Tuesday, September 30, 2008 Ramos: What's between China and Taiwan? Asean's role? By By Fidel V. Ramos
(Last of Two Parts)
THE election of President Ma Ying-jeou and Vice President Vincent Siew in Taiwan has truly warmed up its relations with China. As reported in our column last Sunday, Taiwan's new approach is "Economic Cooperation Before Politics," replacing its former pro-independence fixation, which kept both sides in a state of constant tension. The fresh winds of political rapport and economic team working now blowing across East Asia augurs well for the Philippines, with our long history of peaceful commerce and cultural exchange with nearby neighbors Fujian, Guangdong, Hong Kong, Macau and Taiwan.
Asean role in China's economy
In my keynote address at the "3rd Forum on the Development of the Western Taiwan Straits Economic Zone" (WTSEZ) in Xiamen, Fujian last 07 September, I stated that the China-Asean Free Trade Area (Cafta), established in November 2001, is progressing well towards its full completion in 2010. Cafta's "Early Harvest Program," starting in January 2004, reduced tariffs on 500 agricultural products. The "Agreement on Trade in Services" signed in January 2007 marked a key step forward, being the first agreement on services that Asean signed with other countries under the FTA framework. Cafta covers 1.8 billion people, with a total 2007 GDP of over USD 3,000 billion and trade volume exceeding USD 1,200 billion. Thus, Cafta has become the world's largest FTA among developing countries, even as Asean negotiates new FTA agreements with Japan, ROK and India.
China-Asean economic cooperation enjoys huge potential with China's economy still ascending. China's GDP is the world's 4th largest and is world number one in foreign exchange reserves. Its accession to WTO membership further enlarged its FDI inflows, ranking 1st among developing countries for the past 11 years. China's reforms to comply with WTO rules are facilitating its transition from being quantity-oriented to being quality-oriented.
Since 1995, China-Asean bilateral trade averaged 15% annual growth. In terms of investment, Asean is a major source of China's foreign capital and is also the first destination of China's "South-South" strategy. Overall, Cafta has steadily developed, and its prospects for broader and deeper cooperation will surely grow.
Correct leadership
Fujian's "Outline for Building WTSEZ" is being implemented according to "scientific development," adhering to four State Council mandates: Continuity, upgrading, performance, and effectiveness.
The progress achieved since 2006 in building WTSEZ profited from the "correct leadership" of the CPC Central Committee and the State Council, generous support from foreign investors, and the concerted efforts of all stakeholders within the South China-Hong Kong-Macau neighborhood. Fujian's development strategy is being actualized through measures that promote project motivation; accelerate industrial clustering; upgrade private enterprises; build marine-based industries; employ brand-name marketing; and balance urban and rural development in infrastructure, social undertakings, and environmental sustainability.
Under Cafta's "Early Harvest" and subsequent tariff-reduction programs for 7,000 commodities, the complementation between the WTSEZ and Asean has, indeed, become substantial.
In Cafta's buildup, overseas Chinese (85 percent of those of Fujian origin migrated to Southeast Asia) have served as bridges for regional integration because of their Mainland kinship. Reciprocal visits of business leaders from Asean and WTSEZ, seminars on two-way investments, and frequent economic dialogues could further widen Cafta's complementation.
China's economic optimism
Amid the global economic slowdown because of rising prices of food, fuel, and other basic commodities - plus the long-playing US recession - China remains ready to overcome current challenges, in spite of growing inflation. In his keynote speech at the 12th China International Fair for Investment and Trade (CIFIT) - the partner-event of WTSEZ's Third Forum in Xiamen (in which I also participated) - Vice Premier Wang Qishan affirmed: "The Chinese government is prepared for challenges to sustainable growth during the global slowdown. While China's economy encountered difficulties this year, including severe winter weather in South China and the May earthquake in Sichuan Province, the Government undertook a series of macro-control measures to cope with the complicated situation. China's GDP surged by 10.4 percent first half of 2008, with rising domestic consumption, investments, and exports. Foreign investors are still keen about investing in Sichuan Province."
Further, Minister of Commerce Chen Deming, main organizer of CIFIT, revealed that the Beijing Olympic Games would not hamper China's economic growth, which was driven by robust domestic consumption and steady foreign trade. He said Olympics outlays accounted for less than 1% of China's annual total fixed-asset investments for the past seven years.
