Changing socioeconomic circumstances in cross-Strait relations

l  China recently released the GDP growth rate for the second quarter, which came in at 9.3%. Compared with the 9.7% GDP growth in the first quarter, this slowdown will inevitably limit Beijing’s policy options as it tries to contain the amounting inflationary pressure.

l  At the same time, as the main gauge of inflation, China’s Consumer Price Index (CPI) came in at 6.4% in June, which was the biggest jump in three years and far exceeded government’s control target of 4% inflation rate this year.

l  Against such a backdrop, Beijing may pursue a tougher position in cross-Strait economic negotiations. We also expect the number of Chinese procurement delegations to Taiwan will decrease in the second half of the year.

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When economics has become politically sensitive

l  Since mid-2009, consecutive Chinese procurement delegations—usually led by government or party officials—have come and visited Taiwan as part of Beijing’s “buy things Taiwan” campaign.

l  These procurement missions have provided a healthy boost to Taiwan’s export-oriented industries in the last two years. However, these high-profile Chinese delegations also allowed the opposition to criticize the government for “putting all the eggs in one basket” and made Taiwan too dependent on China economically.

l  As the legislative and presidential elections near, cross-Strait exchanges have become more sensitive even though they remain mostly economic in nature. The government also does not want to give the appearance that it is too “China-leaning.”

l  Most expect that, in addition to taking a tougher stance on issues like US arms procurement and the sovereign status of the Republic of China (ROC), Taipei will likely.....

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The indictment against former President Lee Teng-hui

l  For someone who has been out of active politics for over a decade, Taiwan's former President Lee Teng-hui continued to wield the kind of influence that few politicians—past and present—can command.

l  In recent months, however, prosecutors from the Special Investigation Division (SID) have been cooperating with judicial authorities in other countries to track the money that was allegedly embezzled by the former president, and formal charges were filed against Lee in late June. 

l  While the opposition Democratic Progressive Party (DPP) claimed the indictment was politically motivated, the ruling Kuomintang (KMT) reassured the public that the prosecutors acted independently on the case.

l  Will the indictment against Lee have an impact on the legislative and presidential elections next January 14?.....

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Showcasing Taiwanese products and services

l  Though the number of individual Chinese travelers to Taiwan will be capped at 500 per day initially, there is growing anticipation of the likely impact that these visitors can bring to the island’s retail and hospitality industries.

l  In preparation for the arrival of individual Chinese tourists, Taiwan’s two biggest convenience store chains—FamilyMart and Uni-President (TaiEx 1216)—are stocking up items ranging from soft drinks, snacks like pineapple cakes, cosmetic facial masks, and Taiwanese tea and cigarettes, particularly at their outlet stores near tourist attractions.

l  Both FamilyMart and Uni-President will continue to offer different products at more outlets based on the consumption habits of Chinese tourists. At the same time.....

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