TitleChina Factor and Economic Developme.

Transcription

1 TitleChina Factor and Economic Developme Author(s) Lin, Chu-chia Citation Issue Date Type Presentation Text Version publisher URL Right Hitotsubashi University Repository

2 China Factor and Economic Development of Taiwan Chu-Chia Lin Professor Department of Economics National Chengchi University Taipei, Taiwan,

3 Outline I. Introduction II. Trade and Investment across the Taiwan Strait III. China Factor and Its Impact on Taiwan: GDP Growth and Structure Change IV. Economic Cooperation Framework Agreement (ECFA) across the Strait V. Conclusion 2

4 I. Introduction The economic development of Taiwan: High growth rate, low unemployment rate, and low inflation rate Small and open economy: trade dependence ratio % ( 2008) Labor-intensive industries to high technology industries i emergence of Asian economic integration 3

5 Table 1 Major Economic Indicator of Taiwan Year Average Average Foreign GDP Per GDP GDP Unemploy CPI CPI Gini reserve Capita Growth Growth ment Growth i (US$) Rate (%) Rate Growth coefficient (billion Rate (%) Rate (%) (10 year,%) Rate(%) US$) , , , , , , , , , , , , , , Source: Directorate-General of Budget, Accounting and Statistics, Statistic Abstract of National Income, Executive Yuan, Taiwan. 4

6 China factor: open door policy (1979) number one trade partner of Taiwan major source of trade surplus number one destination of Taiwan s FDI outflow 5

7 Three major issues: Why is bilateral trade across increasing so quickly? Why are there so many Taiwanese firms investing in mainland China? How does the China factor affect Taiwan s economy, in terms of GDP growth rate, unemployment rate, and economic structure? What is the prospective of economic relationship between Taiwan and mainland China in the future? To what extent that the Asian integration might affect the economic relationship between Taiwan and China? 6

8 II. Trade and Investment across the Taiwan Strait Taiwan s export to China in 2008: US$74.0 billions (41.1%) Taiwan s import from China in 2008: US$31.4 billions (14.7%) Total trade: US$105.3 billions (28.9%) The annual growth rate of export ( ): 21.5% The annual growth rate of import ( ): 14.3% 7

9 Table 2 Bilateral Trade across the Taiwan Strait Unit: US$ million Taiwan s Taiwan s Surplus Taiwan to China to Year Total Trade Surplus from China Taiwan from China the World , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,180.9 Source: Bureau of Foreign Trade, Ministry of Economic Affairs, Taiwan. 8

10 Table 3 Trade Dependence across the Taiwan Strait Unit: % Taiwan China Export Import Total Trade Export Import Total Trade Share Share Share Share Share Share Source: See Table 2. 9

11 The reasons for high growth rate of bilateral trade: 1. comparative advantage: per capita GDP in 1979: Taiwan US$ 1,763 China US$265 in 2008: Taiwan US$15,313 ChinaUS$ trade-creating effect by Taiwan s FDI to China: raw materials and intermediate t goods intra-industrial trade 3. same language and similar culture 10

12 Table 4 Major Export Goods from Taiwan to Mainland China (2008) Unit: US$ million, % Rank HS Code Description Amount (US$ million) Percentage Percentage of of Growth total Export to rate the world (%) (%) 1 85 electrical equipment and parts 26, thereof 2 90 optical, photographic 13, Instruments, parts and accessories thereof 3 39 plastics and articles thereof 6, mechanical appliances; parts 5, thereof 5 29 organic chemicals 4, iron and steel 2, copper and articles thereof 2, mineral fuels 2, man-made made filaments 1, miscellaneous chemical products Total 64, Source: Mainland Affairs Council, Cross-Strait Economic Statistics Monthly, (December 2008), Executive Yuan, Taiw Note: 1.The HS Coding has been applied since June Growth rate is the year-on-year growth rate. 3. The figures are not added up to the total due to rounding up. 11

13 Table 5 Major Import Goods from Taiwan to Mainland China (2008) Unit: US$ million, % Rank HS Code Description Amount (US$ million) Percentage of Growth rate (%) Percentage of total Export to the world (%) 1 85 electrical equipment and parts 9, thereof 2 84 mechanical appliances; parts 4, thereof 3 72 iron and steel 2, mineral fuels, mineral oils and 2, products of their distillation 5 90 optical, photographic, 1, cinematographic instruments; parts and accessories thereof 6 38 Miscellaneous chemical 1, products 7 29 organic chemicals plastics and articles thereof Vehicles, parts and accessories thereof Earths and stone, lime and cement Total 24, Source: See Table 4. Note: 1. Growth rate is the year-on-year growth rate. 2. The figures are not added up to the total due to rounding up. 12

14 The Reasons for Taiwan s FDI to mainland China 1. New Taiwan dollar appreciation (by 30 % from 1985 to 87) 2. abolished martial law (1987/11) 3. comparative advantage labor-intensive industries export-oriented t industries i 4. Same language and similar culture 13

