Showing posts with label exports. Show all posts
Showing posts with label exports. Show all posts

Wednesday, March 30, 2016

Eels in Myth and Solar cycles

Chung_46_29
Looking forward to roads like this soooonnnnn...

From Eels and Humans, Tsukamoto and Kuroki (Eds.)

Freshwater eels (Anguilla spp.) are an important food resource and support large-scale aquaculture in some oriental countries. Taiwan’s climate is ideal for eel stocks living in the wild and for aquaculture. Indeed, the country’s aquaculture industry, which was initiated in the 1960s and peaked in the early 1990s, contributed greatly to Taiwan’s economic development at the time, though much of that production has since been transferred to mainland China. Despite their economic importance to humans, however, many people are not that familiar with eels, so this chapter supplements material presented elsewhere in this book by documenting aspects of eel distribution and biology, mythology, cuisine, etc, in Taiwan.

....

The recent decline in the population of wild Japanese eels has resulted in there being an insufficient supply of glass eels for aquaculture in Taiwan and elsewhere. The reason for the decline is not absolutely clear, but as speculated elsewhere in this book and for other species of eel too, it may be related inter alia to overfi shing, habitat degradation and/or global climate change (see below). Whatever the cause of the decline, though, and in an attempt to stimulate recovery of Japanese eels in the wild and concomitantly to increase glass eel production for aquaculture, the Taiwanese government ordered the release of hormone-induced mature eels (silver eels) into the open ocean from 1976 to 2002. Since the millennium, however, that programme has shifted its focus to releasing young eels into rivers.

In addition to the five species of eel found naturally in Taiwan, some exotic species of anguillid eel have also been found in the wild. Succinctly, faced with a reducing inflow of Japanese glass eels and a heavy demand for glass eels generally for aquaculture in the country, glass eels of non-endemic species such as the American eel A. rostrata were introduced from North America; some escaped from the aquaculture ponds into the wild and have since been caught occasionally during their spawning migration as adults (Han et al. 2002; Tzeng et al. 2009). Additionally, the Australian speckled longfin eel A. reinhardtii has been caught in Sun-Moon Lake in central Taiwan, having originally been imported from Australia for cuisine purposes because of its similarity to the A. marmorata eaten preferentially by Taiwanese (Chang et al. 2008).

....

Long-term catch data (1972–2011) have indicated a significant decadal change in peak catches of Japanese glass eels coinciding with solar activity reflected in an 11.2 year periodic change in sunspot number (Fig. 9.3a; Tzeng et al. 2012a). The catch of glass eels seems to increase with a concomitant increase in the number of sunspots, and although the cause−effect relationship between glass eel numbers and sunspots is not a direct one, the climate change index WPO (Western Pacific Oscillation) that influences the two currents (NEC and Kuroshio) that transport eel larvae from the spawning grounds to the coasts and subsequently affects the Taiwanese glass eel catch is clearly a link (Tzeng et al. 2012a). After peaking in 1979, the Taiwanese glass eel catch gradually declined to a lower peak in 2001, since when it declined further until the most recent lower peak in 2011, mirroring similar decreases in the population size of the Japanese, American and European eels (Fig. 9.3b ). All this is taken as evidence that fluctuations in the catches of glass eels in Taiwan refl ect not only the overall population size of A. japonica but also ocean–atmosphere interactions exemplified by the climate change indices of sunspots and WPO.

...

The eel is an important religious icon in Taiwanese folklore. The Japanese eel and the giant mottled eel are regarded, respectively, as river and sea gods, and this can be seen in the design and paintings of gate god statues commonly placed at the entrance to traditional Taiwanese village dwellings. Many villagers believe that the gate gods protect them against the devil and evil spirits, and protect the security of their family (Fig. 9.13a ). Additionally, eels appear in the design of “ong-bao” (Fig. 9.13b ), the red bags containing money that parents give children to seek good fortune during the Chinese Lunar New Year. Eels are important also for Taiwanese native (aboriginal) peoples, but those people do not kill and eat the eels because they believe that they are the embodiment of celestial beings.
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Friday, August 07, 2015

Economic downers

No matter how deep you are in the mountains, there's always some McDonald's trash around.

The latest economic news is in and most of it is not good. ECFA has once again boosted Taiwan's exports to new heights failed to drive growth...

Taiwan's exports have fallen for the sixth straight month:
Taiwan's exports suffered a 11.9 percent year-on-year decline in July, the sixth consecutive month in which they registered a drop, according to customs statistics released Friday by the Ministry of Finance.

July exports amounted to US$23.55 billion, while imports in that month fell 17.4 percent year-on-year to US$19.93 billion, the tallies show. The trade balance for the month was favorable, reaching US$3.62 billion, the ministry said.
This came on the heels of news that economic growth is in a long term slump, with second quarter growth the worst in three years:
Taiwan's gross domestic product (GDP) for the second quarter of this year rose 0.64 percent from a year earlier, compared with an earlier forecast of a 3.05 percent increase, according to an advance estimate released by the government Friday.
Bloomberg reported:
Taiwan’s exports have fallen in five of six months this year as demand waned in the top destinations of China and the U.S. The island’s manufacturers are also battling with mainland firms upgrading their supply chains, while local consumption has been hurt by a fall in property and share prices.

“With its heavy concentration in the electronics sector, second-quarter GDP was hurt by the unusually low level of activity in the electronics supply chain,” said Wai Ho Leong, a Singapore-based regional economist at Barclays Plc. “This was then compounded” by the stock slide, he said.
At least our Forex holdings are at record levels.

To the extent that people vote their pocketbooks, this is good news for Tsai Ing-wen. it will undermine both the KMT's claim to economic management prowess, and any promises that KMT presidential candidate Hung Hsiu-chu will make about the economy. Unlikely though it might be, it may help James Soong, if he can somehow evoke the spirit of the miracle years and Chiang Ching-kuo....

But it's very bad news for the people of Taiwan...
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Thursday, June 25, 2015

ECFA success #25904: Exports, Industrial Production Slump

Rift_Jun_2015_330
Wish I could have gone to Tainan...

FocusTaiwan has the news:
Taiwan's industrial production index fell 3.18 percent to 106.71 in May from the previous year, ending 15 consecutive months of growth, according to data released Wednesday by the Ministry of Economic Affairs.

