Defending Taiwan’s Economy and Identity

The existential threat to democratic Taiwan comes not only from the Chinese military, but also from ill-designed economic policies
Don Rodgers

Now, no shells ripped the evening sky

No cities burning down

No army stormed the shores for which we’d die

No dictators were crowned

I awoke on a quiet night, I never heard a sound

The marauders raided in the dark

And brought death to my hometown

Bruce Springsteen – Death to My Hometown


Democratic Taiwan faces an existential threat from authoritarian China, this is clear. Beijing has the Anti-Secession Law, which promises that China will use “non-peaceful and other necessary actions” to prevent the Taiwan independence movement from “splitting the country.” The language and intent are clear. Yet, as threatening as this law is, it may not be the most immediate threat facing the Taiwanese people. Another threat that Taiwan confronts is the less palpable, but probably more immediate, attack on the Taiwanese people’s livelihoods and lifestyles. This attack comes in the form of reckless economic integration with China. Perhaps most troubling about this attack it that it actively promoted by Taiwan’s own government, which pushes programs like the Economic Cooperation Framework Agreement (ECFA) and the Cross-Strait Services Trade Agreement (CSTA) without giving careful attention to the implications of these agreements for the average citizens of Taiwan.

In the government’s model, economic integration is pushed as a panacea for all of Taiwan’s social and economic concerns. High unemployment? Open to and integrate with China. High home prices? Open to and integrate with China. Rising inequality? Open to and integrate with China. Limited markets? Open to and integrate with China. Yet, the government has provided no clear evidence that the opening and integration will address these problems. In fact, evidence to date indicates that the integration has provided little benefit for Taiwan’s economy, and may be threatening Taiwan’s smaller businesses and contributing to greater inequality. The cost of real estate and the overall cost of living are going up while salaries are stagnating or even declining.

In response, the government has failed to provide any clear indication about what it will do to help people who are negatively impacted by the opening and integration. Instead it simply repeats the vague promise that these agreements will bring economic benefit to the country; that they will make Taiwan richer. But in the process of making Taiwan richer, it is very possible that they will make the Taiwanese people poorer.

The economic model pursued by the Ma Ying-jeou government benefits large corporations in Taiwan and in China, but is potentially devastating to millions of people in Taiwan. The CSSTA is particularly precarious in this regard. Approximately 58% of Taiwan’s population is employed in the service sector. Anybody who has spent significant time in Taiwan knows that part of the country’s strength and charm rests in the small and medium sized service oriented businesses that populate the cities and the rural areas. Taiwan is a service-oriented economy, not only because nearly 70% of its GDP is generated in the service sector, but also because small and medium sized Taiwanese service businesses are a part of daily life in Taiwan. This is part of the uniqueness and identity of Taiwan. These businesses do more than contribute to the nation’s GDP; they contributed to the construction of a very distinctive lifestyle, a quality of life, and an identity in Taiwan. An ill-conceived or poorly implemented service trade agreement then has the potential to cause great harm to this sector of the economy, to this lifestyle, and to this quality of life. These businesses and the people associated with them are to be valued and protected not only for their economic contribution, but also for what they contribute to Taiwan’s culture and patterns of life. This is tied to the identity debate in Taiwan.

It is practically impossible to avoid the topic of identity when discussing Taiwan’s politics and foreign relations. Most commonly, we see great attention given to the question of Taiwanese versus Chinese identity. At a deeper level though, since the significant majority of people consider themselves Taiwanese, the real question is no longer about Taiwanese versus Chinese identity, but rather “what does it mean to be Taiwanese?” Or perhaps, “what represents Taiwanese identity?” This is in some ways an impossible question to answer. For somebody who was born and raised in Taiwan, the answer is “everything about my life. My job, my home, my family, my neighborhood, my hobbies, my food…”

Identity is about patterns of life, what and whom we know, and what we find valuable. Taiwan’s unique patterns of life were co-constituted with its economic activities, its specific and unique economic system. Destroy that system and you certainly threaten people’s livelihood, but you also threaten their lifestyles and their identity. Identity is also a statement about what people are not. The majority of people in Taiwan do not consider themselves Chinese, and the overwhelming majority do not consider themselves tied to the Chinese state; their political or civic identity is firmly rooted in Taiwan, not China. Thus, the Taiwanese people have a very valid fear that not only is what they value being threatened by economic change, but that the threat is coming from an authoritarian China in the form of very different rules, norms, and practices that will push to replace what they know. The economic threat is coming from a country that openly states that it wants to politically absorb Taiwan. The origin of the threat then exacerbates the economic, political and social insecurity the people already feel.

