Wednesday, January 15, 2020

8 Reasons why Taiwan Economy is Declining











Taiwan had been regarded as part of The 4 ASIAN small dragons. Singapore, Taiwan, South Korea, and Hong Kong. She was and probably is one of the leading places for microchips. However, Korea has been doing better. Everyone may know Samsung and LG for their mobile phones and tablets, but who knows Asus, which is one of the leading brands in computer peripherals and motherboards. Taiwan has become one of the wealthiest regions in Asia. However, experts say it still depends too heavily on Chinese trade. Taiwan began losing its roar in the 1990s, even as China's economy rose, eroding Taiwan's manufacturing competitiveness. Today, Taiwan has anemic growth, high cost of living, and rising youth unemployment. Many of its talented young are moving abroad, including to China and Singapore, for better work opportunities. Like Japan, the Taiwanese dollar was forced to appreciate against the US Dollar. In the early 80s, it was about 1 US Dollar to 60 New Taiwan dollar; it is 30 now. This has been affecting their exports. In order to solve the problem, like Japan, they moved their manufacturing to other countries. Moreover, as China’s economy rises, they also employ a lot of Taiwanese. The export of talented workers simply weakens the domestic economy. Internally the political tension between the KMT and DDP, the DDP, and mainland China also affects the economy. In the past years, tourists from China brought billions of income. And export to China of agricultural produces and food products provided another source of income. Gross domestic product growth, year on year, was 1.72 percent in the first quarter, down from 3.15 percent in the first three months of 2018 and the slowest since the second quarter of 2016. Taiwan’s exports, which account for nearly three-quarters of GDP, have this year been hit by a sharp fall in demand for electronic components such as computer chips amid weaker device sales and slower global economic growth. Sentiment has been further dented by the trade dispute between the US and China. Taiwan didn't upgrade its economy, end of the story. Welcome to The Atlantis Report. Taiwan is in decline for the following reasons. #1. Demographics. It’s bad, and the outlook is scary. Even though all the other arguments of how declining population might not be so bad. Just the simple logic of how many people are sharing the same infrastructure alone is a major issue. You built the infrastructure for 20 million but only have 15 million people, etc. Not to mention debt. you borrowed this much money with a tax base that was much bigger than what it ends up being when you actually need to pay it back. #2. Stagnating reforms. Taiwan is relatively advanced in many areas, some even very sophisticated, bureaucracy paperwork for average folks is generally a non-issue, in fact, the government basically calculate your taxes for you, and you just need to pay up. If they counted too much, you can go to the tax office and file it yourself. #3. Geopolitical future outlook: it’s not a secret that the unsettled past with Beijing is the primary concern and those have very real-world implications on the economy, as recently as 2008 (the 21st century!! a decade in!!!) there wasn’t even a direct flight between the two sides nor direct postal. Though the past decade saw a lot more opening on that front, it seems to be built on a foundation of sands that is slipping quickly. The geographic reality is that the economy almost certainly has to be quite interlinked with the PRC unless one or both sides choose to go to North Korea. With the new cold war now basically baked into the cake, the guys caught in the middle are likely to be hurt the most. #4. The ugly politics that’s getting worse and could go off the rails: while there’s always messy politics and democracies, in general, is more messy, the modern issue where the internet and social media have quickly made things even more personal, and messier is as problematic in Taiwan (maybe even more so) than it is in the rest of the advanced democracies, mixed in with history and the situation with the PRC, there’s a lot of room for demagogues to play around and certainly, both major parties are guilty of that to some extent, there have been close calls in the past such as 2004 when the eventual winning candidate had an “assassination” attempt against their life, the day before the vote, but was totally fine, and the shooter committed suicide and all his documents burned and said candidate won by less than 1% of the vote. Even in 2004, there were pretty serious clashes and violent protests due to that. If that happens today, it’ll be much much worse. #5. Perverse incentives in general: look, outside of the very small aboriginal population, most people in Taiwan only showed up a few hundred years at best, many even more recent than that, many are from regions well known for migrations overseas. The reality is Taiwan has always been losing people to immigration, the current period is a relative calm period that could easily change in a few month or year, in the past they simply had way more babies than those that left and things were going up in general anyway so that was no big deal (if anything most of those that left probably lost out.) but now that’s no longer the case, it’s a real problem, especially