...........

In a breakdown of the production in the different sectors, the data showed that manufacturing dropped 2.57 percent year-on-year in May, mining and quarrying increased 4.71 percent, electricity and gas supply dropped 19.32 percent, water supply fell 4.21 percent, and buildings construction rose 2.45 percent.
Quarrying and mining -- essentially gravel digging in Taiwan -- and construction are two sectors tightly linked to local patronage networks that are critical supporters of the KMT. If these flows of money and work to that sector continue, it will help the KMT.

Meanwhile, ECFA continues to drive massive increases declines in exports to China. The Taipei Times reports:
The value of export orders dropped 5.9 percent annually and 4.1 percent monthly to US$35.79 billion last month, dragged down mainly by declining orders from China and Hong Kong, the Ministry of Economic Affairs said yesterday.

The value of orders from China and Hong Kong fell by US$1.17 billion from a year earlier to US$8.98 billion last month, accounting for 52.7 percent of the US$2.22 billion annual drop in overall export orders last month, the ministry said.
ECFA has had little positive effect. Our trade surplus with China is shrinking and will likely return to ~2007 levels this year. Of course, this is due in part to China's increasing ability to manufacture its own stuff, as the article notes.

UPDATE: A comment below notes:
This is a lot to drop in just a simple comment, but Taiwan will need to reckon with its longtime trade surplus eventually, not seek to achieve it across various trade relationships. Who does a cheap currency truly help? Exporters and the owners of those companies. Who's hurt? Regular households that are not employed by the export sector and being severely underpaid across decades. Taiwan's air, water, land, sweat, and blood have been sold too cheaply abroad for far too long. In the beginning, this was actually useful to develop nascent industries, but today's Taiwan is so far beyond that it is only an addiction that benefits the rich. It's madness that has to end, and if you are looking at China, what's important is that China has been copying the model of Taiwan and Japan before it, but now is being forced to reduce all surpluses and develop the domestic consumer market. Unfortunately, China is being forced to adjust prior to achieving the same level of wealth of Japan and Taiwan, but that's how it is, because the US consumer is out of money and can no longer get a poorly thought-out loan.

Taiwan would do well to prepare for a much appreciated TWD. One bright spot: there's a ton of domestic demand opportunity in infrastructure investment that the government could do, as in that regard, Taiwan's government has been relatively conservative in spending money versus other developed countries.
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Friday, May 22, 2015

ECFA Really so awesome?

Coast_April_23
Sympathetic magic as public policy: if we make the smokestacks cute, they won't be harmful.

I had a few minutes today so I thought I'd check out the trade figures for China pre and post ECFA, which I posted on several years ago. Then I said of the 2010-11 figures:
I had Excel put in the trend line on this quick-n-dirty chart. It's obvious even to the Mark I eyeball that the numbers for 2010 and 2011 and 2012 lie on the trend line (in fact slightly below where we would have been had the trend for 2004-07 continued). If ECFA were really that awesome what we should see is a spike after 2010, with the years 2005-2008 lying clearly below this simpleminded trend line
I spent some time today at the Bureau of Foreign Trade, which has a great database system which can be downloaded as Excel files.

First, here are the numbers for the total trade figures for China only from 2000 to 2014.

China Only Total Ex/Im Imports from China Surplus/Deficit Annual Rate of Change
00 10,440,540,918 6,223,111,811 -2,005,682,704    0.819
01 10,798,076,970 5,902,784,486 -1,007,492,002   -49.768
02 18,495,033,007 7,968,294,793 2,558,443,421   -353.942
03 33,907,784,754 11,017,481,839 11,872,821,076    364.064
04 53,140,562,278 16,791,537,670 19,557,486,938    64.725
05 63,736,408,872 20,093,086,019 23,550,236,834     20.415
06 76,590,504,462 24,782,325,696 27,025,853,070   14.758
07 90,430,526,782 28,014,115,689 34,402,295,404   27.294
08 98,273,497,890 31,390,466,074 35,492,565,742   3.169
09 78,670,764,058 24,422,662,822 29,825,438,414   -15.967
10 112,879,654,027 35,945,078,516 40,989,496,995   37.431
11 127,555,177,571 43,595,777,610 40,363,622,351  -1.527
12 121,621,186,471 40,907,429,723 39,806,327,025  -1.381
13 124,376,057,324 42,588,412,443 39,199,232,438  -1.525
14 130,158,219,397 48,038,896,032 34,080,427,333   -13.058

It's a bit wonky, but you can see that our trade surplus with China only has been falling. In fact it is down 13.3% again the first three months of this year. ECFA was supposed to buoy our trade with China. Just the opposite has happened since it was signed.

The data below is for the China, Hong Kong, and Macao.

China, HK, and Macao  Imports Surplus/Deficit Annual Rate of Change
00   44,322,830,265   8,455,926,708   27,410,976,849  23.72
01    41,904,357,865    7,999,571,603   25,905,214,659   02    -5.493
02    53,689,295,915    9,914,356,923   33,860,582,069   04    30.71
03    67,025,011,837    12,964,443,215   41,096,125,407   21.369
04    88,696,335,831    19,133,872,975   50,428,589,881   22.709
05    100,237,776,611    22,235,386,509   55,767,003,593   10.586
06    116,139,937,773    26,688,448,674   62,763,040,425   12.545
07    130,642,313,459     29,866,598,811   70,909,115,837   12.979
08    132,890,050,715      32,912,808,344   67,064,434,027   -5.422
09    109,557,179,579     25,560,602,695   58,435,974,189   -12.866
10    152,632,897,958     37,591,908,057   77,449,081,844   32.537
11    169,546,957,259     45,290,463,268   78,966,030,723   1.959
12     162,388,783,057     43,579,102,256   75,230,578,545   -4.73
13  165,613,353,823     44,257,780,261   77,097,793,301   2.482
14  174,528,005,846     49,732,434,501   75,063,136,844   -2.639

Same general trend. Back in 2012 I noted that the trend was clearly showing a pronounced change beginning in 2010, as Fig. 1 below shows. Several things happened, among them ECFA, but also the Great Recession and the follow on austerity and other collective elite madness in Europe and the US.

