A preliminary study of the impact upon Taiwan economy under the ECFA

The dynamic economic cooperation across the Taiwan Strait would affect tremendously the prospect of Taiwan Economy. The across-strait ECFA signed by Taiwan and the Mainland China in June 2010 has been a topic in focus. Taiwan is a shallow-plate economy which relies deeply on foreign trade. Thus the emerging associations like ASEAN-China, ASEAN-Japan, ASEAN-Korea, ASEAN+3 and even ASEAN+6 etc. may impact the export sector of Taiwan, because the ratio of foreign trade to total output rises more than 70% for Taiwan. As the relationship between Taiwan and China has gradually improved, it has been an important issue to adapt more open policies for the economy of both sides.
Taking CEPA of Hong Kong for an example, it influenced enormously the migration of talents, the opening of China market, the extending of enterprise’s fortune and the higher price of stocks and property. On the other hand, it resulted in the extended poverty gap for its business migrating, outsourcing, labor shortage and salary shrink. All these impacts should be considered thoroughly for policy planning by the authorities.
The ECFA will speed up the linkage of both sides and the global deployment of Taiwan Economy. It will evoke the macro-economic development and represent the peace symptom across the Strait. However, the domestic manufacturing sector will encounter directly with the price competition from the Mainland China. Those who fail to adjust accordingly will be perished rapidly. It might lead to a disaster of the industrial clusters and the supply chains in Taiwan. When it comes to the viewpoint of globalization, the ECFA could be the very beginning for Taiwan Economy to embrace the world market, to take part in the world wide supply chains and to turn the economic crisis into an opportunity of further growth.
Suggestions to the post-ECFA era will be:
1.Upgrade the productivity of industries by way of innovation and more liberalized economic policies.
2.Reduce the poverty gap with totally social solution package.
3.Consider cautiously yet aggressively the FTA with more countries.
4.Exclude syndicates or vested interests for the benefits of the whole society.
5.Seize the chance to make good use of the advantages of Taiwan Economy after the ECFA being signed.