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1. Introduction
“The current phase of cross-Strait relations is fundamentally one of ‘political confrontation with economic integration.’” (Wu 1997).
The economic interactions across the Taiwan Strait “will determine the future of cross-Strait relations” (Keng, Chen, Huang 2006).
Within the complex field of Cross-Strait relations, the aspect of the Cross-Strait integration has become increasingly important. Especially after the implementation of the Economic Framework Agreement (ECFA) between the governments in Taipei and Beijing, a new phase of economic interaction has been engaged. While many studies try to answer questions regarding the Cross-Strait policy by treating the two involved states as unitary actors, this study will follow a different approach and focus on factors outside of the traditional “state”.
Economic interactions are dependent and closely tied to the public opinion in Taiwan. Since Taiwan is a democratic country and its government is elected by democratic institutions, the public opinion can directly and indirectly influence government and government policies (Page, B. I., & Shapiro, R. Y. 1983; Sheng 2002).
During the last couple of years, an increasing number of Chinese tourists have come to Taiwan. Responsible for this development has been a series of agreements between the governments on both sides of the strait in close relation to the Economic Framework Agreement (ECFA), which made it possible for mainland tourists to visit Taiwan. The first step of this happened in 2008 after the election of president Ma Ying-jeou. Ever since, the number of tourists has increased substantially and now reached over 2.5 million during the year 2012 (Mainland Affairs Council 2013A). First, Mainland Chinese tourists were only allowed to come to visit in groups, but this has been further relaxed in the year 2011. Now individual travels are also possible (Chan 2012).
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Some of the main attractions for the tourists are the popular night markets in Taiwan, which are being visited frequently. In 2011, 73.99% of all interviewed inbound visitors to Taiwan said that they would participate in night market sight-seeing, which was only outranked as most favored activity by “shopping” (Ministry of Transportation and
Communication, Tourism Bureau 2011). Some of these night markets are being visited by very large numbers of visitors and benefit directly from their spending. While no actual data on the average spending for night markets exist, a tourist coming from China spent 270 USD on average per day in 2011 and a part of this spending is being done on night markets
(Ministry of Transportation and Communication, Tourism Bureau 2011).
Using in-depth interviews, I will try to examine the effect of the Chinese tourists on the public opinion of the night market vendors on Ningxia Night Market in Taipei. I want to study the attitudes among those vendors on cross-Strait related issues and try to assess the question whether these are being affected by the presence of tourists or not. The increasing number of Chinese tourists offers material benefits for many vendors on Taipei’s night markets. The difference in economic transactions with Chinese tourists offers a possibility to study the influence of the related rational incentives and their effect on policy attitudes and opinions. Night markets are a good object to study, because they offer a good and easily accessible environment to directly assess the impact of tourists resulting from cross-Strait economic integration and government policies. Especially for the rather low income workers on night markets, of which many operate their own business, the increased number of
customers matters and directly affects their income.
I set up a framework to study the economic benefits for the vendors on Ningxia Night Market and check for the influence of those different levels of business interactions with mainlanders on different levels of attitudes. The attitudes I am interested in are directed toward Chinese tourists, cross- Strait economic integration and the alienation of the
Taiwanese people from China. Do vendors, which benefit more from Chinese tourists, adopt a different view on the visiting tourists? Do they take a more favorable viewpoint on cross-Strait economic integration? Do the material benefits and the gains from Chinese tourists on those night markets alter their feelings of alienation from the mainland? And finally, do the
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vendors themselves think that the presence of tourists has altered their political attitudes and opinions? All these are questions, which I want to be able to answer for the small sample of night market vendors in this study.
The influence of tourists on the attitudes toward cross-Strait related issues can be cause by two different factors rational incentives and the contact between the two groups with each other. Different levels of affective identity among vendors also have to be taken into account and included into the study.
The structure of this thesis is as follows: in the second chapter, I will briefly discuss the main variables, related literature and include all the main theories, which are important for this work. The research framework of this study follows in section three and is followed by an overview of the research methods and the analysis of the interviews in section four.
Section five concludes. References and the appendix can be found in sections six and seven.
Before introducing the framework, a short outline of the general situation is given to clarify the background conditions of this study.
Background Information
The Economic Cooperation Framework Agreement (ECFA) as the main agreement of cross-Strait economic integration is probably one of the most important agreements in the history of Taiwan. After the diplomatic ties between Mainland China and Taiwan had been significantly improved and the KMT had come back into power in 2008. The ECFA was signed on June 29th 2010 in Chongqing. This agreement is a preferential trade agreement between the two countries and marks a policy shift. Tariffs have since been reduced and commercial barriers removed to facilitate closer economic ties between both countries (Hong, 2010) and during the following negotiations tourism from Mainland China to Taiwan also has been liberalized.
Official documents advertise the framework agreement vehemently and speak of it as
“creat[ing] unprecedented opportunities for Taiwan’s economy” (Org, E. C. F. A. 2010).
Unlike more common Free-Trade Agreements, ECFA had no definite content or timeline
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other than an “Early Harvest List”. However, it contained the intention to negotiate further agreements, of which today several already have been signed and others are currently still under conciliation. These post-ECFA negotiations will have a considerable impact on
Taiwan’s economy and they are intended to ultimately open up substantially all trade (Hong, 2010).
Whereas ECFA is perceived very positively in foreign countries and China, the most debates about it happen to be right within the domestic politics of Taiwan. Concerned about the security of their country and in opposition to the former enemy of the civil war, people often fear the economic interdependence between China and Taiwan. The gradually deepened economic relations ECFA would bring about might be used by China to “force, coerce and manoeuvre toward unification” (Armstrong, 2010:5). Proponents of this argument fear the assymetric relationship caused by the size of China and its growing economy and that this progress might give China power over domestic economy and politics in Taiwan. Other scholars see this issue rather relaxed and propose that closer economic relations would also make Taiwan more valuable to the mainland and more dependend on it or even that Taiwan itself might get political leverage from the interdependence with China (Armstrong, 2010).