Fig 1. Total trade with Hong Kong, Macao, and China. 2000-14 Data source: BFT

I just eyeballed the trend lines, so they are not exact. But they should be clear. The purple line beginning in 2010 is nowhere near as steep as the growth of the Chen Shui-bian era. If ECFA was supposed to make things boom beyond the dreams of the Chen Shui-bian era, it has been a total failure. Indeed, as the trade surplus numbers show, the surplus has fallen each year and returned to 2007 levels in 2014. In 2015 it will likely be smaller. Extrapolating from the first quarter, it will check in around $30 billion. There are many reasons for the shrinking surplus, but the numbers show that ECFA does not appear to have had any discernable effect.

It should also be obvious what will happen to the trade surplus with China if we sign that god-blighted services pact.
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Thursday, December 12, 2013

ECFA Successes Just Keep Rolling In

Resolutely thinking about the future of Taiwan. Via Motao

One of the merriest, most penetrating minds I know collected a bunch of info on the recent trade stats and sent it around. Not pretty at all. For November, via the Taipei Times:
Exports to ASEAN countries dropped to US$4.37 billion last month, down 9.3 percent from a year earlier and marking the lowest level since July last year. The weakness in shipments to ASEAN offset a 6.5 percent increase in exports to China and Hong Kong, which reached US$10.59 billion last month, the report said.

Yeh said Taiwan’s full-year exports may still show a slight increase from last year, adding that she is confident that outbound shipments this month may at least stay flat from last month.

Cumulative exports in the first 11 months of the year stood at US$277.63 billion, an increase of just 0.9 percent from a year earlier, the report said.
Look at those great Year on Year figures -- a total gain of 0.9 percent. This is the ECFA boost? In recent years ASEAN has been a great market for Taiwan. Note that imports have dropped five straight months -- if you want to export, you need to import. Imports fell due to declining prices for ag and raw material inputs, as well as slowing exporter demand.

FocusTaiwan, drawing on Merrill Lynch analysis, observes that export orders are rising but actual export value isn't keeping pace. In 2000 the ratio of export order value to export value reported by Taiwan firms was .99 (the two were essentially identical). Now it is .68, meaning that the orders are accepted in Taiwan but made elsewhere. As my friend pointed out, the Taiwan stats office, the DGBAS, found that the overseas production ratio of export orders in October was .529.

Meanwhile all those Taiwan firms operating in China are helping Beijing ramp up trade figures 7.8%...

Isn't the move to China wonderful? As I am wont to say, arguing that moving more factories to China will help Taiwan grow is arguing that a double amputee will run faster if we cut off both his legs too.

But the best part is the last part, as my friend noted. Tawan trade stats for Jan-Nov 2013:

Look carefully. According to the Taiwan gov't, exports to China this year rose 1.5% -- lovin' that big ECFA boost! w00t! -- while according to the China gov't, Taiwan's exports to China jumped 18.8% (FocusTaiwan):
Trade between Taiwan and China was valued at US$180.71 billion in the first 11 months of this year, an increase of 18.8 percent from the same period of 2012, according to statistics released Monday by China's General Administration of Customs.
As my friend observed with laughter, the import and export figures are hugely different:

Taiwan gov't: Taiwan exports to China = $109 billion
China gov't: Taiwan exports to China = $143.5 billion

Taiwan gov't: Taiwan imports from China = $40.2 billion
China gov't: China exports to Taiwan = $37.18 billion

Surely there must be whole cadres of financial analysts out there who find understanding these numbers an amusing parlor game.

Exports account for 70% of GDP in Taiwan. As they decline, so will living standards.
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Tuesday, August 13, 2013

Economic Round Up: Beijing to strip Taiwan banks?

So hot on the east coast this weekend, everyone is taking a dip.

With President Ma away on a foreign trip, FocusTaiwan provides some of the most recent numbers on Taiwan's economic situation....
Taiwan's exports usually post strong growth in July, but that was not the case this year. A rare monthly decline in exports was recorded in July and the annual export growth rate for the month was also lower than expected.

Even though exports rose 1.6 percent year-on-year, the growth rate fell far short of expectations, said Liang Kuo-yuan, director of Polaris Research Institute.

....

Taiwan recorded a rare 0.9 percent annual decline in exports to China and Hong Kong in July, according to customs statistics.

Another factor that affected exports in July was the 7.7 percent drop in the export of information and communication technology (ITC) products, Liang said.
According to the articles FocusTaiwan collected, Taiwan's July exports fell 4.4 percent from June but increased 1.6 percent year-on-year. In June exports had annualized growth of over 8%. A huge chunk of growth was due to mineral exports, which grew 20%, with the steepest decline in capital goods. Another signal of bad times to come: imports from the US and Japan both shrank over 15%. Since those two countries are Taiwan's most important sources of production technology and raw materials, shrinking imports should mean that producers are planning to produce less.

The Taipei Times published an excellent editorial on the economy the other day. It noted:
Taiwan’s economy lost steam again last month after exports shrank 4.4 percent month-on-month to US$35.3 billion, data released on Wednesday by the Ministry of Finance showed. That brought the nation’s exports up just 2.3 percent during the first seven months to US$175.74 billion from a year ago.

....

Taiwan’s exports to six emerging countries, including Malaysia and five other ASEAN members, showed robust growth as reflected by an annual growth of 7.3 percent in exports to US$33.45 billion in the seven-month period ending on July 31.

That makes ASEAN countries Taiwan’s second-biggest export destination, surpassing the US, Europe and Japan.

In fact, ASEAN seized the No. 2 position in 2007, when exports to those countries grew at an annual rate of 16.7 percent, outpacing China’s 12.6 percent expansion based on the statistics compiled by the Ministry of Finance.
Facts like these show the retrograde nature of Ma's go-China policy in its full light: it actually refocused Taiwan away from cultivating growing markets abroad to a stronger focus on the China market. You could hardly ask for a better strategy for Taiwan if you were an economic planner in Beijing looking at a Taiwan that was competing with your exports to the ASEAN area. I'm sure it is just a coincidence.

The services pact with China was totally ripped by Huang Tien-lin, President of First Commercial Bank, in the Taipei Times....
Why do I say this is the beginning of a disaster? You need only look at how enthusiastically the financial services industry has flocked to China. Confucius said: “Going too far is as bad as not going far enough” (過猶不及). This is a sentiment deemed fundamental to economists and yet, even now, there are many financial holding companies preparing to increase their investments in China and plough billions into local banks, mergers and acquisitions, and stocks and securities, and opening overseas branches in Fujian Province.