15 Table 6 Taiwan s FDI to China Year Cases Taiwan s Record (a) Amount Average Amount Projects Contracted Amount China s Record (b) Average Amount Realized Amount Units: US$ million Realization Ratio (%) ,446 2, ,430 5, , ,262 1, ,948 9, , (8,067) (C) ( ) (0.25) ,247 5, , , ,778 5, , , ,184 5, , , ,014 2, , (7997) ( ) (0.34) , ,970 2, , (643) (515.41) (0.80) , ,499 3, , , ,108 4, , ,186 2, ,214 6, , ,490 3, ,853 6, , (3950) ( ) (0.73) ,837 4, ,495 8, , (8,268) (3,103.80) (0.38) ,004 6, ,002 9, , , ,907 10, , Total Source: see Table 4. Notes: (a) Data published by Taiwan government Investment Commission, Ministry of Economic Affairs, R.O.C. (b) Data published by China government Ministry of Commerce, PRC. (c) The figures in the parentheses represent the cases or amount for registration of previously unregistered investments. 14

16 III. China Factor and Its Impact on Taiwan: GDP Growth and Structure t Change Impact on GDP: Table 7 GDP Contribution of Taiwan by Bilateral Trade across the Taiwan Strait Unit: % year Taiwan s GDP Growth Rate contribution of bilateral l trade with contribution of bilateral l trade with contribution of bilateral trade with China on contribution of bilateral trade with ithchina and dhong Kong on (1) China on Taiwan s GDP growth rate in China and Hong Kong on Taiwan s Taiwan s GDP growth rate in percentage Taiwan s GDP growth rate percentage (5)=(3)/(1) points (a) (2) GDP growth rate in points (3) (4)=(2)/(1) Source: This Study. Notes: (a) The contribution of bilateral trade with China on Taiwan s GDP growth rate in points = (the growth rate of export to China * the export share to China over total export of Taiwan * the share of trade export of Taiwan over total GDP) (the growth rate of import from China * the import share from 15 China over total import of Taiwan *the share of total import of Taiwan over total GDP).

17 Impact on unemployment rate Table 1 Major Economic Indicator of Taiwan Year Average Average Foreign GDP Per GDP GDP Unemploy CPI CPI Gini reserve Capita Growth Growth ment Growth Growth coefficient (billion (US$) Rate (%) Rate Rate (%) Rate (%) Rate(%) US$) (10 year,%) , , , , , , , , , , , , , , Source: Directorate-General of Budget, Accounting and Statistics, Statistic Abstract of National Income, Executive Yuan, Taiwan. 16

18 Impact on structure change: (%) Figure 1 GDP structure of Taiwan: by Industry 70.5 Service Industry manufacturing Agriculture Source: Directorate-General of Budget, Accounting and Statistics, Statistic Abstract of National Income, 2009, Executive Yuan, Taiwan. 17

19 Figure 2 Taiwan s Structural Change: Export- Labor Intensity % 60 Labor Intensity MIDDLE HIGH LOW Source: Council for Economic Planning and Development, Taiwan statistical Data Book, 2009, Executive Yuan, Taiwan. 18

20 Figure 3 Taiwan s Structural Change: Export- Capital Intensity % Capital Intensity MIDDLE HIGH LOW Source: See Figure

21 Figure 4 Taiwan s Structural Change: Export- Technology Intensity % Technology Intensity HIGH MIDDLE LOW Source: See Figure 2. 20

22 IV. Economic Cooperation Framework Agreement (ECFA) across the Strait The emergence of Asian economic integration: Table 8 Asian Economic Integration Major Country Target Countries ASEAN China (2002), Korea (2005), Japan (2008), Australia & New Zealand (2010), India (2010) Korea ASEAN(2005), USA (2007), EU (2009) China ASEAN(2002), Hong Kong (2004), Macau (2004) Source: This study. 21

23 Table 9 Major Economic Indicators for Asian Integration: 2008 Unit:%(oftheWorld) the Population Total GDP Total Trade China ASEAN ASEAN ASEAN Source: This study. Note: 1. ASEAN 10+3: ASEAN + China, Japan and Korea 2. ASEAN 10+6: ASEAN + China, Japan, Korea, India, Australia, and New Zealand 22

24 Table 10 Taiwan s Economic Relation with Asian Integration: 2008 Taiwan s Export to Taiwan s Total Trade With Unit: US$ billion, % Taiwan s Total FDI to China 99.5 (38.95%) (26.70%) 10.7(70.53%) ASEAN (15.02%) 64.0 (12.90%) 1.4 (9.10%) ASEAN (64.24%) (56.92%) 12.4(81.53%) ASEAN (66.78%) (60.37%) 12.4(81.65%) Source: This study. Note: 1. ASEAN 10+3: ASEAN + China, Japan and Korea 2. ASEAN 10+6: ASEAN + China, Japan, Korea, India, Australia and New Zealand 23

25 The economic impact of ECFA between Taiwan and China: Tbl Table 11Th The Impact of fai Asian It Integration ti on Taiwan s Ti Economic Growth unit: % GDP Export Import ASEAN10+1 (a) ASEAN 10+3 (a) Taiwan + China (b) Taiwan + ASEAN 10+3 (C) Source: (a) Shih, Yang, and Wu (2009). (b) Chung-Hwa Institute for Economic Research (2009). (c) Chen, Chou, and Lin (2008). 24

26 Major economic factors: V. Conclusion Production integration between Taiwan and mainland China China s domestic market The challenges: Asian economic integration ECFA : scheduled in May or June Political problems: domestic political problem inside Taiwan Political issues across the Strait 25

27 The end Thank you! 26