Below 2

Cheming Yang

It is predicted by many recently that Taiwan’s economic growth for 2012 will finish below 2 percent due to declining exports and deepening concerns over the global economic slowdown. Taiwan is an export-oriented country. Once its exports tumble, economic growth will be seriously affected. And the current situation is speculated to be worse than the 2008 financial crisis.

Scholars have come up with numerous advices to boost the economy, including depreciation of Taiwanese currency. The Executive Yuan proposes to adjust the order of priority of its seven recession response strategies as follows: attracting investment, helping industries, stimulating finance, promoting exports, boosting consumption, increasing employment and stabilizing commodity prices. The proactive “stimulating finance” has replaced “stabilizing finance” as a goal.

Minister Kuan pointed out that when the task force was first established in February this year, the top priority was to stabilize commodity prices and the financial system to help strengthen Taiwan’s economic fundamentals. As circumstances have changed, first priority must now be given to attracting investment and helping industries to achieve economic synergy in the short term, he said.

To attract investment, the government will expedite the expansion of the Taipei World Trade Center Nangang Exhibition Hall and the construction of the Kaohsiung Conference and ExhibitionCenter, Kuan said. It will also redouble its efforts to attract investment in science parks and take stock of public lands that can be put to active use, including lands inside schools and military barracks that have been standing idle as well as state-owned lands managed by the Ministry of Finance.

Cross-strait finance will be an important part of the government’s effort to stimulate the financial industry, the minister stated, with the details of its programs depending on the form of the cross-strait currency clearance and settlement mechanism that will be established. Kuan also stated the government also has plans to launch major construction projects throughout the island to spur investment from the private sector.

All these measures mean well for sure, although whether they will be effective remains uncertain. However, what is more important and worth discussion is whether the government focuses merely on short term results or long term development. When we are facing the threat of GDP growth falling below 2 or even 1, the government might react to save the numbers but the economy, which will be once again disastrous for the economy and well-being of the people in the long run.

The whole world is plagued by inequity caused by widening income gap. Taiwan is no exception. The looming housing bubble is an evident example. With the average income level regresses to the level of 15 years ago, why can the real estate market sustain a 200% or even 300% price hike? The focus on having growth without considering its distributive effects has made the fruits of growth usurped from the hands of the general public by only a few. We should not let the concern for equity get overwhelmed by the panic caused by low GDP performance. We need sound economic policies that take care of both growth and equity. The last thing we need is stimulant. Stimulants harm humans both physically and mentally, that is a scientific fact. Stimulation may be not totally bad for economy, but do not depend on it and overdose. Otherwise, we will live in a society with economic growth, but more and more people are deprived.

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