By Ralph Jennings
The United Nations had just told Taiwan it couldn’t join this year’s general assembly of the agency that sets civil aviation rules. Then the diplomatically isolated Asian government found out the UN conference on climate change in November will let Taiwan attend only as an informal observer, led by a research institute delegation rather than a government minister. That’s a demotion from last year when the UN Climate Change Conference let Taiwan’s Environmental Protection Administration minister participate for the first time. Whatever Taiwan contributes this year is unofficial.
Everyone knows China did this – again.
Since Taiwan President Tsai Ing-wen was elected in January before taking office in May, the Communist leadership in Beijing has chiseled away at gains in international status that Taiwan made under the previous president in Taipei. Tsai takes a relatively guarded approach to China relations as Beijing wants to unify with Taiwan even though most people on her island tell opinion polls they don’t want that fate. China uses its 170-plus diplomatic alliances to keep Taiwan out of most UN agencies and forbids those countries from any establishing formal diplomatic ties. China claims sovereignty over Taiwan, which has been self-ruled for seven decades.
Taiwan wants more participation in international agencies, regional blocs, treaties and trade agreements to help set rules for the world on things it cares about. Trade and transport are two points of concern. Taiwan seeks free-trade agreements to help its exporters, which is natural since exports drive the half-trillion-dollar Taiwanese economy. International exposure also reminds the outside of Taiwan’s de facto political autonomy.
The 2015 climate change conference in Paris, often dubbed COP21, yielded an agreement signed by 196 countries to limit the rise in global temperatures to 2°C (3.6°F) by 2100.
Pressure from China also barred Taiwan from joining the UN-backed International Civil Aviation Organization assembly as an observer in late September. China’s a UN member, Taiwan has just 22 diplomatic allies. China sees Taiwan as part of its territory, not a country entitled to formal membership in international bodies. Taiwan is proudly self-ruled and has pushed for a stronger role in the UN since the 1990s.
China probably let the EPA minister in last year because the climate was better between Beijing and Taipei. Taiwan’s president at the time Ma Ying-jeou had agreed in 2008 to talk with Chinese officials as two parts of “China,” just subject to different interpretations on what that geographic label means. Ma used those talks to sign 23 agreements with China, which also eased up on Taiwan’s pursuit of free trade deals with other countries and let it brush up against UN bodies.
“Beijing’s not happy with the current Taiwan government, hence one can infer why Taiwan officials can’t participate in this conference,” says Sean King, senior vice president with the consulting firm Park Strategies in New York. “With no official Taiwan government representation, it’s a definite net downgrade from last year.”
Taiwan’s foreign ministry does not acknowledge a status drop this year in its statement on the UN conference, though it notes that local NGOs failed to land permission to hold sideline events. “Taiwan’s normal participation shouldn’t be ruled out,” the statement says. The now former EPA Minister, Wei Kuo-yen, used last year’s UN event make the same plea. Taiwan had recently passed its Greenhouse Gas Emission Reduction and Management Act to do its part in controlling carbon emissions.
The Industrial Technology Research Institute will head Taiwan’s delegation to COP22 this year.
The demotion is no one-off case. China has cut into the island’s international relations since April by asking that other countries extradite Taiwanese fraud suspects to Beijing, not Taipei, on the premise that they’re Chinese. China also formed diplomatic ties with Taiwan’s former ally Gambia in March, another slight to its international status.
The message from this year’s climate conference is “pretty obvious,” says Nathan Liu, international affairs and diplomacy professor at Ming Chuan University in Taiwan. “Things have developed from a stalemate to something like confrontation,” Liu says. “Tension across the Taiwan Strait will get even worse. The situation right now is pretty awkward.”
Beijing stresses “unshakeable on one China principle” as Taiwan’s Tsai Ing-wen refuses to bow to pressure — Mainland critics say Taiwan is being “choked by the throat” as it is squeezed out of international participation
Why Trump Is Right About China
By Bryan RichForbes
September 27, 2016
The debate last night was entertaining. It’s sad to see how the media manipulates facts and cherry picks quotes to fit their narrative. But that’s what they do and it ultimately shapes views for voters, unfortunately.
Today, I want to focus on China and Trump’s comments on China’s currency manipulation. Everyone knows the U.S. has lost jobs to China. Everyone knows China has become the world’s manufacturer. But not everyone knows how they did it.
Is it just because the labor is so cheap? Or is there more to it?
There’s more to it. A lot more.
China’s biggest and most effective tool is and always has been its currency. China ascended to the second largest economy in the world over the past two decades by massively devaluing its currency, and then pegging it at ultra-cheap levels.
Take a look at this chart …
In this chart, the rising line represents a weaker Chinese yuan and a stronger U.S. dollar. You can see from the early 1980s to the mid-1990s, the value of the yuan declined dramatically, an 82% decline against the dollar. China trashed its currency for economic advantage—and it worked, big time. And it worked because the rest of the world stood by and let it happen.
For the next decade, the Chinese pegged its currency against the dollar at 8.29 yuan per dollar (a dollar buys 8.29 yuan).
With the massive devaluation of the 1980s into the early 1990s, and then the peg through 2005, the Chinese economy exploded in size. It enabled China to corner the world’s export market, and suck jobs and foreign currency out of the developed world. This is precisely what Donald Trump is alluding to when he says “China is stealing from us.”
China’s economy went from $350 billion to $3.5 trillion through 2005, making it the third largest economy in the world.
This next chart is U.S. GDP during the same period. You can see the incredible ground gained by the Chinese on the U.S. through this period of mass currency manipulation.
And because they’ve undercut the world on price, they’ve become the world’s Wal-Mart (sellers to everyone) and have accumulated a mountain for foreign currency as a result. China is the holder of the largest foreign currency reserves in the world, at more than $3 trillion dollars (mostly U.S. dollars). What do they do with those dollars? They buy U.S. Treasurys, keeping rates low, so that U.S. consumers can borrow cheap and buy more of their goods—adding to their mountain of currency reserves, adding to their wealth and depleting the U.S. of wealth (and the cycle continues).
The U.S. woke up in 2005, and started threatening tariffs against Chinese goods unless it abandoned its cheap currency policies. China finally conceded (sort of). It agreed to abandon the peg to the dollar, and to start appreciating its currency.
It allowed the currency to strengthen by about 4.5% a year from 2005 through 2013. That might sound good, but that was a drop in the bucket compared to the double digit pace the Chinese economy was growing at through most of that period. Still, the U.S. passively threatened along the way, but allowed it to continue.
With that, the Chinese economy has ascended to the second largest economy in the world now—on pace to the biggest soon (though it still has just an eighth of the per capita GDP as the U.S.). But China’s currency is a bigger threat, at this stage, than just the emergence of China as an economic power. The G-20 (the group of the world’s top 20 economies) has had China’s weak currency policy at the top of its list of concerns for a reason.
The current global imbalances are the underlying cause of the global financial crisis, and China’s currency is at the heart of it.
And without a more fairly valued yuan, repairing those imbalances—those lopsided economies too dependent upon either exports or imports—isn’t going to happen. It’s a recipe for more cycles ofbooms and busts … and with greater frequency.
Are big tariffs the answer? Historically that’s a recipe for disaster, economically and geopolitically.
What’s the solution? I’ve thought that the Bank of Japan will ultimately crush the value of the yen, as the answer to Japan’s multi-decade economic malaise and as an answer to the stagnant global economic recovery. It’s an answer for everyone, except China. A much weaker yen could crush the China threat, by displacing China as the world’s exporter.
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