China Daily (09 September) amplified: "Vice Premier Wang Qishan informed 445 delegates from 104 countries that the global slowdown has little impact on China because its GDP maintained double-digit growth first six months of 2008.... Driven mainly by domestic consumption, investment and exports, China's economy has become more balanced. The Government will improve services and guarantee a fair investment environment with a transparent legal system. The Government is encouraging foreign capital to flow into high technologies, modernizing agriculture, energy-saving industries, and innovative services. China has made every effort to boost the economy after disastrous snowstorms lashed the southern and eastern provinces, and the Sichuan earthquake that killed 80,000 and caused billions of yuan in economic losses."
Closer Taiwan-Fujian links
Of the various Chinese entities, the most prominent advantage belongs to Fujian Province resulting from its "Five Close Links" with Taiwan:
(1) Close geographical distance. Fujian faces Taiwan with only 68 nautical miles between Pingtan Island of Fuzhou, Fujian and Xinzhu, Taiwan.
(2) Kinship relationships. Over 80 percent of Taiwan compatriots have ancestral homes in Fujian.
(3) Cultural affinities. Both share the same dialects, customs, and progenitor cultures - Southern Fujian, Hakka, and Mazu (Goddess of the Sea).
(4) Huge business ties. Fujian hosts 9,300 Taiwan-funded enterprises, and has recruited a total of USD 12.6 billion Taiwan investments, ranking third among China's provinces.
(5) Ancient historical links. Since the Song Dynasty, Taiwan had been under Fujian's jurisdiction for 600 years. It was only in 1885 when Taiwan became a province on its own, although retaining the name "Fujian Taiwan Province."
Cross-straits tourism growing
At the "Third Forum," Minister Wang Yi of the State Council's Taiwan Affairs Office announced that Mainlanders with permits to visit Taiwan could now travel to and from Taiwan through the islands of Jinmen, Mazu, and Penghu, under new policies:
(1) Since 20 July, residents of Beijing, Tianjin, and Shanghai and the provinces of Liaoning, Jiangsu, Zhejiang, Fujian, Shandong, Hubei, Guangdong, Chongqing, Yunnan, and Shaanxi can visit Taiwan in groups, under a Mainland-Taiwan agreement.
(2) Starting 25 September, each Mainland Travel Permit (MTP) holder will be assigned a permanent number.
(3) Beginning 20 October, Taiwan compatriots traveling to the Mainland can obtain MTPs valid for five years in Beijing, Tianjin, Chongqing, and Shanghai, and in Zhejiang, Jiangsu, and Fujian provinces.
(4) China will add Nanjing, Chongqing, Hangzhou, Guillin, and Shenzhen to the list of places that can issue travel permits to Taiwanese starting 20 October.
Wang added: "In launching weekend charter flights and Taiwan tours for a greater number of Mainland residents, the people on both sides of the Straits have a strong wish for better ties. The number of Taiwanese travelers to the Mainland already reached 470 million by end-2007 (counting multiple visits), while 1.6 million Mainlanders traveled to the island, according to records of the Taiwan Affairs Office. Statistics also show that there are 700,000 Taiwan compatriots working and living in the Mainland."
Vice Minister of Commerce Jiang Zengwei added: "This year marks the 30th anniversary of both the opening up of the Mainland and the resumption of economic exchanges between the Mainland and Taiwan. 'The past three decades have witnessed remarkable achievements in our economic cooperation."
He also recommended that an institutional arrangement for deeper cooperation needs to be established, resembling the Closer Economic Partnership Arrangement (Cepa) between the Mainland and Hong Kong.
What should the Philippines do?
PGMA and her Administration should:
(1) Strategize and implement upgraded RP engagement in the emerging "Central East Asia" cluster (midway between Southeast Asia and Northeast Asia) consisting of Fujian-Guangdong-Hong Kong-Macau-Taiwan-Philippines - for reasons cited above.
(2) Reinforce RP offices in Philcongen-Xiamen and Meco-Taipei as contact/action agencies, with Secretary DTI as overall coordinator, in collaboration with Secretary DFA.
(3) Maintain consistently high-level participation in China-Taiwan events for both RP authorities and business leaders.
In the Philippines, is it not also "economics before politics?" Or, is it the other way around? Or, is it just wait-and-see? - wait for 2010?
PGMA should act now so that our people will not miss the boat again!
