Thursday, 2 January 2014

Rounding up econ blues

Baking sweet potatoes the traditional way.

President Ma's New Years Address laid it out (President's site). The Bloomberg Businessweek report I felt overfocused on the China stuff. The real meet was the call for joining trade blocs. The President called for trade liberalization, as always, pimped his programs, and pillaged the DPP's longtime push for a drive south into ASEAN, but still said moving toward China can save the economy. We're long past that point... As The Guardian observed in an article this week that got forwarded by everyone I know, China is experiencing the same mess Taiwan is, declining manufacturing with rising housing prices.

A housing bubble is the way the financial industry skims off the wealth from the middle class and transfers it to the small circle of the already wealthy. In Taiwan this reservoir of wealth saved by the middle classes during the Miracle Economy is still vast, it is cushioning the young as they move into an economy where wages haven't moved since 1999 and where good jobs are scarce and long, brutal, unpaid hours are the norm. I got in a taxi this morning and saw that the fee had hiked $15 NT. The driver said that was the first hike they'd had in 14 years..... in China the Bubble is driven by many of the same factors driving the Bubble in Taiwan -- (1) the economy will take a massive hit if the government moves to prick the Bubble ( I predict that the Bubble will persist for several more years and that if the DPP is elected it will do nothing about the Bubble); (2) the housing industry/construction is an important conduit/recipient of government funds and helps form links that support local and central government parties and politicians; (3) Chinese want a "root", a house of their own; (4) in Taiwan the tax situation has turned real estate into a tax shelter (is it the same for China?)...

Meanwhile Taiwan is taking a beating from two directions (FocusTaiwan). The falling yen has made Japanese exports more competitive with Taiwanese exports...
In 2013, the yen fell about 21.5 percent against the U.S. dollar, while the Taiwan dollar only depreciated 2.7 percent against the greenback.
 while South Korean has aggressively moved to ink trade agreements with markets that Taiwan exports to. This represents a shift in S Korea's strategy, according to the article. Originally S Korea attempted to drive the won down and compete on price, but now the Korean government has shifted to pushing for lower tariff barriers.

Gonna be a tough 2014. Be well, my readers.
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Mansion

Wednesday was a fitting day. My close friend Andrew Kerslake of Taiwan in Cycles had his first ride after recovering from a long period of problems, and what could be better than a flat ride through some local history? Drew took me over to a mansion from the 1930s built for a local landlord. The building is now a minor historical site and is in a state of complete ruin. He said you used to be able to go upstairs but it is sealed off now. The site is surrounded by ugly modern cookie cutter buildings, sadly.

Location of mansion on southwest side of Taichung city, not far from the HSR station (Google link).

The courtyard looking towards the gate.

The veranda.

Vintage wallpaper?

The house is old enough that trees have sprouted in one of the outer rooms.

Mud bricks were used to construct it. They were faced with....

...a mixture of rice husks.

Guests once greeted in the finest style.

Perhaps they stayed in a room like this

Strolled about the veranda.

Read the latest calendars...

...and newspapers.

Drew studies a window.

Old wooden ceilings on the second floor.

We rode off to another set of old buildings in southwest Taichung, where I've visited before.

The settlement here dates from the 18th century though the houses are probably younger. It's near where Liming Road and Huanzhong Road intersect. You'll see a large temple to the west, turn onto the alley near there.

There are plenty of older buildings.

And some pretty nice old Sanheyuan houses.

You never know what treasures are out there waiting for you...

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Monday, 30 December 2013

Yacht What

A farmer contemplates a field in Yunlin.

The Taiwan government is so droll. Upon being criticized for building 115 slots for yachts at ports in Taiwan last year, the government replied:
The project is not limited to pleasure yachts from high income people, but anyone can use the docks if they have a yacht, the agency said, adding that “it is like being able to park in a parking lot if there are empty spots.”
Did you hear that folks? Anyone can use them! Which is good, because I was wondering what do with my collection of yachts....  the story is actually more complex. Building up yacht tourism in Taiwan was one of President Ma's projects for his first administration (FocusTaiwan), and three Taiwan ports were chosen for expansion in Tainan, Yilan, and Keelung (Badouzi).  To promote the industry and Taiwan as a yachting destination, the industry staged its first yacht show this year.

News item from today about Taiwan, a world center of quality yacht manufacturing:
Alexander Marine, builder of Ocean Alexander yachts, announced the expansion of its manufacturing facility in Taiwan. The company said “record-breaking sales this past summer” culminated in 9 new yacht sales, requiring the expansion in the city of Kaohsiung. Sales trends have shown an increase in larger yachts, and the yard will expand to meet the demand for them.

