Over the past two decades, much of the world’s economic focus has fallen upon Asia. An area that was once primarily agriculturally based, Asia has in the last half century rapidly developed into a booming technological and industrialized region. Containing the bulk of the world’s population, Asia has also attracted global interest to its enormous market potential. Although the entire continent is under much observance, attention has especially been paid to Taiwan, Hong Kong, and China. These three countries that are linked through a common heritage have shown their ability to succeed as well as the possibility for an even greater future. In the past, the disparate political situations have distinguished each country as individual entities. However, since the recent hand over of Hong Kong to China, an interest has grown as to the possible outcome of unifying Taiwan to China. If Taiwan were to reunite with China, but maintain basically its present capitalistic market structure, in the long run, both Taiwan and China would benefit economically. At present, Hong Kong is under China’s "one country, two system" policy of government for a period of fifty years. By following the situation of Hong Kong as a model for future unification of Taiwan and China, the numerous advantages from such an action will bring to light the benefit of creating one China.
Both Taiwan and Hong Kong share many of the same characteristics that enable a fair comparison and useful deduction of how Taiwan could unify with China. The two islands are strategically located on the coast of China [see fig.1]. Taiwan possesses easy access to the central coast of China, as the Taiwan Strait is 130 kilometers at the narrowest (1). In addition, Taiwan is situated in a prime location that finds itself in the crossroads of several shipping routes between the Americas and Asia. Analogously, Hong Kong provides excellent access to the southeastern coast of China with part of the territory lying on the mainland as well. Because of their prime locations, the two islands’ economies rely heavily upon exports and imports. In 1995, Hong Kong was the world’s eighth largest trading economy with exports amounting to 177.1 billion US dollars [see table 1] (1). Comparatively, Taiwan is ranked fourteenth in the world with 93 billion US dollars in exports [see table 1] (1). The location additionally allows both islands to participate greatly in the sea and air cargo business. In terms of the business structure, Taiwan is very much like Hong Kong in that "it is the home of thousands of small entrepreneurial firms and several large, indigenous private sector multinational firms" (1). "The Taiwanese combination of private sector entrepreneurship and management, and hustle and commitment strategies is closer to that found in Hong Kong than anywhere else in Asia" (1). Because of their strategic location and trade-inclined economies, Hong Kong and Taiwan would serve China as excellent economic intermediaries to the rest of the world.
Quality of life as well appears to be similar in Hong Kong and Taiwan. The infant mortality rate in Hong Kong is 5.1 deaths per thousand live births (2). Taiwan is up slightly at 7 deaths per thousand live births [see fig 1] (3). Likewise, the average life expectancy of each country is close in comparison. Hong Kong has 81.5 years versus Taiwan’s 76 years average life expectancy [see fig 2]. By verifying the similarity in aspects of nations such as the quality of life, the likeness of the two islands further proves the high possibility of Taiwan playing a role more like Hong Kong. China, however, does not have numbers that look as favorable as those of the islands. Mostly because of its enormous population of 1.2 billion people, health services are more difficult to provide. According to 1996 data, the infant mortality rate stands at 39.6 deaths per thousand live births and the average life expectancy is 69.5 years (4). Hopefully, with two highly modernized islands as models, China can strengthen its economy and improve the situation on the mainland.
As of now, direct links between Taiwan and China are forbidden. By opening direct trading to China, Taiwan could greatly increase its trade and save costs. Hong Kong presently serves as a gateway to the southeastern coast of China. Shipping between the mainland and Hong Kong is immense as total exports from Hong Kong to China in 1996 amount to 61.458 billion US dollars (5) while Taiwan, on the other hand, only exported 16.02 billion US dollars (1) to the mainland. Although a scarce number of shipping transactions now occurs between China and Taiwan, "the scheme is limited, allowing only the transshipment of goods through Taiwan’s southern port city of Kaohsiung by foreign-registered vessels to and from just two southern Chinese ports—Xiamen and Fuzhou."(6). Kao Koong-lian, vice-chairman of Taiwan’s Mainland Affairs Council, stated that cargo from the mainland still would not clear Taiwanese customs and direct trade is still banned (6). Direct routes would prevent waste of time and money. Taiwan’s Yangming Marine Corp. claims it could save $4.35 million per year by adding Shanghai to its Taiwan-US route (7). A captain of a Chinese-owned but Cyprus-registered cargo ship, Yang Weiqing commented, "We usually go through another port in South Korea, Japan, or Hong Kong. It also costs us $5000 for inspection and other services. Direct links would save us time and money" (7). By doing away with many of the political barriers between China and Taiwan, much time and money would be saved. Taiwan could receive many of the same benefits that Hong Kong enjoys presently as China’s primary gateway to the outside world.
