THE Chinese theory about economic integration with Taiwan is that it will bind the two together politically. Taiwan will become ever more reliant on China for its prosperity, paving the way to eventual unification. Many in Taiwan fear this process is under way. But now the premise of the theory—that closer ties with China are essential for growth—is being tested by a sharp economic slowdown in Taiwan.
Over his nearly eight years in office, Ma Ying-jeou, Taiwan’s president, has pushed for a detente with China. A flurry of deals, including a limited free-trade agreement, has fuelled business ties. Taiwanese exports to China have soared, as has Chinese investment in Taiwan. A recent meeting between Mr Ma and Xi Jinping, China’s president, in Singapore—the first between leaders of the two countries—was meant to show the promise of more co-operation.
Awkwardly, though, Taiwan’s economy is in a slump. GDP shrank by 1% year on year in the third quarter, its first contraction since 2009. Last year Taiwan grew by 3.8%. Many analysts had expected about the same this year. Instead, it will do well to hit 1%, says Gordon Sun of the Taiwan...Continue reading
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