Policy or Circumstance?: Covid Impacts and Probable Political Economy Outcomes

Written by Ian Inkster.

Image credit: Close-up of a barricade tape around the tables in a cafe’s garden by Ivan Radic/Flickr, license CC BY 2.0

When attempting a summary prediction of Taiwan’s political economy in January of 2019, I admitted that even annual forecasting can look very foolish, especially during the decline in democratic systems perceived at that time and the importance of complex external commercial relations to the country’s growth and welfare. The forecaster turns idiot with awful speed. I asked to be forgiven during the gentle days of Chinese New Year! Like everyone, I did not predict the coming Covid 19. This now makes things far worse, as the chronology of stabilisation and recovery will not be neatly synchronised across the world but most probably by regions, and the economic experiences of these regions may well be conditioned by their overall very varied Covid histories. But here goes.

It is probable that during 2022 or 2023, a consensus shall arise in Taiwan that the relatively very mild attack of the Covid 19 virus and its several variations was mostly an outcome of astute government policy. This would be a rational public verdict on a terrible period. Even after all complaints of inefficient social spacing or medical facilities, Taiwan today (06/12/2021) maintains its very distinctive record of 36 deaths per million and 698 cases per million since the inception of Covid 19, contrasted with a world average of 697 and 34,218 or the US figures of 2428 and 150,248. Taiwan continues to compare very favourably with the most relevant East Asian nations, themselves considered exemplary low-Covid cases, thus Japan at 146 and 13,722, or South Korea at 76 and 9,299.

Secondly, the expert medical evidence argues that there are good reasons to think that this outcome is more policy-dependent than in other places. In a very early paper, Jason Wang pointed out the alacrity and subsequent speed of the Taiwan public response; the boarding of flights from Wuhan from Dec. 31 2019, assessment of passengers, screening from Jan. 5, mobilisation, and extension of coordination powers of the Central Epidemic Command Centre, and creation of big data for analytics. New scanning and reporting technologies were used to classify risks, allowing very efficient communications, quarantining, tracking, and monitoring incubation. Taiwan was clearly in the lead in terms of two-way information pathways whereby officialdom could seek out potential patients whilst hotlines allowed very extensive citizen reportage of symptoms at the familial and neighbourhood levels. Wang very early made the vital point that good civil society acquiescence in official measures and regulations required two-way information flows and the reduction of any stigma associated with having the disease, and that both were amongst the prime tasks of government.

All very well and good. But, supposing in this case that we do favour the power of policy over that of circumstance, even the mild version of the Covid attack that Taiwan has experienced will have internal repercussions in both social and economic fields. The difference here compared to other capitalist systems is that it is somewhat less likely that coming problems associated with recovery will be exacerbated by the general distrust of the public in governance, a political scepticism heightened in other nations by the abject and measurable failures of democratic nations to handle the pandemic. In many nations during 2022-2023, such distrust may well over-ride ‘normal’ party politics. The rectifying functions of vaccination in wealthier nations may act to discount some of the public antagonism, but this is by no means certain and may not arise if nations fail to adopt recovery policies that are seen to help those disproportionately affected by unemployment, inflation or, indeed, health costs. Right now, the attempt by European nations to mount some equivalence of another lock-down faces the popular resistance of the electorate as Christmas approaches.

In the milder Taiwan case, we might expect attempts at democratic adjustments. First, as the coming four-question referendum suggests, good health will be seen not so much as a matter of the individual to plan and fund but become increasingly a matter of public health and government expenditure. As I argue elsewhere in Taiwan Insight, all referendum queries – apart from that of the KMT-originated proposal to link referendums with elections – arise at heart from major environmental issues. There could well be a much greater concern amongst the electorate in policies of public health, health education, obesity, and quality of foodstuffs, and so on. In Taiwan, only 6% of GDP is spent on health at present. This compares fairly unfavourably with other nations in East Asia; 11% for Japan and 8% for South Korea. The average expenditure for the globe is around 10%, the USA spending some 17% on health.

As a rider to this first discourse, the question of obesity might well become a major public issue. The Nutrition and Health Survey in Taiwan (NAHSIT) reported that the prevalence of obesity among Taiwanese adults was 22.8% in 2013–2016, higher than that in 1993–1996 (11.5%) and in 2005–2008 (17.9%). Paradoxically, Taiwan maintained this high obesity level alongside a low Covidity level, exceptional in global terms, and there is now significant medical literature on the positive correlation between obesity and Covidity in almost all nations. Measurably, within East Asia, Taiwan is unique in its high obesity – levels of obesity in Taiwan, Japan, and South Korea in the nearest comparative year of 2016 (defined as body mass index, % of the population) were 22.8%, 4.3% and 4.7% respectively those for Singapore and China registered at 6.1% and 6.2%. In short, Taiwanese obesity levels are approximately those of the richer nations of the west – for the same year, the obesity levels in Europe (average for the EU 28) and the USA were respectively 26.0 and 36.2.

Second, it may not be too far-fetched to suggest that economic relations with mainland China might be seen in a more positive light within popular discourse on the economy. This shall be returned to later.

Third, whether this much affects the daily or electoral politics of Taiwan is another matter. There has long been a strong position amongst large numbers of people that close economic relations with China are a good thing so long as politicians maintain some version of an arms-length scepticism about Chinese intentions regarding the complex Taiwan Straits issue – economic complementarity with China does not spell out political complementarity, a seeming contradiction that has been successfully maintained for many years now, and across some three political generations. Moreover, the Covid months have shown that rich western nations do not always fare well in crises and that they are likely to lake longer to recover from Covid repressions and expenditures than anywhere in East Asia, including China.

Fourth, the need to ally strongly with new regional trade and investment collectivities will surely become a popular issue. Of course, the obvious case in point is the much-contested Regional Comprehensive Economic Partnership (RCEP), signed by videoconference on Nov. 15 at an ASEAN summit. It was to include ASEAN’s ten member states — Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam — as well as the six countries with which ASEAN has free-trade agreements — Australia, China, India, Japan, South Korea, and New Zealand. Unfortunately, India dropped out for technical trade reasons, leaving a total of 15 probable members.

Readers will note that this is generally a group that has been less affected by Covid-19, and it accounts for almost half of the world’s population, a quarter of all exports and a faster rate of GDP annual growth since 2008 than the highly affected Covid-19 nations such as the US or Germany. So far, Taiwan is excluded from this group because of Chinese opposition and possibly due to its country status. The latter fact makes it easier for otherwise quite disinterested nations to agree with Chinese opinion. The irony, of course, is found in the political economy rather than political ideology — China is by far Taiwan’s biggest trading partner, taking up some 48% of total trade as compared with 26% for the USA or some 23% for Japan. Moreover, almost all imports from China are fundamental to manufacturing and services produced within Taiwan, some 36% of the total in electrical machinery and computers.

Whether the late and post covid period shall see any Taiwan-China resolution of a decisive nature is very doubtful, of course. But it seems unlikely that even the provocations coming from the USA and Japan shall destabilise the existing status quo, however much the latter contradicts every theory of political economy. But inhibiting the fraught conversation from transmogrifying into violence will mostly depend on the sturdiness of prevailing trade and investment relations. So, the beat goes on, we should hope.

Professor Ian Inkster is a global historian and political economist at the Center of Taiwan Studies, SOAS, University of London, and a Senior Fellow in the Taiwan Studies Programme and China Policy Institute at the University of Nottingham, UK.

This article was published as part of a special issue titled ‘Taiwan 2022: Reflections, Predictions and Trends”.

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