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Economy

Has President Ma overplayed his China hand?

TAIPEI -- Outwardly, President Ma Ying-jeou can claim some solid results after seven years in office: Taiwan's stock market is holding its own, the economy is growing at a reasonable rate, and tourists are pouring in from China.     

     Yet wages are static and there is widespread concern that the Ma administration's China-friendly policies have eroded Taiwanese sovereignty. Indeed, many younger voters set out to punish Ma and his Nationalist party in key mayoral elections in November.

     "Ma said he would make everyone rich but all I can see is money going to big businesses," charges 31-year-old Hilary Chen, an office worker in downtown Taipei. "I don't think about buying a house -- I will never save enough even for the down payment."

     "Ma talks all the time about cross-strait relations, but he is nowhere to be seen when it comes to food safety issues," Chen went on. "I am worried he is so eager to sign deals with China that we will end up getting shortchanged."

     Concerns such as Chen's led hundreds of student protesters last year to occupy parliament for three weeks in March to preempt the signing of further pacts with China. The occupation was an augur of the Nationalists' electoral setbacks in November.

     The Nationalists ended up with only a half dozen key mayors around the country among more than 20. The poor showing compelled Ma to step down as party chairman. Since then, Nationalist heavyweights have shied away from running for the presidency in January, fearing a trouncing by the main opposition, pro-independence Democratic Progressive Party (DPP).

     A DPP win could presage the worst Nationalist meltdown since General Chiang Kai-shek and his Nationalist (Kuomintang) forces were forced to flee to Taiwan after losing mainland China to Mao Zedong's communists in 1949.

     In 2008, Ma swept into office with 7.65 million votes, or 58% of ballots cast. He was elected to a second term in 2012 with 6.89 million votes, defeating Tsai Ing-wen, today the DPP's chairwoman and presidential candidate. The wheel of fortune has turned. Ma's reputation has taken a beating, and many believe Tsai is poised to become Taiwan's first female president. 

Cross-strait achievements

Since taking office in 2008, Ma has signed 21 pacts with China covering a host of trade, legal and other bilateral issues. Transportation links have been improved and direct flights introduced. Restrictions on mutual investments have been loosened. The unprecedented cooperation with Beijing has significantly reduced tensions on both sides.

     Taiwanese critics charge, however, that the liberalization has only really benefited local conglomerates. Even Eric Chu, Ma's replacement as Nationalist party chairman, has acknowledged the unequal distribution of dividends from expanded cross-strait exchanges.

     The balance of investment has certainly been lopsided. Taiwanese companies have injected a total of $150 billion into China since 1991 when their capitalist government first allowed local companies to make mainland investments. China's investments amount to only $1.2 billion since Taiwan opened itself up to them in June 2009. And while Chinese tourists have grown more than tenfold since 2008 to four million in 2014, aggregate tourism income only increased by 130% to 437 billion New Taiwan dollars ($14.33 billion) in that period. The more churlish Taiwanese often complain about the uncouth behavior of mainlanders, a topic that is easy fodder for the local press.  

     The political verdict on Ma's China efforts is also not in. While strains between Taipei and Beijing have certainly reduced, China has yet to abandon its territorial claims to the island. The thorny issue sank Ma's request to meet China's President Xi Jinping on the sidelines of the Asia-Pacific Economic Cooperation summit last year.

     Beijing also rejected the Ma administration's application to join its regional initiative, the Asian Infrastructure Investment Bank, as a founding member on the grounds that it does not recognize Taiwan as an independent country.

Negligence on domestic issues

The main weighted index on the Taiwan Stock Exchange has performed well, rising gently over the past four years to 9600. The economy grew 3.46% in the first quarter, ahead of Hong Kong, South Korea and Singapore.     

     However, in a May poll by Taiwan Indicators Survey Research, only 22.1% of respondents said they trust Ma; 65% said they did not among the 1,004 people polled with a margin of error of 3.1%. Many felt Ma's poor approval rating reflected his handling of domestic affairs.

     The average real wage in 2014 of NT$45,494 was lower than in 1999. Taipei City has seen the home-price-to-income ratio almost doubled from 8.33 at the beginning of 2008 to 15.73 at the end of last year. In practice, this means a household will need to save its entire earnings for almost 16 years to be able to pay for an average home in the capital -- slightly lower than Hong Kong's ratio of 17 but much higher than London's 8.5. 

     At a time when ordinary people were already feeling pinched, Ma's move in 2012 to raise fuel and electricity prices -- both still largely controlled by state-owned companies -- was extremely unpopular. Public confidence in the government was battered by a string of food safety issues, including tainted cooking oil scandals, the worst of which involved local conglomerate Ting Hsin.  

Ma's unrealistic perception

Nationalist lawmakers are worried about presidential and parliamentary elections in January. They are concerned that the party may lose its majority on the back of a weak showing in the presidential campaign.

     "The hike in utility prices has stirred up public ire against the Nationalist Party and the issue of wealth distribution has riled the middle class," said Nationalist lawmaker Lo Shu-lei. "Ma feels good about himself, but the public certainly does not."

     Indeed, to this day, Ma still seems not to understand where his policies went wrong. When he spoke to reporters on Monday, he said all his efforts have been to lay a solid foundation for Taiwan's future development.

     "Ma's problem is that he is selfish," said Professor Chu Chao-Hsiang at the National Taiwan Normal University Graduate Institute of Political Science. "He has only been thinking about his own legacy, and neglecting the needs of the public. But it looks like his legacy will be his incompetence, and his success will be splitting up his party."

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