Taiwan's Southbound policy is 'purely economics'

Aim is to extend its domestic market; it has nothing to do with politics, says diplomat

Mr James Huang, who is in charge of Taiwan's New Southbound Policy, says Taiwan does not mean to downgrade the importance of the Chinese market.
Mr James Huang, who is in charge of Taiwan's New Southbound Policy, says Taiwan does not mean to downgrade the importance of the Chinese market.

The man in charge of President Tsai Ing-wen's push to pivot south and wean Taiwan off the Chinese economy says it is "understandable" that Beijing will "look at our policies with suspicion".

But Mr James Huang maintains that the success of the high-profile New Southbound strategy to ramp up Taiwan's ties with South-east Asia and India does not depend on its relations with China.

In an interview with The Straits Times yesterday, the diplomat sought to soothe concerns that countries in the region may feel caught between Taiwan and China should cross-strait relations turn frosty.

"We are not competing on political grounds," he asserted.

Instead, the New Southbound Policy - ranging from offering infrastructure aid and building industrial parks to getting Asean students to study in Taiwan - should be viewed through purely "economic" lenses. The ultimate aim is to extend its domestic market.

  • S'pore, Taiwan can impart different expertise

  • Taiwan is strong in manufacturing and information and communications technology, while Singapore's strengths lie in services and financial management.

    Both cities, suggested Mr James Huang, can learn from each other how best to offer vocational and professional training to Asean countries in these fields.

    Having been in his post for three weeks, the director of Taiwan's New Southbound Policy Office said details of the policy, aimed at reducing the island's reliance on China, still need to be ironed out. He declined to give a timeline.

    But for now, one clear policy objective is to equip as many people as possible with skills to help Taiwan enter the South-east Asian and Indian markets.

    Specifically, he wants to bring more Asean students to Taiwan via scholarships and internships and vice versa. There are now 29,000 Asean students in Taiwan.

    The office also aims to attract more visitors from Asean and is now working on liberalising visa applications.

    Meanwhile, Taiwanese companies want industrial parks built exclusively for them in countries such as Vietnam, Indonesia, Thailand and the Philippines, he said.

    Free trade agreements are a tougher nut to crack. To date, Taiwan has inked only two with non-diplomatic allies: Singapore and New Zealand. It is something the government is looking at, said Mr Huang.

    The overarching goal is to coordinate the private sector's needs and the public sector's different agencies. There is a demand for it, said Mr Huang.

    "In the past few weeks, e-commerce, public infrastructure and construction people have approached my office, saying they are glad that finally the government is paying attention to this."

    Li Xueying

For instance, 39 per cent of Taiwan's exports now go to China. "For any country in the world, this kind of trade dependence is too high," said Mr Huang.

In fact, he added, Taiwan is open to cooperating with China in wooing the Asean and India markets together. Companies from both sides of the Taiwan Strait have formed joint ventures - and should continue to do so.

He noted that China is good at mega projects - building high- speed rail, dams and power plants - while Taiwan's strengths are its small and medium-sized enterprises ( SMEs) in fields such as sophisticated agriculture, vocational training and information and communications technology. "So jointly, we can help Asean together," he said.

The New Southbound Policy is a key prong of the new Democratic Progressive Party government's effort to revitalise Taiwan's long-languishing economy.

Ms Tsai, in her inauguration speech on May 20, said it will "elevate the scope and diversity of our external economy, and bid farewell to our past over-reliance on a single market".

Underscoring the importance placed on it, the newly created agency is housed in the Presidential Office along with a dedicated think tank. Mr Huang, who was foreign minister from 2006 to 2008 in the Chen Shui-bian administration, drives the endeavour.

It is a response to the people's demand for decisive steps to be taken to reform the economy and raise wages - which the China-friendly policies of Ms Tsai's predecessor, Mr Ma Ying-jeou, failed to achieve.

Taiwanese firms have also found having China as a manufacturing base increasingly hard going. Two-thirds of Taiwan's overseas investments now flow to China. But while they previously reaped dividends from cheap labour, this advantage has disappeared even as Chinese firms themselves become competitors, said Mr Huang.

In Taiwan itself, there is also disquiet at the extent to which the economy depends on China - which some fear is a Trojan horse to undermine the island's de-facto independence.

But analysts remain sceptical as to whether the latest incarnation of a go-south policy can succeed. The policy failed under Mr Chen, and before him, Mr Lee Teng-hui.

Beijing, already riled by the absence of a one-China principle endorsement by Ms Tsai, looks askance at any perceived attempts by Taiwan to distance itself from the mainland. Given China's increasing clout in the region, potential new partners will be wary of being compelled to publicly choose sides.

Already, China has criticised the New Southbound Policy, saying it "runs counter to economic principles" - though the rhetoric is less strident than that in 2003 when Beijing condemned Mr Chen's go-south policy as "no different from digging a grave for oneself".

It is thus a careful balancing act for Mr Huang in trying to publicise the policy on one hand, and not antagonising China on the other. He stressed that Taiwan does "not mean to downgrade the importance of the Chinese market which is still important for our business community".

And while he acknowledged Taiwan's unique geopolitical position, he said: "When we talk about the Southbound policies, we don't want to talk about the politics.

"It's very simple why we're doing it - every nation is investing in South-east Asia. We are doing what we should do and we are already behind the United States, Japan, India and even China."

The only time that Mr Huang departed from this carefully modulated script was when he was asked about Beijing's criticism.

He retorted that China itself is embarking on a similar strategy of trying to gain markets through infrastructure aid. "They say it contradicts economic principles. What about their One Belt One Road project? Beijing is using political language, we are talking in economic language, pure and simple."

He added pointedly: "If we make policies based on what China will oppose, we will be sitting in our offices doing nothing."

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A version of this article appeared in the print edition of The Straits Times on June 09, 2016, with the headline Taiwan's Southbound policy is 'purely economics'. Subscribe