.......

The yard in China will be closed so the company “can consolidate key personnel with many years of boatbuilding experience into one yard.”
Taiwan is actually known as the yacht kingdom and usually only trails the major industrialized nations -- UK, US, Germany, Italy, etc -- in the production of yachts. Horizon in Taiwan is the number ten maker of yachts in the world and Taiwan beat out Germany this year to move into the number six slot in the world. However, total industry production peaked at $350 million in 2008 and never recovered from the double whammy of the Great Recession and the entrance of Chinese firms into the market. Despite the threat, the government has ambitious plans for a yacht complex in Kaohsiung based on predictions of market growth that have not materialized.....
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Sunday, 29 December 2013

Some links

Old school newspaper and drink stand operated by an old couple, Taichung.

Don't feel like blogging. Enjoy.


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Saturday, 28 December 2013

FEPZs on the march into education

Are those egg cases on its back?

The Free Economic Pilot Zone initiative continues to advance, as Taiwan Today observes. Apparently one area to be liberalized is education, foreign institutions will be permitted to set up schools in the zones:
The eye-catching new plan firmly demonstrates the government’s determination to liberalize. For example, in recent years elite educational institutions from Australia, Europe and the U.S. have established branches in Asia, precipitating educational innovation; Singapore, South Korea and even Malaysia have become important bases for international education. Due to restrictions on campuses and classes in the law governing private schools, not one foreign institution has yet set up a branch or joint venture in Taiwan.* Yet changing the law on private schools is well nigh impossible.
This is a very interesting end-run around the rules. The system is designed so students are forced to attend public schools or the private schools that ape them. But if foreign institutions offered alternatives, many people would pull their kids out of the local system, especially people with money.

*Yes, there is at least one foreign university offering accredited courses here.
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Friday, 27 December 2013

Ma-Xi Meetup???

It's a common pattern for Ma to float ideas like a meet up with President Xi of China in the foreign press -- in this case a Hong Kong paper -- and then "explain" them to the home media. TT says:
The Chinese Nationalist Party (KMT) yesterday defended the possibility of President Ma Ying-jeou (馬英九) meeting with Chinese President Xi Jinping (習近平) at next year’s APEC meeting in Beijing, insisting that such a meeting would only be held if supported by Taiwanese and if national dignity can be maintained.
The Mainland Affairs Council said that a Ma-Xi Mating would not be on the agenda for discussion with the Taiwan Affairs Office of Beijing.
Wang Yu-chi (王郁琦), chairman of Taiwan's Mainland Affairs Council (MAC), is expected to meet with his counterpart, Zhang Zhijun (張志軍), director of the Mainland's Taiwan Affairs Office (TAO), after the Chinese Lunar New Year's holidays (Jan. 30 – Feb. 4) on the Mainland. An MAC official pointed out that both sides were still proposing topics for discussion during the meeting, but a meeting between President Ma and his Mainland counterpart Xi Jinping was not on the agenda. According to the MAC official, our side would not take the initiative to bring up the possibility of a Ma-Xi meeting. However, if the TAO should bring up the possibility of such a meeting, the MAC would consider it.
Ma always raises the issue of a meeting, which he obviously desperately wants, in the context of denying that Taiwan is ready for a meeting. FocusTW reports on Ma's eagerness and appears to suggest that Ma might be willing to accept going to the meeting with a title other than President. In fact the day before Christmas Ma admitted China has already ruled out such a meeting....
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Tuesday, 24 December 2013

Will China Attack Taiwan? Yes, of course, if it wants to

An egret lands.

This week Beijing called for an exchange of media offices with Taipei. This means that a bunch of reporters, many pro-Beijing, will go to Beijing from Taiwan, and a bunch of espionage agents, political warfare specialists, and propaganda experts will come to Taiwan from China. The always hilarious propagandists of Beijing piously observed:
Zhang Zhijun, the director of Taiwan Affairs Office under the State Council, told a forum organized by Beijing's CCTV for Chinese and Taiwanese media that Beijing is more than willing to speed such exchanges, adding that he hopes Taipei would match Beijing's efforts.