Initial estimates suggest that Taiwanese banks have either already transferred, or are preparing to transfer, not less than NT$160 billion in core capital to China. This is another example of integration with China that will surely see the further marginalization of Taiwan, just as the exodus of Taiwanese manufacturing to China did in the past.

Closely related to this is the deregulation of Chinese yuan deposits in February that, in the short four-month period to the end of June, has seen the accumulation of more than NT$360 billion worth of Chinese yuan in domestic and offshore accounts. This figure is increasing at the rate of NT$50 billion per month, giving a projected annual increase of NT$600 billion, a rate and amount equivalent to half Taiwan’s average annual increase in national M2 deposits — NT$1.2 trillion — in the decade from 2001 to 2011.

What is the purpose of accumulating all these yuan deposits? Naturally, they are to be used for providing financial services in China. This increase in credit financing in China means squeezing the amount of credit available to be extended in Taiwan.
Credit is a key driver of economic growth, the lubricant of a healthy economy. As Huang notes, the money flows not only will reduce investment on this side of the Strait, but also threaten Taiwan politically and socially by increasing the exposure of local banks to China's increasingly slowing economy. This "financial integration" has long been an important goal of China precisely because its political effects are so powerful. Unlike the US, Taiwan cannot simply print an enormous pile of money and save its banks. Debts owed to Taiwan banks give China additional leverage over Taiwan -- both directly: "Submit! Or we won't pay up!" -- and indirectly, since bank officials are likely to pressure the government to further align itself with Beijing in order to protect themselves from the consequences of the coming overexposure. Not that they aren't already.

Consider also: Taiwan's truly wealthy keep their wealth parked overseas or in land; savings in local banks are likely to be held by middle class and upper middle class individuals. It is they who will suffer if and when Taiwan's overexposed banks are punished by huge losses in China.

The move to China by the banks comes at a time when private domestic investment is moribund. The Economic Daily News observed:
According to the Directorate General of Budget, Accounting and Statistics, the increase in consumption was driven by rises in stock transactions and mutual fund fees. This demonstrates that the consumption increase had nothing to do with real consumption.

The rise in net exports, meanwhile, was the result of slower growth in imports, due to slower demand for equipment. Consequently, capital formation contracted 3.03 percent in the second quarter, cutting 0.52 percentage points off overall economic growth.

More worrying still, over the past five years, there have been four years in which private-sector investment recorded negative growth, despite various efforts made by the government to promote investment.
Recall also that Taiwan is not attracting much foreign direct investment; FDI was negative in 2011, positive for 2012 (source). With economic expansion slowing in Japan, and the US and Europe afflicted with austerity madness, it seems Taiwan will continue to suffer from the stupid, self-destructive policies of European and American elites.

Finally, enjoy a well written blog post on the nature of the debates over China, its credit issues, and its growth model from Michael Pettis.
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Tuesday, March 19, 2013

Government still selling ECFA as Ag boon

Future exports under ECFA?

The government is still pushing the ECFA = Agricultural Export Increases! line, still trying to sell ECFA as a big boost to Taiwanese agriculture (a 2011 review of that drive) and change some minds in southern Taiwan. Though, I also wonder if they are trying to lay the groundwork for opening up to agricultural exports from China, which would likely be devastating: "See how competitive we are? It's safe to flood the island with melamine melons and stuff from China!"

The latest round in this effort was out on the intertubes via Taiwan Today.... noting that 2012 ag exports rose to US $5.08 billion (8.8% YOY rise), the piece attributed that to ECFA. But wait... what's our top market? Well, it says Japan, but actually Taiwan splits Hong Kong from China... meaning that 25% of our exports go to China.
“Agricultural products posted the highest growth at 14 percent, while Japan was the country’s top export market at 21.1 percent followed by mainland China, 15.5 percent, Hong Kong, 10.1 percent, and the U.S., 9.3 percent,” a Council of Agriculture official said March 18 in a statement.

Fresh fruit exports reached US$62.02 million, down 0.6 percent year on year but up 51.7 percent from 2007. The official attributed the drop to reduced output and price increases following typhoons.

“But cross-strait direct flights saw fresh fruit shipments to mainland China jump 42 percent to US$15.39 million. Of these, items on the ECFA early harvest list such as bananas, hami melons, lemons, oranges and red dragon fruits accounted for US$1.38 million, surging 71.4 percent compared to 2007.”
Think about the numbers the COA gives there. Total exports: $5.08 billion. Fresh fruit shipments to China jumped to.... $15.39 million. Like 0.3% of total exports? It's less than a rounding error. But here the COA is, still pushing the ECFA = Big Ag Boost! claim using increases in fruit sales....
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Wednesday, December 26, 2012

Ecch Faux Stats

Taiwan Today hosted another one of the government's claims of triumph for ECFA this week.
The Cross-Straits Economic Cooperation Framework Agreement (ECFA) is paying handsome dividends for Taiwan, spurring significant tariff savings and business growth, according to the ROC Ministry of Economic Affairs Dec. 22.
The article goes on to give "details" about the great economic growth under the ECFA Cargo Cult regime. But first I thought I drag out overall numbers so we could get a feel for ECFA's effect on the exports to China. Here are the numbers for 2004-11 for value of exports to China in million$ (DGBAS):

YR
04 36,349
05 43,644
06 51,809
07 62,417
08 66,884
09 54,249
10 76,935
11 83,960

The pact came into effect in Sept of 2010. Here are numbers through Oct for 2012 (million$):

J 5,261
F 6,486
M 7,114
A 6,822
M 6,922
J 6,528
J 6,762
A 6,673
S 7,223
O 7,167

Ten month total: 66,957

Assuming we get $8,000 million for Nov and Dec, that would put 2012 at $83 or $84 billion. Roughly the same as last year. Of course, the global economy is in a nasty sustained downturn thanks to the austerity insanity in Europe and the total indifference of American elites to the fate of the US economy and the individuals who inhabit it, so we shouldn't be expecting too much anyway. But let's graph these numbers so we can view the trend line:

I had Excel put in the trend line on this quick-n-dirty chart. It's obvious even to the Mark I eyeball that the numbers for 2010 and 2011 and 2012 lie on the trend line (in fact slightly below where we would have been had the trend for 2004-07 continued). If ECFA were really that awesome what we should see is a spike after 2010, with the years 2005-2008 lying clearly below this simpleminded trend line. BUT: Remember that (1) in 2009 the economy collapsed and it was still recovering in 2010 and (2) numbers like this tend to level off and become stable over time. What stands out, really, is how deeply the Great Recession scored the global economy. It's a relief to know that the Obama Administration jailed all the bankers and instituted a tough new regulatory regime like any sane and competent government would do, isn't it? O wait....

