Crisis Engendered by the Economic Activities across the Straits

"Under the premise of one China, the socialism in the mainland and the capitalism in Taiwan will coexist and develop symbiotically. No one will be devoured. After unification, Taiwan will become a special administrative zone that retains its autonomy and army." The above quotation from China's white paper indicates that China deems Taiwan a part of China. If China is going to make Taiwan a special zone, would it not be the case that Taiwan will be devoured? Furthermore, it is unrealistic that capitalism and socialism can coexist within a country in the long run.

While making promises that Taiwan will be allowed to run its own economy, military and party politics, China has attempted all efforts to keep other countries from selling arms to Taiwan. How is it possible for an unarmed army to protect Taiwan's economic and political institutions, and most importantly, its autonomy? The white paper purposely fails to make proposals as to how the economic transition would be made with regard to taxation, finance, currencies, stock markets, exchange rates, foreign reserve, etc. These issues are too complicated to be brushed over simply by the slogan of "Peaceful Unification". Germany's unification shows the cost of a peaceful unification. Economic questions cannot be answered by political slogans. China's failure to address the economic aspect of unification is either because it intentionally avoids the key problems or because of its inability and inexperience in the economic management of free market. A government incapable of administering and managing its domestic ma rket economy does not seem competent enough to rule Taiwan.

Between the years 1945 to 1949, Taiwan and China were literally under the policy of "One Country, Two Systems." Taiwan had its own administrative, financial, taxing, and currency system. However, it was still not able to sustain its economic autonomy. China's economic policy exploited Taiwan and ultimately caused the 228 Uprising and the ensuing massacre.

There is great discrepancy between Taiwan's GNP per capita of US$10,000 and that of China's of US$400. These days, Chinese who desire a higher living standard have attempted to sneak into Taiwan in great numbers already. If Taiwan were to merge with China and the Chinese could enter Taiwan freely, the impact on Taiwan as a result of a possible population boom would be inestimable. Taiwanese labor will be the first to suffer. A great many social problems may erupt while the economic order will be disrupted. There is also the question of whether or not Taiwanese businessmen will enjoy the same privileges for their investment in China after unification.

The white paper also states that "before the realization of unification, both sides should actively promote economic cooperation and other exchanges under the guideline of mutual respect. The opening of such channels as direct postal services, commercial activities and aviation will be necessary steps leading to the peaceful unification of China." China has repeatedly requested for direct contact in all areas in the hope of speeding up the pace of unification. Its "friendly" attitude, however, is merely a gesture. In the same paper that emphasizes the importance of cooperation and mutual help, statements are made regarding China's objection to Taiwan's right to participate in international organizations as an independent entity. Meanwhile, China also denounces Taiwan's aviation rights. In this context, we can see that China's policy in favor of Taiwanese investment is aimed at its own economic development. After all, obtaining foreign capital and technology is perhaps the only way for China to industrialize , and Taiwanese investment provides exactly what China needs.

Taiwanese investment in China has more cons than pros to Taiwan, nevertheless. In the short run, lower labor costs and cheaper raw materials may seem profit-promising. In the long run, several problems will emerge:

1. Chinese products will create intense competition with Taiwan's exports;
2. Taiwan's effort for industrial upgrading will slow down;
3. There will be a hollowing-out;
4. Taiwan's economic edge over China will diminish;
5. Taiwan will gradually fall into the trap of China's strategy of speeding up the pace of unification through commercial activities.