Moreover, China’s enormous labor supply as well as lower production costs would greatly supplement Taiwan’s labor intensive industries. Although Taiwan has already begun to minimally move some of its manufacturing industries to China, a more open relationship would allow Taiwanese industries to fully utilize its comparative advantage. Hong Kong exemplifies such a possible transition of exporting its primary production facilities. The small harbor transformed itself from a prominent producer of light manufactured goods such as textiles, electronics, toys, etc. into a major re-exporter of goods produced in China. Now the tiny harbor handles about half of all of China’s exports (5). While the Mainland provides the labor and production, Hong Kong specializes in marketing, financial, logistics, and management aspects of the industries. Taiwan as well produces many of the light manufactured goods (3) and therefore a transition much like that in Hong Kong is very possible. A shift to becoming a re-exporter for China would change Taiwan into a capital-intensive nation much like that of Hong Kong. An action such as this could propel Taiwan into the high tech ranks of Japan and the United States. A shift of labor intensive industries to the mainland would aid China with its unemployment problem as well. At present, "job creation has become the No. 1 task in China’s economic development"(8). In the last few years, the real unemployment rate in urban areas of China has reached 7 to 8 percent (8). Unification would prove beneficial to both China and Taiwan’s production industries.
At the moment, the political tensions that exist between Taiwan and China are detrimental to the economy of Taiwan. After democratic Taiwanese presidential elections took place in 1996, political anxiety caused record breaking foreign exchange reserves at over 100 billion US dollars to fall to 85 billion US dollars (1). President Lee Teng-Hui, the first democratically elected president of Taiwan, claims he will "seek stability for the island, which has been hurt economically by China’s threats" (9). Additionally in 1996, the Mainland missile tests and naval exercises shut down shipping lanes and intimidated investors. A resolution to this strife would allow Taiwan to maximize its economic potential. Because the political tensions at issue arose during the post World War II era, a move to focus more on the economic relationship would move China out of the past and put it more on par with other industrialized nations.
The political complication of which "China" to recognize divides the number of countries with whom Taiwan and China can have relations. A single "China" would facilitate conducting business among countries as well as increase the overall quantity of trading partners. The controversial issue with membership in the United Nations exemplifies this conflict of recognition. Until 1971, Taiwan, Republic of China, was a member of the UN General Assembly as well as the Security Council. Then a shift in global politics precipitated the expulsion of Taiwan and recognition of the People’s Republic of China as the new China in the General Assembly. As a member of the United Nations, several economic advantages and resources become available such as the Economic and Social Commission for Asia and the Pacific (ESCAP). "The principal role of the Economic and Social Commission for Asia and the Pacific is to initiate and participate in measures for facilitating concerted action for the development of Asia and the Pacific, including the social aspects of such developments, with a view to raising the level of economic activity and standards of living, and for maintaining and strengthening the economic relations of countries and territories in Asia and the Pacific, both among themselves and with other countries in the world" (10). Additionally, for membership nations the commission undertakes studies, investigations, provides advisory services, and acts as an executing agency for regional projects. Along with the economic aspects of the United Nations, Taiwan loses out on the political support provided by the organization. In today’s world, Taiwan and China are constantly vying for representation in the international arena.
Membership in other multilateral organizations such as the newly formed World Trade Organization (WTO) can provide many economic advantages within the world market. The international organization, which was formerly known as General Agreement on Tariffs and Trade (GATT), solves trade disputes between membership nations as well as negotiating trade agreements. In addition to the former GATT’s limited power over goods, the WTO deals in banking, insurance, transport, tourism, telecommunications, and intellectual property rights. Perhaps one of the greatest benefits of entry into the WTO is the allowance of Most Favored Nation (MFN) status with every other nation within the organization. Most Favored Nation status maintains tariffs to be at minimal levels such as five or six percent as opposed to the possible exorbitant tariffs such as the Smoot-Hawley tariff (a set of tariffs imposed by Congress and President Hoover in 1932 which raised the average tariff level to 59 percent) (11). With 132 members, the WTO provides many auspicious trade opportunities. However, "Taiwan is unlikely to be admitted into the World Trade Organization until the Mainland is admitted" (1). Based upon China’s policy of allowing recognition of only one "China" in any international organization, unless unification occurs, it does not appear as though Taiwan will be able to join the WTO. Having one China would enable both Taiwan and China to take full advantage of the international resources.
With a GDP of 3.5 trillion US Dollars (4) in 1996, China’s economy dwarfs that of Taiwan’s, which has a GDP of 290.5 billion US dollars [see fig. 4] (3). From a realistic perspective, unification between China and Taiwan would not have a drastic effect on the Chinese economy by virtue of the Chinese economy’s immense size. However, China can learn much from Taiwan and Hong Kong. Both islands have an immense measure of per capita GDP in comparison to China [see fig 5]. "International trade is still a brand new undertaking for China" (8); therefore, the trade expertise of Hong Kong and Taiwan would aid China in its foreign relations. In the long run, that in itself could contribute more substantially to the Chinese economy.
Setting aside their political differences would allow both China and Taiwan to prosper. The two countries need to recognize the positive economic as well as political outcome from creating one China. As of now, they appear to be lingering on an issue from the post World War II era rather than looking towards the future. Hong Kong, with its similar socio-economic composition, provides a paradigm for a role that Taiwan could play for China. Although the two countries are opening up relations slightly, the process has been excruciatingly slow. The potential is large for Taiwan to become like Hong Kong as an international financial trade center. Unifying Taiwan and China would open up many opportunities for both nations. As of now, the separation is only stifling their progress.
Works Cited
www.chinapoint.com/news/business/asia/hongkong.htm
www.asiapoint.com/news/business/asia/china/economic.htm
Houghton Mifflin Company, 1998.