Anyway, the Taiwan Today piece gave some more breathless numbers:
The latest MOEA statistics show that from January 2011 to October this year, the ECFA generated US$551 million in tariff savings for local firms and farmers.
Jan 2011 through Oct 2012, tariff savings of $US 551 million on a hair over $150 billion in exports to China.  That means that the total savings are roughly 1/300 of the export total. How big can the effect be? After all, shifts in the value of currency, labor costs, or inflation are much greater...

In case you were wondering about the trend for 2012 through November, exports to China are down 5.5%, to ASEAN 6 up 9.3%, and to America down 10%. Yay ECFA!

We then get some numbers in percentages....
For the first 11 months, agricultural exports to mainland China were US$146 million, up 36.47 percent year on year. Oranges, live groupers and tea leaves top the list at 103.76 percent, 32.22 percent and 11.89 percent, respectively.
The wording is strange. I think the author meant to say that the exports to China were UP $146 million. Otherwise, the second sentence makes no sense as written. Indeed, the DGBAS numbers have ag exports to China at $630 million through Oct of this year for a y-o-y rise of 17%, well more than $146 million. Because of the way this was worded last year, I suspect that this wording is actually meant to apply to the early harvest agricultural goodies and not to ag exports as a whole.

I've blogged on this issue several times. Let's just repeat what I wrote last year at this time because it is still apropo:
The COA then goes on to make my bullshit sensor signal a five alarm fire:
In the Jan.-Oct. period, Taiwan farm produce exports to China, in 18 categories that were included on an ECFA early harvest list, totaled 14,242 tons at a value of US$95.7 million, according to Chang.
Ok, in the 18 ag product categories, there was a total gain of US$95.7 million. Now hold still, because a couple of paragraphs later come some numbers.
In the 18 categories, the sale of live groupers surged by a whopping 192 percent year-on-year to an export value of US$79.66 million, she said. Chang attributed the increase mainly to the ECFA “early harvest” tariff concession program and the opening of 15 Chinese seaports for direct shipping links.
So... maybe I am reading this wrong, but of the $95.7 million increase, $79.66 million is groupers. 83% of the increase is from one product! Add the number given by the spokesperson for tea exports, $7.37 million, and 90% of the gain is from just two products. We're not succeeding in agricultural products, just in raising fish. Subtract that $79.66 million and the agricultural deficit sucks -- which shows how important definitions of what counts as agriculture are -- most people when they hear the word "agriculture" don't think of fish.
The numbers are basically in the same proportions, just larger. Grouper and tea still account for the bulk of the rise in exports to China. The 103% rise for oranges is probably from a very small base, no doubt why percentages and not absolute numbers are given. The comforting idea that ECFA is going to save the poor farmers of southern Taiwan is a con. Unless you raise grouper -- fish and related products account for 2/3 of the island's agricultural exports (data source) -- you are not making money off agricultural trade. That post I wrote last year also explains why the profits are not going to Taiwan.

Taiwan runs an agricultural trade deficit with China proper but when you throw in Hong Kong, counted separately in the Taiwan figures, it seems that Taiwan still runs a slight ag trade surplus. Japan, China, and Hong Kong are first, second, and third as agricultural trade destinations (DGBAS). Against that, there's likely a flood of smuggled agricultural goods from China not counted in the trade figures (see this article).

Despite the hype, agricultural exports to China are not flying out of the containers. Rather, they consist of a couple of high value items whose profits are concentrated in a few powerful hands. This is why China cannot woo the south with the promise of agricultural concessions. Because they have no appeal for the vast majority of farmers.
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Sunday, December 02, 2012

China Consumes Taiwan's Agriculture

Moon and raindrops

Several times on this blog I've noted that one of China's longterm goals is to hollow out Taiwan's productive industries, since Taiwan's strong economy is a powerful support for independence. This move has multiple prongs, including getting its industries to move to China, and stealing the island's production technology. A legislative report notes the effect of the latter effort on Taiwan's agriculture (Taipei Times):
It added that some Taiwanese strains of agricultural products grown or raised in China have also dealt a blow to Taiwanese farmers, as the farmers’ products have been sent back to the country because they were still prohibited from entering China. They included red carrots, pineapples, groupers, black tiger shrimps, abalone, butterfly orchids, carnations and mushrooms.

In the six years since 2006, China has acted “in a more systematic way” to lure Taiwan’s farming sector, with a total of 29 “Development Parks for Taiwan Farmers” established in 14 provinces as of this year, in addition to nine “Cross-Strait Agricultural Cooperative Experimental Zones” that have been set up since 1997, according to the report.

China not only offers Taiwan-funded enterprises in the agricultural parks a set of incentives in land acquisition, tax credits and lending, but also encourages and invites award-winning Taiwanese farmers to visit China through organized tours, or offer them money in exchange for seeds and techniques, the report said.

The report said that the 3,000 hectare Zhangping Yongfu Development Park for Taiwan Farmers, one of six in Fujian Province in southeast China, is being planted with oolong tea, all by Taiwan farmers from Nantou County, a famous tea-producing area, and is being developed into what China calls the “Alishan (阿里山) of China.”

It was estimated by Chinese research institutes that their annual production of oolong tea, which is under cultivation in the Zhangping Yongfu park, could be as high as three-fifths of the amount of high mountain oolong tea produced in Taiwan annually, the report said.
I've blogged on this before including this post from Nov 2011 on the bogus numbers on Agricultural Exports to China and this post on an enthusiastically awful NY Times piece. This month the government in Taiwan also moved to create a uniform fast track for agricultural exports. Why?
Local exporters have complained that without the mechanism, their products have often been detained in customs at Chinese ports pending quarantine checks, making it nearly impossible to get the products on the market while they are at their freshest.
This functions as an informal barrier to agricultural exports from Taiwan. Is it deliberate? Well, the old saw runs that you should never attribute to malice what can be explained by stupidity. Smuggling of agricultural goods from China, which has been going on for more than two decades, is almost never covered by the media. Sadly.
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Sunday, June 24, 2012

Apple's Patent Aggressiveness Hurts Taiwan's Economy?

