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Taipei economy sags as foreigners leave for China
2007-09-05
Taipei, once an Asian business magnet for foreign visitors unable to enter China because it was closed to the West, has faded in importance as China has opened its borders to tourists and business travelers. The trickle of visitors to Taipei, compared to the surge to China, is a sign of the island's overall decline in regional importance as foreigners skip Taiwan for its fast-growing neighbor across the straits. Hotels in Taipei are operating at low capacity, Chinese-language schools have seen a dramatic drop in foreign students and nightlife districts are bereft of the white-collar expatriates who once packed bars and restaurants. "People who invest in mainland China, we don't see them here anymore," said bar owner Chang Hui-lan. "A lot of them have taken up residence in China." The stagnation of its tourism industry has generated grass-roots criticism of the Taiwan government, which is vehemently anti-China and opposes trade ties and direct air links with the mainland. Such steps could help Taiwan benefit from China's prosperity, a message that the opposition pro-China party is making ahead of a tight presidential election next March. China has seen self-ruled, democratic Taiwan as part of its territory rather than as a separate country since the island broke away from Mao Zedong's Communists after civil war in 1949. Due to these icy relations, the two sides allow neither regular direct flights nor direct trade. So the flood of business people and tourists headed to fast-growing China since the mid-1990s rarely reach Taipei, population 2.6 million and the island's chief economic centre. These days arriving passengers at Taipei's international airport are dogged by idle taxi drivers who wait much of the day for fares. "I won't necessarily get even one passenger per day," complained taxi driver Lin Tien-hua. Passenger volumes at airports in Beijing, Shanghai and Guangzhou grew by more than 10 percent this past spring, while Taipei's international passenger volume grew by 5.3 percent, the International Air Transport Association said. Foreign companies once based in Taipei have moved their regional hubs to China or Hong Kong, while foreign students prefer to study Mandarin in China. National Taiwan University has lost more than half of its foreign student body since 1987, largely to China. TAIWAN UNDER PRESSURE TO EASE RESTRICTIONS Analysts have advised the government to re-think its deep-seated opposition to warming trade ties with China. "Failure to broaden economic ties with the mainland will relegate Taiwan to one of Asia's growth laggards," CLSA Asia-Pacific Markets said in a research report last month. Taiwan businesses are relocating their factories to China, where overheads are lower and they have a better chance of getting a piece of the expanding domestic market. "Taiwan companies are moving away and taking their business," said John Lee, general manager of the Holiday Inn East Taipei. "Direct links (between Taiwan and China) that we've hoped for have never happened." Government leaders defend their China policy, saying that to open further to China could spark capital outflow and cheap Chinese labor coming onto the island. Only when China democratizes and treats Taiwan as an equal can Taiwan consider serious economic ties, said Tung Chen-yuan, vice director of the policymaking Mainland Affairs Council. China, meanwhile, has liberalized visa policies for foreign business people, language students and expatriates. "This certainly has an impact on Taiwan," said Chu Yun-peng, an economics professor at National Central University. "(Foreign companies') Asian operation centers used to be in Taipei." China was off limits for decades as hard-line Communists resisted Western influence and pursued their internal economic development. Beijing began easing up in the 1990s as China modernized and became more liveable. Taiwan's economy is still strong, held up by its high-tech manufacturing sector, which produces for international companies such as Dell, HP and Intel, the American Chamber of Commerce said in a 2007 Taiwan white paper. But Taiwan's service sector, which makes up 73 percent of the economy, is "lagging" with no momentum, the chamber said. "The primary driver of its positive macro numbers is still extraordinary prowess in high-tech manufacturing," the white paper states. "Outside the high-tech sector, views of the economy are less upbeat."
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