Markets surge in Taiwan as election raises hopes for mainland ties
TAIPEI: Stock prices soared in Taiwan on Monday as investors welcomed the presidential election victory over the weekend of Ma Ying-jeou, a Nationalist who has called for closer relations with mainland China that could spur the islands lagging economy.
The stock market jumped 6.2 percent at the opening, and closed 4 percent higher, on top of a 4.5 percent rise last week on expectations that Ma would win. The New Taiwan dollar rose 1.1 percent to 30.229 to the U.S. dollar, the strongest in more than 10 years.
Ma said in an interview Sunday that he hoped to have an immediate effect on the economy in his first 100 days in office by opening up Taiwan to mainland Chinese tourism. Taiwan is virtually closed to mainland tourists now for fear that spies and saboteurs might join tour groups and later stay behind, although groups of academics and professionals already come.
Ma acknowledged that economic weakness overseas could hurt Taiwan, but said that the answer was to increase spending at home. “The global economic slowdown is a reality we cannot change - what we can change is to enlarge domestic demand,” he said.
To do that, Ma plans a $130 billion spending program over the next eight years, mostly for infrastructure projects. He plans to enlarge ports and airports up and down Taiwans western coast to accommodate greater trade and travel with the mainland, and expand rail and highway links. He also plans a variety of ambitious environmental projects that may require large numbers of fairly low-skilled workers, like replanting extensive forests in southern Taiwan to reduce the risk of landslides.
Ma said that the government would also give special attention to building up Taiwans financial services, tourism, health and cultural industries.
“We think if we push ahead, we can really revitalize the economy,” he said.
Economic worries played a central role in Mas decisive victory on Saturday, by a margin of 58 percent to 42 percent, over Frank Hsieh of the Democratic Progressive Party.
Beijing officials still have not issued any response to Mas victory, but had made clear before the vote that they would prefer Ma.
The current president of Taiwan, Chen Shui-bian of the Democratic Progressive Party, has had frosty relations with the mainland as he had sought greater political separation for Taiwan.
Taiwanese investment on the mainland has dropped by nearly half during Chens nearly eight years in office, to about $2 billion a year, as he has enforced limits on how much capital can be invested by Taiwanese companies on the mainland - limits that Ma said he would lift.
Mas running mate, Vincent Siew, is a longtime advocate of a “common market” with the mainland, an idea influenced by economic integration in Europe.
Hsieh attacked this idea as leading to an influx of millions of low-wage mainland laborers into Taiwan. A Democratic Progressive Party rally featured a so-called Trojan horse that, when its belly opened, turned out to have poisoned mainland food inside, a reference to recent health and safety scandals involving mainland products.
Ma has since said that he favors a closer economic cooperation agreement with the mainland that would be based on World Trade Organization free trade principles.
Ma promised during the election campaign that he would raise Taiwans annual economic growth rate to 6 percent and ensure that a broader swath of Taiwanese society benefits from growth.
While the Taiwanese economy grew 5.7 percent last year, the gains were heavily concentrated among professionals with jobs in the islands highly successful computer manufacturing industry and among entrepreneurs with mainland investments, as many factories have moved to the mainland so as to tap low-cost labor there.
FedEx shut down a 12-year-old package distribution center Aug. 16 last year in Kaohsiung as freight volumes dropped. Ma said that if he is successful in introducing direct flights to and from the mainland, Taiwan would start to revive as a logistics center; FedEx declined to comment on whether it would reopen the Kaohsiung operation if direct flights begin.
Enoch Fung, a Goldman Sachs economist, predicted in a research note Monday that economic growth in Taiwan would slow to 3.8 percent this year and 4.6 percent next year because of weaker demand for exports. But Fung also said that closer cross-straits ties would raise the possibility that actual growth could be higher.
Ma said that he wanted to conclude a series of free-trade agreements with other Asian countries and with the United States - a task that could be difficult given Beijing officials strong opposition to most international agreements with Taiwan. Ma suggested that these objections could be finessed by having Taiwan conclude trade pacts using the name it used to join the World Trade Organization: the customs territory of Taiwan, Penghu, Kinmen and Matsu.
