Seize One Belt, One Road Opportunities
China Times Editorial (Taipei, Taiwan, ROC)
May 28, 2015
Executive Summary: The Asian Infrastructure Investment Bank (AIIB) will be established by the end of the year. The Mainland's One Belt, One Road is taking a giant leap forward. Taiwan longs to profit from the Mainland's One Belt, One Road business opportunities. We must respond to the new cross-Strait situation. We must seize the opportunity. Taiwan enjoys a number of industrial advantages. We must propose a viable cross-Strait co-production strategy. Otherwise, with the rise of the Mainland red supply chain, Taiwan risks marginalization.
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The Asian Infrastructure Investment Bank (AIIB) will be established by the end of the year. The Mainland's One Belt, One Road is taking a giant leap forward. Taiwan longs to profit from the Mainland's One Belt, One Road business opportunities. We must respond to the new cross-Strait situation. We must seize the opportunity. Taiwan enjoys a number of industrial advantages. We must propose a viable cross-Strait co-production strategy. Otherwise, with the rise of the Mainland red supply chain, Taiwan risks marginalization.
The Mainland's One Belt, One Road vision establishes interoperability between the Asian, European, and African continents, and their adjacent oceans. It will use railroad and highway infrastructure projects to link the nations' development strategies, explore the potential of regional markets, promote investment and consumption, and create demand and employment. Put plainly, its purpose is to increase regional cooperation.
The One Belt, One Road runs all the way through Asia, Europe and Africa. The One Road, the Maritime Silk Road of the 21st century, is active in the East Asia economic circle, and is highly relevant to Taiwan's geopolitical situation. Meanwhile, the One Belt, the Silk Road economic zone, or developed European economic zone, is Taiwan's major foreign trade market.
Consider the data. The One Belt, One Road encompasses 4.4 billion people and $21 trillion USD. It accounts for nearly 30% of the global economy, an estimated investment of $1.6 trillion USD, and trade approaching $2.5 trillion USD. Any of these numbers loom large in world economic development.
Think tanks on Taiwan are worried. Taiwan must participate in the construction of the One Road, One Belt. It must work with the Mainland to further regional cooperation between Europe, Asia, and Africa. Taiwan has already been plunged into economic crisis. It is on the verge of marginalization and exclusion, especially since the One Belt, One Road will promote Mainland China's global production chain.
In recent years, the Mainland has nutured an independent industry and the rise of the red supply chain. Taiwan's model of re-exporting components to the Mainland for further processing has come under pressure. Recent ROC Customs export data and Ministry of Economic Affairs export orders data show exports to the Mainland falling. This April in particular, showed the largest decline in exports to the Mainland in nearly six years.
The Mainland's One Belt, One Road strategy must not further marginalize or exclude Taiwan. The One Belt, One Road accounts for nearly 30 percent of the global economy. It is the largest regional integration plan of the 21st century. Taiwan must not remain passive or sit on the sidelines. If it does, Taiwan's economic lifeline will be seriously threatened. It may never recover.
This scenario is a nightmare that could well come to pass. One. Cross-Strait relations have entered a critical stage. If the leader elected in 2016 opposes the 1992 consensus and supports Taiwan independence, the basis for peace will evaporate. Political trust, Taiwan's membership in the AIIB, RCEP, TPP and other regional economic organizations may be threatened. During the recent Hsia Zhang meeting, Taiwan's request to join the AIIB was not promptly approved, This reveals the Mainland's wariness toward Taiwan.
Two. Cross-Strait industrial cooperation fails to take into account the One Belt, One Road strategy. Taiwan screams that it wants to profit from the business opportunities provided by the Mainland's One Belt, One Road strategy. But is Taiwan industry prepared?
We all know that the Mainland supply chain has risen. Industrial development on the Mainland has gradually caught up to Taiwan. The Mainland's high-speed rail, nuclear power, and other infrastructure projects have made it highly competitive. Taiwan wants to profit from the Mainland's One Belt, One Road project. But Taiwan cannot join the AIIB. Infrastructure projects require considerable capital. This is not among Taiwan's strengths.
There is only one hope. The One Belt, One Road promotes economic development, regional consumption, and investment in the nations along its path. Taiwan is adept at trade. It might find a foothold there. But such opportunities are long term. They are unlikely to show returns that will help Taiwan's economy in the short term. If Taiwan wants to benefit from the One Belt, One Road, it must understand the Mainland's One Belt, One Road strategy. It must allow Taiwan's industrial advantages to enjoy a synergistic effect. It must seize the initiative. This is especially important in the absence of stable cross-Strait relations. We must regain the initiative. That is even more important. We cannot merely scream about profiting from the economic opportunities provided by the One Belt, One Road. We must offer a strategic blueprint for industrial cooperation. We must be clear on what we want. Passively waiting for the Mainland to make concessions is wishful thinking.
Mainland industries are large in scale. But in certain respects, they lack Taiwan's finesse. They also lack experience in marketization. By contrast, up to 98% of Taiwan's industries are small and medium enterprises. Many of them are stealthy "small is beautiful" champions in their own fields. They include companies such as TXC in the Taoyuan Pingtan Industrial Zone, which manufactures quartz components. Apple, Samsung, Huawei, and other non-Apple mobile phone manufacturers all use their parts. Of the 700 million smart phones the world over, one in five uses TXC's quartz components.
Taiwan has many stealth champions like this, enough to play an important role in the Mainland's One Belt, One Road strategy. It can punch beyond its weight. But it must work as a group, combining the advantages of Taiwan's various industries, then negotiate with Mainland.
The old model for cross-Strait industrial cooperation . involved the government setting up a platform on which companies would then fight for business opportunities on their own. That is no longer viable. Instead, they must work as a team. Former Vice President Vincent Siew said that to profit from the Mainland's One Belt, One Road business opportunities, all walks of life, big and small, must form groups. Only then will they have a strong enough team to seize these opportunities.