ROC's Success in Economic Liberalization and Globalization

Article excerpt

The Republic of China's economic success has become a model for developing nations. Among the many factors contributing to rapid development, the most crucial has been the ROC's ability to quickly adjust its economic policies to meet changing economic conditions.

In the early 1980s, expanding trade and a growing trade surplus resulted in the steep appreciation of the New Taiwan dollar and a continuous rise in wages. The government took timely measures to liberalize and globalize the economy. As democratic reforms were initiated and the Emergency Decree was abolished in 1987, foreign exchange regulations were revised to ease capital flow restrictions. Labor-intensive industries that were losing their competitiveness began to relocate overseas, first to Southeast Asia, and then in the early 1990s, to the Chinese mainland, as the government relaxed controls on mainland investment. Cross-strait business activity and Taiwan investment on the mainland stimulated exports, greatly enhancing cross-strait trade.

Beginning in the 1980s, the ROC gradually shifted economic policies from control and protection to freedom and liberalization. In 1984, the government initiated policies to privatize government-run enterprises, remove interest rate controls, reduce customs tariffs and eliminate centralized exchange rates. In 1995, the government approved a plan to develop Taiwan into an Asia-Pacific Regional Operations Center and promoted economic liberalization and globalization by revising its trade regulations. The 1997 four-year national development plan included, among others:

1. Liberalizing trade and investment

Relaxed restrictions on investment by foreign firms and individuals to ensure a free capital flow; removed trade barriers by gradually reducing tariffs; and promoted a business environment to maintain international competitiveness.

2. Liberalizing and internationalizing finance

Enacted policies to make local money and bond markets more effective and efficient; established a futures market; expanded the offshore financial center and foreign currency call-loan market; accelerated globalization of the capital market; and expanded the scope of the financial market by developing the trust industry.

3. Liberalizing the service sector

Upgraded international competitiveness of ocean shipping and civil aviation; promoted sea and air transport centers; liberalized the telecommunications industry; and authorized the employment of additional foreign professionals in Taiwan's service sector.

4.Encouraging market competition

Removed market barriers and inappropriate market controls, made law enforcement more transparent; and ensured fair competition in the market. …