Down, Not Out--President Chen Shui-bian's First Year in Office

Although May 20 was the first anniversary of Chen Shui-bian's inauguration as ROC president, no celebrations were held, nor was there any press conference to mark the event. Instead, President Chen spent the day doing volunteer work in an effort to promote volunteerism in Taiwan.

At about 9 o'clock on the morning of the 20th, Chen Shui-bian donned a bright safety vest and went picking up trash on the traffic island in the middle of Chungking South Road, just outside his official residence. He was accompanied by environmental activist Lin Ming-teh, Wang Ling-chiao (chairwoman of the ROC Junior Chamber of Commerce), Lee Yuan-tseh (president of the prestigious Academia Sinica), and Yu Shyi-kun (secretary-general of the Presidential Office).

The weather was hot that day, and after an hour of bending over for trash, the president was soaked with sweat. Onlookers applauded. From there the president proceeded to Yu Cheng Carwash. Located underneath the Chienkuo Viaduct, Yu Cheng Carwash is run and operated by people with disabilities, and Chen chose to put in an appearance there to highlight the fact that disabled people are completely capable of living full and productive lives. He washed two cars, earning the center NT$400.

In the evening the president delivered a televised address to the nation to reflect on his first year in the Presidential Office. He stated that last year's peaceful transfer of power was a very meaningful event, both from the perspective of 5,000 years of Chinese history, and from that of the past half-century of Chinese rule in Taiwan. At the same time, however, Chen likened the transfer of power between different political parties to an insect's metamorphosis. He acknowledged that the ruling and opposition parties had not yet made a completely successful switch to their new roles, with the result that the birth of a fully fledged democracy had been a painful one. He further acknowledged that both the ruling and oppositions parties need to try harder, and called upon the government to courageously manage the country's democratic transformation.

Evaluating the new administration's performance, Chen gave his government full marks for its handling of cross-strait relations, and said that it has also done a good job of consolidating democracy, stabilizing cross-strait relations, fighting to eliminate long-standing abuses, and strengthening Taiwan's diplomatic position. He also noted that the biggest challenges currently facing Taiwan are the global economic slowdown and the need for Taiwanese industry to fight its way up the industrial food chain.

Tough press

In contrast to last year's post-election euphoria, the mood of government officials upon the new administration's first anniversary has been very subdued. Now that the honeymoon period has ended, opinion leaders and the general public have turned critical.

Media analysts fault the government for poor policymaking processes, and point out numerous fiascoes, including the bureaucratic bungling that came to light in connection with the spectacularly failed rescue at Pachang Creek, the Fourth Nuclear Power Plant controversy, government attempts to support share prices on the Taiwan Stock Exchange, and the slow response to the oil spill caused by the grounding of the MV Amorgos. The poor performance of the executive branch under the new administration has trained a spotlight on the fact that the Democratic Progressive Party (DPP), having just gotten its first chance to rule, is short on qualified personnel and lacks internal cohesion.

At the same time, however, the opposition parties do not escape blame either, for they have shown a knee-jerk proclivity to oppose whatever initiative the government puts forward. One case in point is the tussle over how much to shorten the standard number of working hours. The standard work week when President Chen took office was 48 hours. After the new government proposed to shorten this to 44 hours, the opposition-controlled Legislative Yuan one-upped the administration by passing legislation that further reduced standard working time to 84 hours over two weeks. This measure saddled businesses with an extra burden, and manufacturing operations began migrating offshore at an accelerated rate, thus contributing to increased unemployment. The Kuomintang (KMT), which controls an absolute majority of the seats in the Legislative Yuan, bears part of the responsibility for this situation. While the opposition proclaims its duty to act as watchdog over the DPP administration, the public has grown very resentful of the KMT for putting its own interests above those of the nation. The KMT has refused to participate in Chen Shui-bian's proposed inter-party consultations, obstructed efforts to pass a budget and other legislative bills, and threatened to impeach the president over his handling of the nuclear power plant controversy. These are just a few of the ways that the KMT has clearly contributed to the political stalemate and economic decline of the past year.

Perhaps the people of Taiwan were too optimistic a year ago. In any case, Taiwan's precipitous economic downturn over the past year has come as a shock.

Taiwan's economy was firing on all cylinders as recently as the first quarter of last year, but they are now in the midst of a five-month slide. Private-sector investments rose at a double-digit pace last year, but will most likely tumble to negative growth this year. The ever-sensitive unemployment rate broke above 3% last July and has been rising steadily ever since, hitting 3.89% in March. It is now heading for 4%, which in Taiwan would qualify as high unemployment.

With this unbroken run of dreary macroeconomic figures, the view at street level is none too encouraging. Factory closures have risen sharply, and the exodus of manufacturing operations to mainland China has been unstoppable. For more and more people, unemployment is no longer just a scary figure in the newspaper, but a painful reality.

