CAPP Events: 2003

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Scholars from Taiwan Visit RAND

On November 20, 2002, CAPP hosted a roundtable with analysts from several research institutions in Taiwan. The visitors included Dr. Jaw-ling Joanne Chang, Research Fellow at the Institute of European and American Studies, Academia Sinica, Dr. David S. Hong, Vice President, Taiwan Institute of Economic Research, and Dr. Wen-cheng Lin, Professor and Director, Institute of Mainland China Studies, National Sun Yat-sen University. The meeting was chaired by Dr. Charles Wolf, Jr., RAND Senior Economic Advisor and Corporate Fellow, International Economics and attended by RAND staff and Pardee RAND Graduate School students.

The topics of cross-strait relations, China’s economy, and warming trends in the relationship between the U.S. and China dominated the discussion. According to Dr. Chang, China’s assistance to the U.S. in the war on terrorism and vote in favor of the U.N. resolution mandating the return of weapons inspectors to Iraq show that China is becoming more cooperative with the United States. She explained that while there is a prevalent misconception in the U.S. that Taiwan’s government prefers strained relations between the U.S. and China, the Bush administration’s forceful stance on a peaceful resolution to the cross-strait issue makes Taiwan confident that its best interests will not be sacrificed in the quest for better U.S.-China cooperation.

The scholars explained that most in Taiwan want the status quo. “People in Taiwan think time is on their side, that the world is giving up on Communism and moving towards democracy,” Dr. Chang noted. “However, if the PRC [People’s Republic of China] uses force against Taiwan, time will be on nobody’s side.”

The group discussed the prospects for continued economic reform in China and the effects of China’s rapid economic growth on Taiwan. K.C. Yeh, a retired RAND alumnus, addressed the issue of Taiwanese businesses moving their manufacturing processes to the mainland. “Cheap labor in China makes it the factory for the world,” he said. Taiwan can balance the effects of this exodus, he advised, by staying ahead of China technologically and maintaining Taiwan’s advantage in the marketing and finance sectors. “The Chinese and Taiwanese economies are complimentary,” he pointed out. He mentioned recent statistics showing China’s unemployment rate as hovering near twenty percent of the total labor force. He pointed out that this high unemployment rate could have negative ramifications over the long term.

While China’s economy is currently in a very dynamic phase, growing rapidly and attracting foreign investment, Taiwan’s economy is experiencing a retraction. Dr. Chang speculated that, like the election that brought former President Clinton to office in the United States, the economy could become the most important factor in Taiwan’s 2004 election. She explained that President Chen Shui-bian is attempting to push forward with reforms to boost the economy, but he is encountering resistance from the opposition party and labor.

Dr. Wen-Cheng Lin stated that some voters may blame the opposition party rather than President Chen for Taiwan’s economic problems, since the ruling party has only been in power two years while the opposition led Taiwan for fifty years before Chen’s election. “Some may feel [the ruling party] must be given more time to solve Taiwan’s economic problems,” he said. Legislators need to understand the importance of compromise, he asserted. “Compromise is the price of a democratic society.”