OPINION / OBSERVER
Taiwan’s economic future hinges on Tsai’s political stance
Published: May 10, 2016 12:32 AM

As economic contraction continues, concerns are mounting within Taiwan over the island's bleak economic outlook. Early this month, "premier"-designate Lin Chuan said that Taiwan's growth rate is unlikely to reach 1 percent this year, with the risk of even turning negative. General Chamber of Commerce chairman Lai Cheng-i in a recent interview with Want Daily warned that there will be no solution to the economic conundrum if the incoming Tsai Ing-wen government continues to avoid stating an explicit position on the 1992 Consensus.

The 1992 Consensus has been the foundation for the steady development of cross-Straits ties. Unfortunately, "president-elect" Tsai has been skirting around endorsing the consensus.

Tsai will be confronted with tough challenges soon after she is sworn in. Taiwan's economy shrank year-on-year for a third straight quarter as exports tumbled without signs of abating, adding to the urgency for Tsai to fulfill her election campaign pledge to revive growth after she takes office. However, Tsai's promises to revitalize the economy will only be empty rhetoric if she worsens ties with the Chinese mainland by negating the 1992 Consensus.

The Taiwanese economy will come to a dead end without connectivity with the mainland. In the island's trade-reliant economy, exports to the mainland account for over 40 percent of its gross exports and the mainland is a major contributor to Taiwan's trade surplus. The number of mainland tourists to Taiwan hit a record high of 3.4 million last year. Mainland visitors are now spending more in Taiwan than any other group.

The mainland won't adopt abrupt measures to halt cross-Straits cooperation. Instead, based on its track record, it will continue to encourage trade and economic exchanges with Taiwan, including keeping preferential policies in some fields. Nonetheless, negating the 1992 Consensus or seeking "Taiwan independence" in whatever form, will cripple the trust the mainland has for Taiwan, thus impairing the mainland-Taiwan cooperation and the interests of the Taiwanese public.

Tsai hopes to decrease economic reliance on the mainland. But the paradox is that as the mainland has become the engine of world economic growth and also a driving force for Taiwan's economy, it's impossible for Taiwan to be isolated from the mainland economy. The current cross-Straits economic and trade bonds are naturally formed and cannot be easily changed given the gigantic size and the rising economic power of the mainland as well as the blood relationship of the two sides.

If the mutual political trust based on the 1992 Consensus collapses after the new government assumes power, it will lead to the sabotage of cross-Straits cooperation, worsening Taiwan's economic predicament. The economic issue will be turned into a political issue for the ruling party.