Taiwan should reconsider its trade ties with China: The China Post

 A man stands in front of a cargo ship at a port in the northern Taiwan city of Keelung.
A man stands in front of a cargo ship at a port in the northern Taiwan city of Keelung. -- PHOTO: REUTERS

In its editorial on Sept 19, the paper urges the government to re-examine its trade policy with China, given Taiwan's economic downturn.

At the start of 2016, forecasting agencies across Taiwan predicted the economy would grow by 2 per cent or more for the year, finally relieving the nation from a long period of lacklustre growth. 

Taiwan recorded just 0.75 per cent growth in 2015. 

However, the forecasters have made multiple downward adjustments over the course of the year, as Taiwan's export performance sank over time. Most research institutes now say Taiwan will see GDP growth of only 1 percent. 

It is true that sluggish growth is a phenomenon seen across the globe. Global trade among nations has slowed. South Korea, Japan and China have all suffered a setback in exports. 

Taiwan Institute of Economic Research Economic Forecasting Centre Director Gordon Sun said recently that an economic revival may not happen until 2018. Indeed, slow recovery has become the new norm. 

The government is aware of the challenge and has prescribed policies in an attempt to reverse the tide. With a more reserved attitude toward China, the Democratic Progressive Party (DPP)-led government initiated the "New Southbound Policy" with the aim of expanding Taiwan's trade ties with South-east Asia and India. 

The government has said that the new policy will by no means decrease Taiwan's economic ties with China. This makes perfect sense, as China is still by far the largest consumer market in the world. 

But despite the DPP government's clarification, one cannot help but suspect that the "New Southbound Policy" contains anti-China sentiment. A ruling Kuomintang (KMT) government would have never made a similar announcement. 

Under former President Ma Jing-jeou, cross-strait relations only became more intimate. 

The anti-China sentiment doesn't play out just on the political stage; It actually reflects different views the nation's citizens have of China.

Companies doing business in China created the phrase "red supply chain" to depict the threat of Chinese enterprises. 

This is counter-intuitive in the business sense. In the age of globalisation, companies all over the world compete with one another. 

National boundaries have become irrelevant. It is unnecessary to single out rising business powers from a specific country. 

For example, IBM from the U.S., BMW from Germany and Sony from Japan do not consider supply chains in China to be a threat. 

Mr John Hsuan, honorary vice chairman of the United Microelectronics Corp, said he did not think the "red supply chain" existed. 

"Companies try to make good use of existing supply chains. If you are part of the supply chain, you should hone your strengths instead of rejecting other participants in the supply chain," he said in an interview in August. 

We should not forget the size of the Chinese market. Most companies in the world view the Chinese market as a crown jewel. 

To have a foothold in the global market and to stay competitive, foregoing China is almost unwise. 

Instead of a "New Southbound Policy," maybe the government can consider a "New China Policy" to adjust and reorient Taiwan's trade relations with China in a way that works in Taiwan's favour. 

* The China Post is a member of The Straits Times media partner Asia News Network, an alliance of 21 newspapers.