He added that peaceful development across the Taiwan Strait needs to be consolidated, and unbiased news reports about the development of Taiwan and China, as well as reports promoting the idea of "we are a family" who are part of the same culture, will help Beijing and Taipei strengthen the bonds between them, while respecting each other's differences.
I've argued before that one of Taiwan's most important defenses against invasion from China is its democracy, which Beijing will either have to accept or crush. Not only is that a problem, but Beijing must also eradicate the Taiwan identity. One solution of the Zhongnanhai gang to both these problems is the constant assertion that Taiwan and China have the same culture (an assertion, which, not coincidentally, underpins one of its claims to annex the island). And yet...

I got to thinking about this again because Zachary Keck, who has been writing at the The Diplomat on Taiwan lately, has a piece which argues that China won't invade Taiwan for all the reasons we've heard before:
The first and least important is the dramatic impact this would have on how countries in the region and around the world would view such a move. Globally, China seizing Taiwan would result in it being permanently viewed as a malicious nation.
(1) The Chinese don't care how they are viewed and (2)  countries will view China in the way that is convenient for them irrespective of what Beijing does and (3) China is already viewed that way in the region, as the current re-arming taking place around China's borders signals. This one is a non-starter.
But the more important deterrent for China would be the uncertainty of success.
Haha. This deters leaders right up to the moment when they decide to move, then it doesn't. When they want to move, they move.
Thus, even if it quickly defeated Taiwan’s formal military forces, the PLA would continue to have to contend with the remnants of resistance for years to come.
Ah... the resistance fantasy. I think it is fanciful to imagine that the Taiwanese will engage in armed resistance -- there are no weapons available, unless the ROC disperses them before it disappears from history. And I seriously doubt that will happen; sympathy for China is widespread in the armed forces, and thousands of ROC officers have retired there.

In any case, China is already contending with "remnants of resistance" in Tibet and Xinjiang. It's not a problem for Beijing, just an annoyance, since luckily for them, the Dalai Lama keeps Tibet pacified. The solution to resistance is at hand in the form of 1.3 billion settlers, hundreds of thousands of whom will be shoehorned onto the island to occupy and loot it. But will Beijing want to risk exposing that many people to Taiwan's independent identity and democratic ways?

Pieces like Keck's fail for two broad reasons. First, they assign too much rationality to the conduct of human affairs. Leaders and peoples are not rational and especially not so about war, else there would have been no Japan-American war, no criminal and stupid invasion of Iraq by the US, no invasion of Kuwait by Iraq, no impulsive expansion like Nazi Germany's across Europe, etc. When Beijing decides to move on Taiwan the problems of defeating the forces of Japan, Taiwan, and the US as well as occupying Taiwan will be treated as problems to be solved, not insuperable obstacles, just as Tokyo did when going to war against the US colossus in 1941 (how can we maximize our advantages and minimize theirs?). Or perhaps they will simply take the US approach to occupying Iraq, and fantasize that they are loved and everything will be peachy-keen. Surely if US leaders can fool themselves into defeat in Iraq, Beijing is capable of no less.

The second issue is that such analyses almost never take into account the domestic push for action (it is entirely missing from Keck's). And yet the domestic construction of The Problem (Taiwan, oil for Japan's war effort in China, the Polish Question, the Falklands, the question of slavery and identity) is generally the dominant factor in shaping how and when the nation goes to war. Japan had many possible responses to the problem of getting oil from its main supplier, the US, besides going to war with it, and to the larger problem of colonialism, yet in the end it settled on the least rational response.  Hitler settled on war from the beginning, the diplomacy was merely a smokescreen to that end, and moved by some inner timetable of his own, not when it was conventionally wise to move. The Falklands became a war zone when the Argentine Junta decided to hit it for domestic reasons, not because the UK had made some major change in the status of the islands.

When Beijing moves, it will be driven by some domestic calculus that will not be immediately obvious to outsiders, most likely the kind of combination of medium-sized factors such as domestic unrest, economic uncertainty, and sudden billowing nationalism, the arrival of a hard-liner in a position of real power, the ascendancy of the PLA over domestic politics, and/or the appearance of a communicator who can argue internally and credibly that Taiwan is ripe for the plucking and the US won't move. Nations fool themselves into going to war -- the Junta had persuaded itself the UK would not defend the Falklands. That's why the prompt US response to the ADIZ, flying B-52s through it, was exactly the right move.

It's impossible to say that Beijing won't move against Taiwan. All previous history -- the seizure of islands from Vietnam, the invasions of Tibet, Xinjiang, and Vietnam, the war with India, and so forth, suggest that Beijing is interested in territorial expansion and sees violence as a key tool for achieving that goal. And that is why, ultimately, even our crazy democracy won't be enough to deter them, if they want to come over....
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