Clean air today, good for photography...

The rabidly pro-China WantChinaTimes argues that Apple hurts Taiwan....
Significantly, Taiwan's exports to the United States and Europe in May declined 12.3% and 13.4%, respectively. Meanwhile, its exports of consumer electronics to these two regions were down 53.7% and 41.1% year-on-year, respectively.

The sharp fall in Taiwan's exports of electronics was attributed to large declines in the Taoyuan-based HTC's exports of smartphones to the United States and Europe.

According to media reports, HTC contributed one quarter of Taiwan's export growth in 2010. Therefore, declines in its exports to the United States and Europe negatively affected exports and even income and employment growth.

Apple can be called the culprit behind the decline in HTC's — and hence Taiwan's — exports. To achieve its goal of profit maximization, Apple filed patent infringement lawsuits around the world against major manufacturers of Android mobile phones and tablet computers, including Samsung and HTC, and demanded that other countries ban the import of products that violate patents.

HTC's exports declined sharply due to its failure in these lawsuits, though it had commanded a large market share in the United States, which has grown over the past few years.
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Friday, July 08, 2011

Exports fall, presaging slower second half

A beautiful bride-to-be being done up for the traditional wedding photographs.

The Taipei Times reported:
The nation’s exports fell 9.7 percent from a month earlier to US$27.88 billion last month because of weaker seasonal demand for Taiwanese electronics and the shutdown of several plants at the sixth naphtha cracker complex, the Ministry of Finance said yesterday.

However, exports still grew 10.8 percent last month from a year earlier, with exports surging 16.9 percent year-on-year to US$154.14 billion in the first six months, the strongest level ever, the ministry’s data showed.
Exports fell from May to June this year, 9.7%. Compared to last June they are still up 10.8%. The report noted that imports also reached all-time highs, causing a fall in the trade surplus, but much of the rising tide of imports consisted of capital imports, implying that makers are purchasing machinery to make more stuff. Yay!

The Taipei Times article noted differing views -- the second half of the year could be good if Japanese reconstruction starts, China maintains, and the US grows. However, the US economy doesn't seem to be headed for spectacular growth, as its leaders would rather burn the Middle East than make America grow. The Financial Times column Beyond Brics put Taiwan's export decline in a global context:
Solid evidence in Taiwan’s latest export numbers of a worrying slow down in world trade.

Economists warned earlier that Taiwan’s strong export growth couldn’t continue forever, and that the second half of the year was likely to present a much tougher environment than the first.

And on Thursday they were proved right, with Taiwan’s June export numbers showing exports falling 10 per cent compared to May, and up just 10 per cent compared to June 2010.

Exports traditionally fall from May to June, but some economists were still caught off guard – The median growth rate forecasted by eight economists surveyed by Dow Jones was 19.6 per cent.
The slowdown is a repercussion of a global slowdown -- China's numbers are expected to show a slowing economy as well. FT pointed out that Taiwan's machinery exports fell 13.3%, implying that the tightening of credit in China is hitting purchases of production machinery from Taiwan.

How will this affect the election? I expect a second-half slow down will have very little effect, for two reasons. First, the pro-KMT media was able to create the feeling of economic slump among voters despite economic growth above 4.5% for the period 2006-2008 during the run-up to the election. Hence, I expect that the pro-Blue media will be able to blunt the effect of economic slowdown, unless it is truly awful. Don't forget that the foreign media is Taipei-centric and frequently recirculates KMT talking points as if they were serious analysis, validating the local media. Second, voters in the local election choose on purely local issues such as development projects and clan and patronage networks, while at the national level core voting groups are probably already set. Only the ten percent swing vote remains to be captured, and this educated group will not be much influenced by transient economic changes.
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Sunday, October 10, 2010

Taipei Housing Prices to Remain High, NT on its way up

President Ma came to power strongly backed by foreign financial interests who also saw Taipei's real estate market as a good investment possibility. In the latter choice they were smart. From the China Post:
Prices of luxury apartments and office space in Taipei City's prime locations will continue to be high in the short-term, due to a strong rise of the local currency, analysts said yesterday.

The Taiwan dollar (TWD) has appreciated by a significant margin over the last couple of days, due to an influx of hot money into Taiwan as well as other parts of Asia, on the ultra-loose monetary policy announced by the United States.

........

According to a recent survey of My Housing Magazine, as much as NT$109.5 billion worth of new apartments will be rolled out in northern Taiwan in November.

Institutional investors pointed out prices of luxury mansions and office space in prime areas of Taipei City will continue to be high, due to several factors besides a rising TWD.

Luxury mansions in Taiwan are mostly sold at NT$1.8 million to NT$2 million a ping, far less than the NT$7.5 million to NT$12.5 million in Hong Kong. Each ping is 3.3 square meters.

The article also observed that the wealthy have plenty of cash on hand, and that the government is no longer selling state-owned land. That restriction on supply has, as many foresaw, helped to sustain high prices in the Taipei market -- it is difficult to avoid concluding that keeping prices high is the reason for it, in fact. Yet another factor keeping real estate costs up is the expected increase in demand for office space as Chinese and foreign investors set up shop in Taipei to take advantage of ECFA.

A high NT (it hit 30 to the dollar last week) threatens Taiwan's exports by making them more expensive. To counteract the inflows of cash, the Taiwan Central Bank flooded the market with NT last week:
Sales of the island’s dollar failed to prevent the exchange rate from closing at a two-year high as all of Asia’s 10 most- active currencies rallied following Japan’s first cut in interest rates since 2008. Taiwan’s central bank last week raised borrowing costs for the second time this year and foreigners have pumped almost $3 billion into local shares since the start of September.
Some analysts are predicting that the Taiwan dollar may hit 29.75 by the end of the year. Economic growth and a rising NT are masking an unanticipated fall in exports, a report on Thursday noted:
Taiwan's export growth slowed for the second straight month in September and was much lower than economists had forecast.

