed to him shocked many of Lee's supporters, including numerous TSU members. Lee later contended that the magazine had distorted his remarks, and that he still hopes to see the country's name changed to "Taiwan" and a new constitution adopted to "make Taiwan a normal country." Newly appointed TSU Chairman Huang Kun-hui, a former cabinet minister and longtime Lee associate, said Lee's point was that a declaration of independence is unnecessary because Taiwan is already an independent, sovereign country. DOMESTIC CHEN'S SON-IN-LAW GETS PRISON SENTENCE A judge sentenced President Chen Shui-bian's son-in-law to six years in prison for insider trading in late December, in one of a series of corruption scandals surrounding the first family. Chao Chien-ming, an orthopedic surgeon at National Taiwan University Hospital, was also fined NT$30 million for making at least NT$4.27 million in illegal profits by using inside information on the state of the Taiwan Development Corp. Chao's father, Chao Yu-chu, was also found guilty of insider trading and embezzlement. He was sentenced to a total of eight years and four months in prison, and also fined NT$30 million. The Chaos lawyers indicated that their clients will appeal the verdict. Three other business executives involved in the case were also sentenced. In related news, the trial of First Lady Wu Shu-chen, who has been indicted on for allegedly embezzling state funds, continued throughout January. Because of Wu's poor health, she did not appear in court. BULLET TRAIN FINALLY BEGINS OPERATIONS After numerous delays, Taiwan's high-speed rail system finally began operating in mid-January, revolutionizing public transport and marking a significant step towards integrating the island's southern and northern regions. The 345-kilometer system, which ran up construction costs of around US$15 billion, operates trains at a top speed of 300-kilometers per hour and can reduce travel time between Taipei and Kaohsiung to less than 90 minutes. As the Chinese New Year approached, however, the station in Taipei still had not opened, and southbound trains were departing from the suburb of Banciao in Taipei County. The launch saw a few glitches with ticketing services, with some passengers complaining that they lost their seats because of double-booking. PARLIAMENTARY MELEE DISRUPTS LAWMAKING One of the worst brawls in the history of Taiwan's unruly Legislative Yuan erupted in late January, preventing a number of significant bills from being passed. Among them were the central government's 2007 budget and authorization for the purchase of a portion of a billion-dollar U.S. arms package that has been blocked by the opposition for over two years. Dozens of lawmakers kicked, punched, and threw shoes at one another - an already familiar scene - but local media said it was the first time that doctors and nurses had to be called in to provide treatment. The fisticuffs were sparked by a dispute over a draft bill that would have shifted control over appointments to the Central Election Commission from the government to the opposition-dominated legislature. The ruling party then sought to schedule an extra legislative session over the winter break to deal with critical bills, but it failed to gain agreement to do so from the opposition. INTERNATIONAL CHINA PROTESTS U.S., JAPANESE DEFENSE AID Beijing in early January launched a strong protest in response to reports that Japan and the United States will soon start working on plans for military coordination in the event of a PRC attack on Taiwan. A Kyodo News Agency report, quoting official American and Japanese sources, said defense officials from both countries will soon start studying possible responses to various scenarios of military confrontation in the Taiwan Strait, including a possible scenario where Taiwan declares independence. "China expresses serious concern over this," Chinese foreign ministry spokesman Liu Jianchao was reported as saying by the international media. CHEN VISITS NICARAGUA President Chen in mid-January took a quick break from all the controversy surrounding him by making a trip to Nicaragua to attend the inauguration of President Daniel Ortega, an ex-Sandinista guerilla leader, amid speculation that the latter's election could cause the Central American country to sever diplomatic ties with Taiwan. In a sign that relations between Chen and the United States had improved somewhat, the president was granted an overnight stopover in San Francisco on his way there and a few hours in Los Angeles on his way back. On his last Central American tour Chen took a circuitous route rather than accept the U.S. offer to transit through Anchorage, Alaska. After the inauguration ceremony, Chen said Ortega had assured him Nicaragua would not