One source of this fear obviously is the role of identity, or in the terms of this study’s framework: the affective identity, in Taiwan. Another major argument is concerned with the development after ECFA is signed. ECFA is widely believed to offer a new basis for other states to take Taiwan as an economic player into account more seriously. At the moment, Taiwan’s ability to sign FTAs with other countries is seriously limited by its international relations to other countries. Before the signing of ECFA, Taiwan had only engaged in FTAs with Peru, El Salvador, Honduras, Guatemala, and Nicaragua (Armstrong, 2010). These are not major trading partners. But every other intent to sign trade agreements with different countries has been threatened by China. All of the above named countries, which have signed FTAs with Taiwan, have also diplomatic relationships with Taiwan and not with China. Every country with diplomatic ties with China is put under pressure to not engage in these kind of activities with Taiwan. Therefore, the preferential trade agreements of Taiwan have not really been significant enough to seriously boost the trade volume of Taiwan. Many analysts hoped to see a change in this regard after ECFA has been implemented, because the normalisation
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of economic relations across the Taiwan Strait might allow Taiwan to engage especially the East-Asian region much more substantially (Armstrong, 2010; Chen W. ).
But the possibility of Taiwan to actually follow up on ECFA with similar libaralization agreements with other economies without interference from China has been a difficult question (Rosen & Wang, 2010). The reasoning behind this debate is the claim that by signing further FTAs, Taiwan could not only boost its trade and subsequent its economy, but that by engaging in these kind of agreements it could also lessen the interdependence on the Chinese market. FTAs could function as strategic policies to prevent Taiwan from being marginalized in international trade. Especially the “ASEAN plus One”-FTA (the ten ASEAN states plus China), which was implemented in the same year as ECFA (2010), and the
possibility of an ASEAN plus Three FTA region (in addition including Japan and Korea), would put Taiwan under pressure economically.
The probably most important positive arguments for signing ECFA have been made about the estimated Effect of ECFA on the economy. Predictions have been made about different industry sectors, which should benefit from the agreement (textile, basic iron and steel, petroleum and coal product manufacturing industries, plastic material and automobiles) and which should suffer from the competition (electronics, transport equipment, wood
product manufacturing industries) (Hong, 2010). In general, the domestic demand-driven sectors of the industry, small and medium enterprises, and downstream companies in specific industries were identified as most vulnerable (Hong, 2010). The also potentially difficult sector of agriculture is left out of the early agreements and stays protected.
These effects of the free trade agreement with China might very well impact the public opinion of ECFA. Looking at the rational incentives for different kinds of industrial sectors or people, we assume that a more favorable opinion about ECFA is being held by those industry sectors and people, which can look optimistically at the future development.
If we categorize these opinions about ECFA, we can see different arguments for and against cross-Strait economic integration. We can broadly classify these arguments in economic (or rational) arguments and value (or symbolic) arguments. National identity, nationalism and the perception of China as a threat to Taiwan do significantly influence the
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public opinion about ECFA, facilitate protectionist agendas and a rather negative view of Mainland China. But if we look at the material incentives included here, we can see that for economists, disregarding all of the security issues or value-based arguments against ECFA propose a purely economic viewpoint and would stress the maximizing of general welfare1.
It is probably no coincidence that ECFA, embedded in a general improvement of cross-strait relations, was signed in the aftermath of the 2008 global financial crisis. While there might be pros and cons to every agreement on trade, the general view of scholars predicts that a FTA can boost business for both partners and benefit the economy (Hong, 2010;
Armstrong, 2010; Chen W.; Rosen & Wang, 2010). This may be even more true, if we look at the “combination of economic complementarities […] and geographic proximity as well as psychological distance” (Hong, 2010:4). Taiwan and China’s economy are highly
complementary. While Taiwan has advantages in high technology and skilled labor and is more industrialized, China can conversely offer high abundance of unskilled labor and low cost production (Armstrong, 2010).
Turning to actual data-based predictions, we find several studies estimating the effect of ECFA on the domestic economy of Taiwan. The Chung-hua Institution for Economic
Research (CIER) has predicted that Taiwan’s economy will grow from 1,65% to 1,72% after signing the ECFA and domestic GDP will increase from US$ 6.9 billion to US$ 7.1 billion.
Employment is foreseen to rise by 257,000 to 263,000 people and each of those factors will positively affect Taiwan’s economic performance (Cited in: Org, E. C. F. A. 2010).
Therefore, we can see that rational incentives should lead to a rather positive view on cross-Strait economic relations and probably the image of Mainland China in general. In contrast, affective arguments and security concerns would influence the public opinion in a negative way and lead to a more negative view on cross-Strait economic integration and the
1While economists disagree on many different issues, the topic of trade is being debated mainly technical. Although this issue is highly disputed among the public, we can find a mainly universal consensus about the quality of international trade: Free trade is a good thing (Mayda & Rodrik, 2005). While we can find many views favoring protectionist viewpoints in politics, the scholars agree upon the fact that international trade maximizes the overall wealth and, therefore, should be adopted by all countries.
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image of Mainland China. Thus, I expect the view on cross-Strait economic integration to be mainly influenced by rational incentives and affective identity. By looking specifically at the role of the tourists, I hope to see, whether the night market vendors in Taipei, which benefit from the increased amount of Chinese tourists in Taiwan, respond to these material
incentives and the contact with tourists and hold different views than their counterparts, which do not enjoy the same benefits. We now turn to the literature regarding this topic and to clarify the main terminology and variables used in this study.