Economic and social change will and should occur, and increased economic integration and trade are part of this change in our global economy. But change need not lead to a reduced quality of life for the people; it need not come in the form of an attack on the working class and small business owners who have contributed so much to Taiwan’s development, Taiwan’s quality of life, and Taiwan’s identity. Progress means better, not worse. Economic change in the form of integration and trade should contribute to an improved quality of life for the people of Taiwan. But improvement requires careful attention to the structure and implications of trade agreements. It is not enough to assume that free trade will automatically bring benefit.

None of this means that Taiwan should become isolationist, or even that Taiwan should avoid trade with China. There are potential benefits to both. Instead, Taiwan must change its approach. It should not longer look to the Chinese economy as its sole link to salvation. It should no longer accept Beijing’s vague promises of greater freedom of action if it Taipei signs agreements. And while Taiwan’s economy has some weaknesses, we must remember that Taiwan still has one of the largest economies in the world, sophisticated technology, strong infrastructure, and a well-educated workforce. Due to these strengths, the weaknesses can be overcome with proper leadership, planning, and coordination. Unfortunately, despite the perception that the Chinese Nationalist Party (KMT) is an efficient, technocratic party, the Ma administration has demonstrated little desire or ability to manage the economy. Observing the Ma government’s handling of the economy has been akin to watching surgery performed with a butter knife. That must change so that Taiwan can engage Beijing and the rest of the global economy with confidence.

To improve the situation, Taiwan’s government must take an active role in analyzing and guiding the processes of economic development, trade, and integration. While it is unlikely that the Ma administration will take any of these suggested actions due to its political agenda, one might hope that the next government will.

First, the Taiwanese government must do a much more effective job in assessing the economy’s strengths and weaknesses and implementing policies that strengthen Taiwan’s domestic economy and comparative advantage in the global economy. Taiwan must work to position itself to negotiate from a position of greater strength and to avoid relying exclusively on trade agreements with China to solve domestic economic concerns.

Second, the leadership must carry out due diligence to understand how any trade deal will affect the people and to determine whether the agreement is truly beneficial. It must assess the costs and benefits of agreements so that it can say no when an agreement is not in the Taiwanese people’s best interests. (This second point should go without saying, but the Ma government has certainly not made such assessment a priority).

Third, the leadership must find ways to protect or assist those who will be negatively impacted by changes in economic relationships. Vague recognition that some people may not benefit is inadequate. The government must provide detailed analysis and specific policy solutions. As the Sunflower Movement so ably demonstrated, these changes require action by the people of Taiwan to hold their government accountable. This means that people must be ever vigilant to protect their interests, their livelihoods, their lifestyles, and their identities.

An existential threat to democratic Taiwan and Taiwanese identity comes not only in the form of a military threat from China, but also from an economic policy that, if not carefully considered, takes from the people the lifestyle and quality of life they have worked so hard to achieve.


Donald Rodgers is Associate Professor of Political Science at Austin College.

3 Responses to “Defending Taiwan’s Economy and Identity”

September 09, 2014 at 7:45 am, Terry Lee Huang said:

Great analytical piece; now if only the Ma administration and the KMT party can start listening to scholars and its people alike.


September 09, 2014 at 4:34 pm, Philip Liu said:

Yes, right on the heart of the problems facing Taiwan. However, a new government will also need a new Congress or Taiwan will repeat herself when she had Chen’s Administration.


September 10, 2014 at 4:12 am, mike said:

The claim that the current government’s cross-strait trade policies constitute an “attack” on Taiwanese lifestyles and identity is hyperbole, since a genuine “attack” would involve the direct imposition of much more onerous social regulations and alterations to the tax code. The author may believe that the removal of trade restrictions will generate problems for people who work in middle and working class positions, which is a point worth making, but there is nothing special about this that marks it out as an “attack” since all government policies generate problems for somebody or other.

Further, to speak of “the Taiwanese” and their “best interests” as if they were all one person obscures the fact that they have different and often opposing interests as consumers and producers. More competition – provided it was free of political interference – could reasonably be expected to benefit large numbers of Taiwanese consumers and thus represent very real aspects of “progress”, especially for the poor, at least to the extent that it brings about a fall in prices for everyday goods and services. It is the consumers who ultimately are, and should be in charge of the economy, not the producers wrapped up in the flag of “Taiwanese identity”.

The horse goes before the cart, not the other way around.


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