cut off ties with Taiwan. Miffed at the situation, Beijing pressured Mexico not to let Chen's plane fly through Mexican airspace, which delayed his arrival in L.A. by five hours. TAIWAN CRITICIZES PRC SPACE WEAPONS TEST Taiwan in late January strongly protested China's anti-satellite weapons test, amid new concerns about the rising militarization of space. Cabinet spokesman Cheng Wen-tsang said that most countries in the world were working hard to prevent future wars in space but China appeared to be doing the opposite. Britain, Australia and other countries expressed concern that debris created by the test could pose a hazard for other satellites orbiting the earth. Some political analysts speculated that China wanted to demonstrate its capability to attack U.S. satellites that would play a key role if a military confrontation ever developed between Beijing and Washington over Taiwan. BUSINESS REBAR SCANDAL TRIGGERS BANK RUN, CHANGE AT THE FSC Alarmed by news that two companies in the Rebar Asia-Pacific Group had declared insolvency, thousands of depositors of The Chinese Bank, the group's banking arm, lined up at ATM machines and bank branches across the island in early January to withdraw their savings. It was Taiwan's first bank run in 80 years, and occurred despite government efforts to reassure customers through newspaper ads that their deposits were guaranteed. After billions of New Taiwan dollars were drained from accounts, triggering fears of a wider financial crisis, the Financial Supervisory Commission (FSC) announced that the government was taking over control of the bank. FSC Chairman Shih Jun-ji later stepped down to take responsibility for the bank run, and Hu Sheng-cheng, chairman of the CEPD and one of Taiwan's most prominent economists, was named to succeed him. The Chinese Bank is Taiwan's smallest publicly traded bank. The Rebar group, a 50-year-old Taiwan conglomerate founded and headed by Wang You-theng, is involved in a wide range of businesses including textiles, construction, hotels, real estate, insurance, telecommunications, and the media. Premier Su Tseng-chang ordered an investigation into the scandal, which took over the headlines after it was discovered that Wang You-theng and his wife Wang Chin Shih-ying, who chaired several of the group's companies, had left Taiwan shortly before news of the insolvencies broke. After a raid of the Rebar offices, prosecutors accused the Wangs of defrauding shareholders of billions of New Taiwan dollars. More than two dozen executives of Rebar companies, including several of Wang's adult children, have been charged with embezzlement, fraud, and insider trading. Warrants were also issued for the arrest of Wang and his wife, who were put on Taiwan's most-wanted list. The couple kept the Taiwan authorities busy tracking their movements as they fled to China, then the United States, and later Singapore and back to the United States after an abortive attempt to reach Burma. As of press time, Taiwan had revoked Wang's passport and he was under detention by U.S. immigration authorities while Taiwan negotiated for his return. His wife, who holds U.S. citizenship, was able to reenter the United States without difficulty. BLOCKBUSTER SELLS ITS TAIWAN UNIT Movie rental chain Blockbuster Inc. in mid-January announced that it had sold its Taiwan unit to Webs-TV Digital International, a local broadband firm, for an undisclosed amount. Analysts saw the decision as motivated by a Blockbuster desire to concentrate on its core U.S. market. Jenny Cheung, Blockbuster's Taiwan managing director and vice president, said the company would be renamed Lots Home Entertainment but that the Taiwanese stores would continue to operate under the Blockbuster brand and the original management would remain unchanged. Blockbuster Taiwan has 89 directly owned stores and 40 franchised outlets on the island. The Dallas-based company first entered Taiwan in 1997 and has over 8,500 retail locations in the United States, Europe, Asia, and Australia. BENQ UNVEILS PLANS IN CZECH REPUBLIC BenQ, which specializes in digital, mobile, and electronics manufacturing, will construct an LCD screen and monitor factory in the Czech city of Brno, the project's Czech promoter told the international media in early January. CTP Invest Director Remon Vos was quoted as saying that the site should be ready by the middle of this year. Czech media reports said the factory will have eight assembly lines capable of producing around 500,000 LCD screens and 500,000 monitors a year. The new plant will employ around 700 people. The move came as the court-appointed administrator of the bankrupt German arm of BenQ Mobile said that talks with potential investors interested in acquiring the unit were continuing. |
