Politics in Taiwan: Manning the trade barriers; Students occupy Taiwan’s legislature in protest against a free-trade pact with China

Politics in Taiwan: Manning the trade barriers; Students occupy Taiwan’s legislature in protest against a free-trade pact with China

Mar 29th 2014 | TAIPEI | From the print edition

TAIWAN’S Legislative Yuan, the island’s parliament, is used to rumbustious scenes. But the occupation since March 18th of its main chamber by protesting students is unprecedented in the country’s nearly two decades of full democracy. The demonstrators, whose actions took many by surprise, want the government to scrap an agreement with China that would allow freer trade in services across the Taiwan Strait. They have displayed a large cartoon of President Ma Ying-jeou in the debating hall, portraying him as a Chinese pawn. The president is at the nadir of his popularity, while China struggles to win over public opinion in Taiwan. Signs of public sympathy with the students are growing.

The past few months have been particularly tough for Mr Ma, now nearly halfway through his second and final four-year term as president. In September he tried to expel a political rival in the ruling Kuomintang (KMT), Wang Jin-pyng, the legislature’s speaker, for alleged influence-peddling. But the move only served to highlight disunity within his party. On March 19th, a day after the students stormed into the legislature, a court in Taipei ruled in Mr Wang’s favour, allowing him to keep his party membership and thus his job. It was another embarrassment for the president, whom critics attempt to portray as an aloof patrician with an autocratic streak.

The agreement his government reached with China last June on removing barriers to cross-strait trade in services such as banking, e-commerce and health care is at the heart of many of Mr Ma’s image problems. Mr Ma sees the pact as a reward for the more conciliatory approach to China that he has adopted since he became president. The students occupying the legislature, as well as opposition parties who back them, claim that the trade deal will lead to an influx of Chinese businesses that will overwhelm Taiwanese competitors, threaten basic freedoms in areas such as publishing, and employ cheap mainland labour rather than Taiwanese. They accuse Mr Ma’s government of being overly secretive in negotiating its terms.

Three days after the students began their occupation, Mr Ma argued that failure by the legislature to approve the agreement “could have serious consequences” (see Banyan). Going back on the deal, he said, could result in Taiwan being “regarded as an unreliable trade partner” by China as well other countries with which the island wants to negotiate free-trade pacts. He denied the agreement would open Taiwan’s job market to Chinese workers and said the government would reimpose barriers if national security were ever at risk.

These arguments appear to convince neither the students nor many members of the public. Thousands have shown support for the occupation by rallying outside the building. A poll conducted on March 20th-21st by TVBS, a broadcaster often regarded as sympathetic to the KMT, found that nearly half of respondents supported the students’ action and opposed the trade pact. Only a fifth were in favour of the deal.

On March 23rd hundreds of students broke into the Taipei compound of the central government, and some used ladders to enter the offices. Police evicted them a few hours later using water cannon and batons in an operation that left dozens injured. Another TVBS poll found much less public support for this action by the students, though support for the continuing occupation of parliament remained high.

In parts of Asia students are seen to embody a country’s moral conscience. Mr Ma is careful not to condemn them outright. “We think it is a good sign that students express their opinions about national affairs,” he says. “I appreciate their passion.” He said the police saw no reason to use force to expel them from the chamber. At first Mr Ma refused to talk to the students, but on March 25th he backed down and proposed a meeting.

The students have vacillated over that. As The Economist went to press they appeared willing to take up the president’s offer, but were insisting that he first persuade KMT legislators to support their idea of a bill requiring greater oversight of cross-strait agreements. A spokeswoman for the students, Liang Chen, said that an inconclusive meeting on March 25th between legislators from the KMT and opposition parties had shown that the KMT, which holds a majority in the legislature, was unwilling to make concessions.

Like the students, the main opposition party, the Democratic Progressive Party (DPP), accuses Mr Ma of trying to railroad the trade bill through parliament (he has said he wants it passed by June). The students began their sit-in a day after the KMT chairman of a parliamentary committee reviewing the bill approved it for scrutiny by the full legislature. DPP legislators accused him of hurriedly making this announcement without due process.

China, meanwhile, tries to sound unperturbed by the commotion in Taipei. Global Times, a Beijing newspaper, called the student action a “typical piece of theatre”. Mr Ma, however, acknowledges that the problem is bigger. “Domestically,“ he says, “we have not yet reached a significant consensus on how we want to develop our relations with mainland China.” After six years of trying, Mr Ma can claim too little progress on this.

 

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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