Speakers: Peter Chow, Professor of Economics, City College of New York; Yu-long Ling, Professor of Political Science, Franklin College; Thomas Bellows, Professor of Political Science, University of Texas at San Antonio; T.Y. Wang, Professor of Political Science, Illinois State University

Taiwanese president Ma Ying-Jeou has much to fear from the political repercussions of the current global financial crisis. During his election campaign last year, Ma staked his political fortune on his ability to improve the Taiwanese economy. However, Taiwan has been hard hit by the global crisis. Tourist numbers, cross-strait investment, consumption and employment rates have all decreased, and in the midst of this turmoil, Ma has had to revise his economic strategy. On March 18, the Asia program hosted an event to examine what the global economic crisis means for the Taiwanese economy.

The first speaker, Peter Chow, professor of economics at the City College of New York, argued that while the global financial crisis has hit Taiwan hard, Ma's government is also responsible for declines in growth, industrial production and consumer confidence. Chow noted, for example, that stock prices were falling well before the international crisis made its presence felt. Soon after Ma was elected, many Taiwanese found that the president's promises to increase growth dramatically and provide a much higher standard of living, while cutting unemployment to 3%, were overly optimistic. Chow believes that Ma's inability to deliver on his promises has led to a "confidence crisis" in the Taiwanese business community.

With the onset of the global crisis, confidence in Ma's ability to deliver has decreased even further. Chow focused on Taiwan's lack of an indigenous industrial sector, a lack of export diversification, and on what he deemed an overly swift move towards economic integration with China as factors that have deepened Taiwan's recession. According to Chow, Ma's cross-strait policy was "too fast and too drastic," and "too early to predict any proved economic interest" with a hidden cost of eroding Taiwan's "de facto" independence.

Yu-long Ling, Williams Chair of Law and Public Policy at Franklin College, discussed the effects of the financial crisis on domestic politics, and focused on Ma's leadership ability. Although a landslide election brought Ma to power in 2008, his popularity ratings quickly dropped in the wake of the crisis. The fact that Ma's party, the Kuomintang (KMT) now controls both the legislature and executive in Taiwan has worked in his favor. However, Ling wondered whether Ma's famous charisma was enough to halt his slide in the polls, given that external economic upheaval over which he has no control continues to erode confidence in his government.

Ling suggested Ma adopt a number of tactics in order to consolidate his power, including the promotion of transparency and honesty in government. He also suggested that Ma use his charisma and common touch to inspire the Taiwanese people and communicate with them in dismal economic times. In terms of policy, Ling suggested that Ma focus on bread and butter issues like law and order, education and effective government, and continue to balance his agenda of fostering good relations with the PRC with the need to take an uncompromising stance on issues related to sovereignty. Finally, Ling noted that Ma must emphasize action over rhetoric and deliver on the agenda for growth that he promised during the 2008 election.

According to Thomas Bellows, professor of political science at the University of Texas at San Antonio, issues pertaining to economics, national identity, corruption, and cross-strait relations are so interwoven that discussion of one immediately involves one or more of the other components. The current economic setting generates considerable anxiety, with one recent survey showing that Taiwan had "ended 2008 in a state of confusion and pessimism, and the prospects for 2009 in the minds of many citizens' remains unclear."

Bellows noted that this sense of uncertainty has been exacerbated by movements in the Legislative Yuan, Taiwan's parliament. With the KMT now controlling both the executive and the legislature in Taiwan, it would be easy to presume that the KMT could carry out its legislative agenda. However the new government has found it hard to pass legislation as individual party members jockey for power in the new parliament. Meanwhile, the recently defeated Democratic People's Party has attempted to show that it is still a force in Taiwanese politics by disrupting legislative procedure. This has led to an erosion of public confidence in the Legislative Yuan.

In his presentation, T.Y. Wang, professor of political science at Illinois State University, highlighted the effect that Taiwan's economic problems were having on public perceptions on relations with Mainland China. Wang noted that Ma maintained a two-pronged strategy to revive the economy, consisting of domestic and cross-strait components. For the latter part of this strategy, the Taiwanese government has relaxed restrictions on Taiwanese investment, direct flights and other links to the mainland, and proposed an economic cooperation framework agreement with the mainland to offset the free-trade agreements that China has already negotiated with other Asia-Pacific nations.

According to Wang, however, Ma's policies did not signal a Taiwan that was moving "closer" to China. In fact, polls show that Taiwanese are as resolute as ever over questions pertaining to their own sovereignty and national identity – if not more so. Ma's moves last year prompted a jump of more than 10 percent (from 21 to 33.6 percent) in the number of people who believe the pace of cross strait interactions is proceeding too quickly. Meanwhile, by August 2008, 65.5 percent (up from 50.3 percent one year earlier) favored tightening cross-strait restrictions. Meanwhile, an overwhelming majority of Taiwanese (79.8 percent) continue to identify with "Taiwan only," precluding significant Taiwanese identification with the mainland. Wang noted several times that there is no ambiguity on national identity issues in Taiwan, despite the closer economic links with the PRC.

Drafted by Bryce Wakefield, Asia Program Associate.
Robert M. Hathaway, Asia Program Director. Ph: (202) 691-4020