with this sort of democratic setup where quite frankly, most people only have a limited tolerance at certain point they really might just pack up and go to the West or China. But if you’re a politician trying to win votes. Forcing those people out is a “winning” strategy, but for the longer-term good of this place, it’s quite obvious that’s the opposite of winning. #6. Brain drain. Some of Taiwan’s best and brightest move out of the island to seek better career opportunities. The most popular destination has been the US until recently. Now, it is the Mainland, which offers enticing rewards for Taiwanese talent. The Tsai administration has tried to impose counter-measures to keep Taiwanese talent in Taiwan, but so far, it has been extremely unsuccessful. They really couldn’t compare with the Mainland policies anyway. #7. Low consumer and foreign investor confidence in the economy. It doesn’t help that vital infrastructure on the island can be manipulated by political figures. The causes behind these symptoms are subjective. However, it is clear that no political party is committed to addressing these problems even as they become bigger and bigger. There is simply too much political bickering about pointless things. This is extremely concerning. You know, the best way Tsai Ing-wen could legitimize her Taiwan independence platform is by turning Taiwan into a successful role-model for the Mainland and others (which was the case a long time ago). If you don’t believe statistics, one of the best ways to sense these factors for yourself is by walking around Taipei, but also smaller cities. #8. Taiwan’s trade with mainland China. There are many things that prevent Taiwan from breaking away from mainland China for good. Like the ROC constitution and laws. Like Kinmen and Matsu. But this why I’m certain that any attempt to separate Taiwan from China will not turn into anything substantial or cause long-term damage. And there’s nothing Taiwan can do about it. No, not because mainland China is evil, but because mainland China is too big. The current president and previous administrations have tried to reduce Taiwan’s reliance on mainland China by promoting trade with Southeast Asia — known as the Go South Policy — but the effects of such a policy are very limited. There are plenty of other aspects where Taiwan is pretty restrictive, such as immigrating to Taiwan is basically impossible short of marriage and/or being an overseas Chinese. Starting a business as a foreigner, who isn't some mega global company, is also impossible without a local partner. Like much of the rest of the world, the pension system looks like a longer-term bomb given the demographics and unreasonable expectations set previously, but dealing with that is a big problem. The thing is Taiwan is really declining, but many people still think Taiwan is still on its prime time. Sure, the government here is a total train-wreck. Corruption everywhere but still pretend to be Holy Saints, but I do think it’s Taiwanese fault either. The citizen of this what so-called country never wants to open their eyes about how the system is falling apart. The government, on the other hand, is so weak. They literally lick their citizen’s shoes one by one. All they can do is blaming each other (blue and green party) all day long, whereas China is preparing to devour Taiwan little by little, yet they only focus on blaming each other. Even a day of typhoon holiday can become a topic for them to blame each other too, such a hilarious and humorous people. Are they clowns or governmental officers? Guess, blaming each other is a culture in here? Well, as many of my Taiwanese friend said, it’s only time to see when China devour Taiwan. No matter who becomes the leader, the result is still the same. Many Taiwanese even migrated to China now. Honestly, I don’t want Taiwan to become part of China, but nowadays, it seems the time is getting nearer and nearer whenever I read China’s news. The decline of Taiwan is difficult to stop for the following reasons. 1) There is no healthy startup culture and entrepreneurial spirit in Taiwan, it has not a single Unicorn startup, out of the 254 unicorn companies in the world. China has 131, the USA has 76, Singapore has 3, South Korea has 2, Hong Kong has 2. just as a reference only 22 countries in the world have unicorn companies. Also, none of Taiwan's tech companies have even ventured into emerging industries like, IoT, or AI. 2) The political atmosphere in Taiwan is also unique. Everywhere else, the partisan divide usually is a disagreement of the economic model. Pro-social or pro-business. In Taiwan However, The partisan divide happens in the issue that will decide the existence of the island, i.e., disagreement of whether staying in the current relationship with mainland China or becoming independent. Due to this fundamental disagreement on the survival of the current regime in Taiwan, it has caused the two parties to oppose each other on every issue, no matter what. So in Taiwan, there is rarely any bipartisan support on any issues, which resulted in the toxic political environment. Opposing for the sake of opposing, constant political gridlock has narrowed the vision of their politicians. This was The Atlantis Report. Please Like. Share. And Subscribe. Thank You.













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