A friend is translating some of the Hsieh campaign’s economic and trade policy ideas, along with their rebuttals of KMT claims. Here’s one on the KMT nonsense that the declining volume of the port of Kaohsiung is a result of DPP mismanagement. As the excerpt points out, the decline began under Veep candidate Siew….

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The Port Fallacy

The Kuomintang (KMT) have been persistent in leveling an accusatory finger at the Democratic Progressive Party (DPP) for Taiwan’s worsening economic environment since the DPP’s ascent to power in 2000. However, the reality is that Taiwan’s economic growth has been slowing since the late 1980s, when it averaged around 8 per cent. From 1991 to 1994, growth averaged 7.1 per cent, dropping to 6.5 per cent in the period 1995-1997, and dropping again to 5.6 per cent in 1998-2000. The same trend applies to the unemployment rate, which for most of the 1990s hovered at around 1.8 per cent, before breaking through the 2 per cent barrier in 1997. In the same period, the Vincent Siew’s KMT cabinet presided over a gradual decline of Kaohsiung’s global importance as a port. By the time the KMT were ushered out of power in 2000, Kaohsiung had dropped from No 3 to No 4 in the world in terms of shipping volume.

In this context, it is interesting that the Ma Ying-jeou-Vincent Siew presidential team not only continues to press the DPP on general economic issues, but that it also continues to point to Kaohsiung’s status as a global shipping hub as evidence that Taiwan is in decline. For the Ma-Siew team, the fact that Kaohsiung has slipped to seventh or eighth place in the global shipping ranking is evidence of a failure to make the port city an Asia Pacific Operations Centre. Furthermore, they maintain that the reason this is the case is that the so-called Three Links with China have not been implemented. However, if we look at the facts, this is, at best, a debateable claim.

Shipping volumes are not a reliable indicator of economic vitality. For a start, as a nation industrializes, the result is not necessarily increased exports. The trend is for modern products such as computers and mobile phones to gradually replace home appliances, and while this results in increased profits, it also means lower volumes of shipments at ports. This is evidenced by the global situation. In 2007, global rankings in terms of shipping volumes put Singapore at the lead, followed by Shanghai, Hong Kong, Shenzhen, Busan, Kaohsiung, Rotterdam, Dubai, Hamburg, and Los Angeles. If we take the World Federation of Exchanges economic competitiveness rankings, then only six of the world’s top 10 most economically competitive nations have a port that ranks among the leading top 10. The world’s most competitive nation, the US, for example, has just one of the world’s busiest ports.

For this reason, Taiwan’s gradual slide in the world’s shipping rankings is something of an inevitability. What Taiwan needs to do is to expand its industries, not work at its rankings in terms of shipping volumes. The models for making Taiwan an Asia Pacific Operations Centre should be Singapore or Hong Kong, because, simply put, these are cities that provide examples of success. They prove that it is possible to move from basic manufacturing to a reliance on trade and services, while still maintaining steady growth.

The KMT can criticize the DPP for its economic policies all it likes, but the fact remains that the premise of its arguments is strategically flawed. Furthermore applying an economic policy of this kind – and it remains a platform in the Ma-Siew economic blueprint for Taiwan – will be a strategic disaster.

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Enjoy.