The country's shipments grew 17.5% year-on-year in September, slower than the 26.6% increase in August, data from the Ministry of Finance showed Thursday. Economists had expected the growth rate to remain unchanged from the previous month's level.

Meanwhile, growth in imports outpaced exports by rising 25%, following a 28% gain in the previous month. Import growth also fell short of expectations of a 30% increase. Total exports amounted to US$22.4 billion during the month and imports totaled US$20.6 billion.
The good news is that exports to the major areas of Europe, China, and the US are all rising, and that orders are also booming:
Data from the Ministry of Economic Affairs released last month showed that Taiwan's export orders, an indicator of the Island's export performance in the coming months, rose 23.3% year-on-year to US$34.88 billion in August, a record-high, beating economists' expectations. Taiwan's economy relies heavily on its export sector. In the second quarter, the economy maintained its double-digit growth on the back of strong exports, growing 12.53% annually. The growth, however, was slower than the 13.7% expansion in the previous quarter.
All this positive progress on the economic front has yet to translate into advantage for the KMT at the polls.
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Tuesday, June 15, 2010

Taiwan News: Don't lower standards for the Taishang


Taiwan News hit another high note today with its response to the suggestion that the economy be dumbed down for returning businessmen from China...
Even though it is questionable whether the "cost-down" mentality or even "sweatshop" management practices, which were fostered during four decades of KMT-imposed martial law rule, have truly left Taiwan, it is indeed critical to Taiwan's economic future to block a "return immigration" of the draconian factory management and low wages and "cost - down" strategies.

The key issues is what will such Taiwan companies and investors do now that they must confront the visible limit point of the viability of this exploitative model in, at least, the coastal zones of the PRC and what will be the policy of our government.

Unfortunately, successive Taiwan governments, whether under the KMT or the centrist Democratic Progressive Party, have been unwilling or unable to wean most Taiwan companies from their addiction to low wage and cost-down business strategies and adopt strategies aimed at boosting value added and total factor productivity, quality, environmental protection, creative designs and brand name marketing that could promote high wage and quality employment.

The latest wave of upward wage pressure in the PRC has again led to calls by many Taiwan conglomerates and "market fundamentalist" economists for the KMT government to attract Taiwan businesses (often known as "Taishang") to "return home" with "favorable conditions."

Revived 'social dumping'

Such incentives include lower corporate income taxes, lower inheritance and gift taxes, favorable rents in industrial zones, streamlined entry into "free trade port zones" and expanded quotas for the use of foreign labor and, by no means least, the publically voiced possibility of "delinking" the wages of foreign labor from Taiwan's basic wage of NT$18,400 a month as mandated by the Labor Standards Law.

Despite statements by MOEA officials urging Taiwan companies to invest in high technology or environmentally friendly "green" products and services, the structure of such perks too clearly presuppose assistance to Taiwan companies in maintaining "cost down" business strategies if they return home. Indeed, the "Cross-Strait Economic Cooperation Framework Agreement" pushed by President Ma Ying-jeou's KMT government also falls into this dilemma by focussing government attention on tariff cuts instead of industrial upgrading.

In our view, Taiwan companies which aim to bring back "cost-down" and "low wage" production methods should be politely encouraged to invest in Southeast Asia or Central and South America or South Asia and help diversify our export markets.

The fact of the matter is that the only and short-term "benefit" of allowing Taiwan companies to bring back this "successful model" will be statistical as positive "multipler" effects for our domestic economy will be minimized if wages are kept specially low in such special zones.

Even more worrisome is the likelihood of further delays to Taiwan's urgent project of industrial upgrading due to the "opportunity cost" imposed by the granting of official incentives to "cost-down" business operations and the resulting squeezing out effect on assistance to high-value added operations.

However, the gravest damage would come if the KMT government caves into pressure from pampered conglomerates and agrees, despite current denials, to directly or indirectly delink the wages for foreign workers in free port zones or elsewhere in Taiwan from the basic wage.
The government's mentality is that it must compete by slashing costs -- labor costs, specifically. It's a move toward the future, if the future is the 1980s, another of the many status quo policies of the KMT Administration. Yes, it is 2010 and we're exporting petroleum products to China, made out of government subsidized oil, with subsidized water and electricity, in factories with the most limited environmental oversight, owned by firms whose taxes just got slashed. Welcome to the free market: what we're really exporting to China is our tax dollars.

Several articles in recent years have pointed out the growing soft power of Korea (2007, 2008, 2010) -- with its TV shows and songbirds (like the Wonder Girls and Girls Generation about whom a local newspaper remarked "they could conquer North Korea with their legs"). Taiwan has nothing like this; its music culture at best is parochially focused on the Chinese speaking world and its talented film culture is tragically undersupported. Yet rising Korean soft power will help drive acceptance of Korean exports all over Asia. Branding and R&D and low labor costs just aren't enough for the 21st century -- the government needs to be taking a much bigger hand here....
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Friday, February 12, 2010

Friday Night Lites

Ralph Cossa of CSIS, who has been a harsh critic of the DPP for "provoking" China, has suddenly noticed that the real problem is Chinese belligerence and intransigence in a recent PACNET piece:
What Beijing needs to understand is that arms sales are more than just the fulfillment of the US moral and legal commitment to help Taiwan defend itself. In the final analysis, these sales are driven by Taiwan's perceived defensive needs in the face of a relentless expansion of Chinese military capabilities across the Strait. The best way to get Taiwan to request less would be for China to significantly reduce the threat Taipei currently faces).

Arms sales to Taiwan are a clear demonstration of Washington's commitment to peace and stability in Asia that send a clear signal to allies and potential adversaries alike that the US is determined to be an Asia-Pacific power. A refusal to sell much-needed arms to Taiwan would raise serious doubts about the credibility of the US defense commitment to its other allies. It could also compel Taiwan to turn to
nuclear weapons as a last resort, an outcome that China, least of all, should want to see.
It's highly unlikely that Taipei would begin construction of a nuclear capability, especially with a party more or less allied to Beijing running the government. But that kind of rhetoric shows the concern and puzzlement among US commentators over Beijing's behavior, evidenced also in the Bush piece discussed below this post. Is there a re-assessment going on in the US foreign policy community? Let's hope so.....