Pitching in to save the economy

With Taiwan's economic fundamentals looking weaker all the time, the new administration has been busy formulating measures to turn the situation around. A special economic task force created in late August was expanded in October, and made two major decisions. One was to reduce the business tax rate for banks. The other was to suspend trading of any individual stock if its price were to drop 3.5% in a single session (whereas the normal daily limit on upward and downward price swings on the Taiwan Stock Exchange is 7%). President Chen then pledged that there would be no tax hikes during his four-year term, and the government rolled out long-term economic development plans calling for establishment of a knowledge-based economy and development of Taiwan as a "Green Silicon Island." Since the beginning of this year the government has held a series of national conferences on economic development, administrative reform, industrial development, and science and technology. It has also adopted a dizzying array of measures designed to stimulate the economy, including plans to spur domestic demand, bolster the property market, create job opportunities, and promote mergers between financial institutions.

Experts point to many causes for the current malaise. Apart from the flagging global economy, some experts also say that the government missed out on an opportunity to turn the situation around. They point to contradictory policies, confusion about the roles of the various cabinet-level agencies, and a lack of overall policy direction.

According to Li Tung-hao, a professor of banking and finance at National Chengchi University, the government started off on the wrong foot by taking an overly optimistic view of the economy, which delayed its response. Its biggest mistake was its failure to do anything about rising nonperforming loan ratios at banks. Instead, it put top priority on social welfare measures and the fight to cancel construction of the Fourth Nuclear Power Plant. By the time policymakers realized the seriousness of the economic situation, the public had already lost confidence. The Council for Economic and Development (CEPD), which is supposed to take overall charge of economic development policy, failed to play its proper coordinating role. The Ministry of Economic Affairs was consumed by the struggle over nuclear power, and failed to pay enough attention to the need to adjust Taiwan's industrial structure. The Ministry of Finance was busy trying to support share prices on Taiwan's stock market, but in doing so resorted to measures that violated market principles.

According to Hsueh Chi, a former CEPD vice chairman who now heads the Taiwan Academy of Banking and Finance, the government is basically on the right track with its long-range policies, but it keeps adopting politically expedient interim measures that cancel out the positive effects of its previous work. He argues that this has badly hurt the economy.

To achieve economic recovery, experts are in overwhelming agreement that there is a pressing need for the government to carry out an across-the-board review of government policy and policymaking procedures, restore the confidence of the business community, and establish a model for handling cross-strait economic relations.

Standing up, being counted

During a recent stopover in the United States on his way to Central America, President Chen stated that he would like to travel to mainland China in order to improve cross-strait relations. He also proposed the formation of an Economic Development Advisory Council to work on Taiwan's most pressing economic problems, and signaled a willingness to establish a coalition government, stating that a nation cannot rely totally on one person or one party.

A possible key player in such a coalition would be People First Party chairman James Soong, who finished just 300,000 votes behind Chen Shui-bian in last year's presidential election. Responding to Chen's call for a coalition government following Taiwan's year-end legislative elections, Soong stated that three factors must be considered: (1) the results of the elections and the relative strength of each political party; (2) the degree of public support for a coalition; and (3) the need to achieve true policy cooperation, and not just concentrate on "dividing the spoils."

In the meantime, the public hopes that the nation's rulers in the Presidential Office, the Executive Yuan, and the DPP will learn from their experience and lead the country out of its morass. The public also wants to see the opposition parties get out of their current mindset, where the only thing they seem to care about is opposing the DPP. They need to quit the war of attrition of the past year and pitch in to help the country resolve its difficulties.

The president earned very good reviews for his recent trip to the United States and Central America. The China Times noted that US president George W. Bush agreed to allow President Chen a much higher profile during his US stopover, and that Chen was the first ROC president to visit New York in a half century. Both of these facts, in the newspaper's opinion, carry great symbolism and significance.

Associate Professor Wang Kun-yi, of the Research Institution of International Affairs and Strategic Studies at Tamkang University, has written that Chen's overseas trip shows that Taiwan is not totally consumed by the issue of cross-strait relations, but is also approaching other countries directly in an effort to achieve its strategic objectives.

During meetings in New York with top US political and business leaders, President Chen played the role of "super salesman," taking every opportunity to call on his guests to invest in Taiwan.

The people of Taiwan largely support Chen's overtures to foreign investors, but they also feel that the more important task is to improve Taiwan's investment climate. As the new government heads into its second year, people everywhere in Taiwan are hoping that President Chen's administration will be able to establish a more cooperative atmosphere and move the country forward.

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El Salvador was the first country visited by President Chen Shui-bian on his five-nation visit to Central America. After meeting with President Francisco Flores, Chen received a book from a Salvadoran cartoonist. (photo by Cheng Yuan-ching)

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May 20 marked the first anniversary of Chen Shui-bian's presidency. Chen spent the day doing volunteer work. He is shown here picking up trash along Chungking South Road, just outside his official residence, to stress the importance of serving the people and protecting the environment. (photo by Tsai Hung-wen, Presidential Office)