The NYTimes also editorialized on The Challenge of China...
The sales could not have been a surprise to China’s leadership. Mr. Obama told President Hu Jintao of his intentions at their summit in November in Beijing. The arms were part of a package approved by former President George W. Bush, and Mr. Obama left out the most controversial items: F-16 jets and diesel submarines.

Rather than encouraging Taiwan’s independence, as Beijing claims, the arms sales will give Taiwan’s president, Ma Ying-jeou, the confidence to continue his efforts to improve relations with the mainland. It is absurd for China to think that any Taiwanese leader would not want to bolster his country’s defenses when Beijing is modernizing its arsenal and stationing more than 1,000 missiles across the Taiwan Strait.

Beijing’s threat to punish American companies is a dangerous game, especially at a time when criticism is rampant — around the world and on Capitol Hill — about China’s unfair trade practices.
Both Cossa and the NYTimes pointed out that Obama told the Chinese months ago this sale would go forward. The noise that Beijing is making is just a game their playing...

...one thing this military build-up during the China-friendly Ma Administration has done is made it extremely difficult for critics of the DPP to reasonably claim that it is "provoking" China. Beijing has made it quite clear that the military build up will go on irrespective of who is in power -- meaning that it is now crystal clear the problem is Beijing.

In other news, Taiwan's share of imports into China has fallen...
Though Taiwan remained China's third largest source of imports in 2009, its share declined as Chinese purchases of Taiwanese goods contracted dramatically, the Ministry of Economic Affairs (MOEA) reported Saturday.

The MOEA, citing data from Chinese customs, said that Taiwanese products accounted for 8.5 percent of Chinese imports in 2009, down from 9.1 percent in 2008.

Japan remained China's top source of imports with a 13 percent share in 2009, slightly down from 13.3 percent in 2008, while South Korea was second with a market share of 10.2 percent, up from the 9.9 percent of the previous year.

China's imports from Taiwan recorded the largest annual contraction of China's top three suppliers, falling 17.1 percent from a year earlier.
The solution, according to the Ministry of Economic Affairs? You know what it must be: ECFA.
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Tuesday, January 27, 2009

Tuesday News Round-up

Sloooow news day here, as everyone is travelling to return to mom's house for Chinese New Year. Locally based Asia correspondent Jon Adams has an interesting article in CS Monitor this week discussing a Filipino worker activist in the Philippines, against the background of the economic crisis:

In her office in this hectic part of Manila, Connie Regalado paints signs for a rally the following day. Her latest cause: calling on the government to do more for overseas Filipino workers who are losing their jobs due to the global economic slump.

A couple days earlier, she and other activists went to the airport to pick up 82 such workers, who flew from Taiwan at their own expense. They'd been axed from semiconductor-factory and other low-end jobs, victims of downsizing. The government was also at the airport, boasting of "one-stop shop" services for the workers, inviting them to the presidential palace, even offering them an appearance on a TV game show.

Ms. Regalado wasn't impressed. "It's a sham," said Regalado. "The 'one-stop shop' services aren't even palliative measures. There's no comprehensive plan to address the problem."

That no-nonsense approach has guided Regalado over nearly two decades of activism. Cynical yet committed to social justice, Regalado has dedicated much of her adult career to improving the working conditions, political voice, and basic rights of overseas Filipino workers.

People like this woman are an inspiration. He observes, further down, that more than 11,000 Filipino workers here in Taiwan can expect the ax this year as the cataclysm depression downturn deepens.

A Taiwanese exchange student was injured in US shooting incident. That will do wonders for those worried parents who are scared to send their children to the US. Speaking of the US, while the Washington Post has had precious little on the Chen Shui-bian trial and the associated hu-ha in the international rights community, it does devote plenty of space to (yet another) I Went To The Temple For New Years travel tale. Isn't it time this subgenre was retired?

Happy news? Taiwan companies scoop up record number of awards in international design competition.

Companies from Taiwan won a total of 201 design awards in 2008 from global organizations such as red dot and International Design Excellence Awards (IDEA) after winning 133 in 2007, according to the Taiwan Design Center (TDC).

....if only there was someone buying our innovative products out there. On the other hand, our DRAM makers are taking another big hit from Qimonda, a German chip firm which died owing Taiwan DRAM makers over a billion US dollars for products supplied.

There have been a spate of articles on the alleged tougher line Obama will take with China (like this AP one) but as Bonnie Glaser noted in that article:

"Everybody just needs to be a little patient on this," Glaser said. "I would not draw any premature conclusions that the administration has decided to take a tougher stance....

The Taipei Times editorializes on what Taiwan would like to say to Obama...

Finally, the South China Morning Post, usually reliably pro-KMT, called for a fair trial for Chen Shui-bian.

The island is deeply divided over its relations with the mainland. Throughout his eight years as president, Chen espoused independence, and there is still much support in Taiwan for such a move. His successor, Ma Ying-jeou, has been instrumental in bringing about closer ties with Beijing since taking office in May. The charges against Chen are, in the circumstances, seen by his backers as being political rather than criminal.

Taiwan's judicial system has long been criticised by human rights advocates. They have questioned the arrests and detention of other members of Chen's Democratic Progressive Party. Prosecutors have leaked sensitive information that has led to trial by media. Sectors of society are suspicious of the impartiality of some judges, even though the judiciary has repeatedly asserted its independence.

There is no doubt that yesterday's guilty pleas damage the cause of the Chen family and others tied up in the corruption scandal. There is no more powerful evidence against a person than his or her own admission of guilt. But we may yet find that the pleas are part of a wider strategy. One strand of Confucian teaching advocates that family members must protect one another, no matter what the circumstances, but another says that justice must precede kinship. Many months of the case remain and only time will tell.

Whatever the reason for the pleas, it is essential that justice is seen to be done. Politics must not have any part in the trials. Every effort has to be made to show that Taiwan has an independent judiciary. Only through the impartiality of judges and the transparency of the legal system can this happen. Taiwan's future depends on it.

Of course the charges are political, and of course Chen is a lawbreaker. That, in a nutshell, is the problem.... but if the friends of the KMT are coming out with stuff like this (note that even SCMP uses the phrase "trial by media"), the perception is widespread that the trial is strongly politicized. The scales fell from the eyes of many when the KMT apparently removed a judge it didn't like.... or more likely, they faced an event that could not be spun or explained away.