To Be or Not to Be Part of Greater China: Social Development in the Post-Ma Taiwan

SOCIAL POLICY &ADMINISTRATION ISSN 0144-5596 DOI: 10.1111/spol.12338 VOL. 51, NO. 6, November 2017, PP. 898 915 To Be or Not to Be Part of Greater China: Social Development in the Post-Ma Taiwan Yeun-wen Ku a* and Yu-fang Chang b a Department of Social Work, National Taiwan University, Taipei City, Taiwan b Department of International Business Studies, National Chi Nan University, Nantou County, Taiwan Abstract Since the beginning of the 21st century, Taiwan has transitioned towards democratization. In 2000, the young opposition party, the Democratic Progressive Party (DPP), defeated and replaced the authoritarian ruling party, the Kuomintang (KMT), for the first time. However, this critical political change failed to meet the social reform expectations of the people, which resulted in the triumph of the KMT in the presidential election in 2008. The same story was repeated in 2016 when the KMT and President Ma Ying-jeou lost their legitimacy to the public, and they were replaced by the current President Tsai Ing-wen, the DPP leader. This article interprets the extremely difficult policy choice of Taiwan towards China and how its relationship with China shapes social development issues behind these political changes. Democratization has long been regarded as the main driving force for East Asian welfare development, especially with the cases of Taiwan and Korea. However, in conclusion, this article argues the importance of globalization in shaping domestic politics and managing welfare expectations. Keywords Globalization; Democratization; Social development; Taiwan; East Asia Introduction Taiwan s political history in the 21st century is filled with surprises and lessons. Taiwan and its sole long-term ruling party, the Kuomintang (KMT), have always been considered as the model of economic development and authoritarian regime in the 20th century. However, democratization began in the 1990s when the first legal opposition party, the Democratic Progressive Party (DPP), was founded in 1986, which became a major competitor of the KMT. Although the DPP won over some local elections, it never received the opportunity to be the national ruling party until the presidential election in Author Email: ywku@ntu.edu.tw 2017 John Wiley & Sons Ltd

2000. The DPP and its President Chen Shiu-bian benefited from the KMT split in its rise to power even with only 39 per cent of votes. The year 2000 has been regarded as the watershed of Taiwan s democratization for two reasons: it is the first time that the ruling party changed, and it confirmed the two-party system in Taiwan s politics. The DPP was the ruling party during 2000 08, which increased the tension between China and Taiwan primarily caused by the DPP s ideology towards Taiwan s independence. Roughly around the same period, China carried out a massive economic restructuring and soon became a world giant in economic, political and even military aspects. To catch up with the rising economic opportunities of China, many Taiwanese businesses poured huge investments into China without governmental permission, which led to a higher unemployment rate and large-scale lay-offs in Taiwan. For instance, in 2002, two years after the DPP assumed power, lay-offs as a percentage of unemployment reached their peak at 48 per cent. This placed a great political pressure on the DPP s policy (Ku 2004), and it created an opportunity for the KMT to gain back its power. In 2008, the KMT, led by President Ma Ying-jeou, won the presidential election with the majority vote of 59 per cent. Unlike the DPP s policy, President Ma insisted that the ever closer relationship with Mainland China is the most important pillar to restore Taiwan s fast economic growth. This, however, did not bring improvement in terms of employment and working conditions, which the people highly expected, especially the younger generation. New social movements started in pursuit of an in-depth social reform for all people, not just for businesses, leading to a distrust of Ma Ying-jeou s government and policy. In the 2016 presidential election, the DPP leader, Tsai Ing-wen, defeated the KMT with a 56 per cent majority vote, and became the first female president in Taiwan, implying a possible radical change between China and Taiwan again. This article interprets the extremely difficult policy choice of Taiwan towards China and how its relationship with China shapes the social development behind these political changes. Democratization has long been regarded as the main driving force for East Asian welfare development, especially in the cases of Taiwan and Korea. However, this article goes beyond democratization and further examines the impact of globalization in shaping domestic politics, with special reference to the case of Taiwan. Democratization, Globalization and Regionalization: A Theoretical Perspective Since the 1990s, as East Asian welfare study has become an important field in comparative social policy, some scholars have devoted efforts to interpret the reasons for this development from various perspectives. Apart from the cultural context, especially Confucianism, which is normally applied by western scholars, welfare expansion with political democratization is widely recognized as a distinctive development in East Asia, and this is largely addressed by eastern scholars (Ku and Finer 2007). This focus is particularly significant considering the expansion of welfare schemes in Taiwan (e.g. Ku 1995) and Korea (e.g. Kwon 1999) during the 1990s. This expansion led to Tang s 2017 John Wiley & Sons Ltd 899

conclusion that the experiences of Korea and Taiwan have shown that democratization could be a crucial factor which influences social welfare development (Tang 2000: 60). A number of books published in the first decade of the 21st century held a similar position. For instance, Aspalter (2002) explored the causal relationship of democratic competition of political parties and the extension of welfare state programmes in Taiwan. A stronger argument can be found in Wong s comparative study of health policy-making in Taiwan and Korea, saying that to provide a political explanation for social welfare development in Taiwan and South Korea, therefore, I focus on the impact of democratic change on social policymaking (Wong 2004: 14). Moreover, the emergence of national health programmes was taken as an example to examine his hypothesis that the political imperatives of democratic transition can elude the economic logic of globalization and its over determined consequences for the welfare state (Wong 2004: 4). Despite his well-structured and explanatory analyses, I would like to note one important difference between the present study and Wong s. Based on the perspective of political economy that rejects both of economics and politics as single factor interpreting welfare development, I recognize the importance of democratization that alters the vertical and top down relationship between the state and the people by endowing the people with more power and rights against the dominance of the state; however, this does not mean that democratic states may go beyond the constraints of worldwide logic on capitalist development (Ku 1997, 2010). Democratization can make the dilemma between public welfare and economic imperative even sharper, rather than improve it in a globalizing world. As Grugel notes, newly democratizing states are caught between pressure to take on more functions, to be flexible and to deliver goods for their citizens on the one hand, and, on the other, to become leaner, in order to cope with the consequences of globalization (Grugel 2002: 84). Thus, the perspective of political economy refers to the interplay between economic and political forces in shaping the nature of globalization (George and Wilding 2002: 18). Three issues are addressed: (1) how globalization, especially via regional negotiating frameworks, aggregates the pressures of the policy agenda in Taiwan; (2) how the government recognizes its policy responses and debates towards globalization; and (3) the kinds of policy impact that can be witnessed and the difficulties of managing people s welfare expectations and globalization. Regardless of its diversified origins and possible impacts, globalization has been widely accepted as an important phenomenon in this era. However, the phenomenon is still far from being able to answer the questions as to what the distinctive meaning of globalization is and when it really begins. A country s incorporation into the global economy can be an indicator, but this process can be traced back hundreds of years when capitalism was consolidated into a world system through labour division and international exchange (e.g. Wallerstein 1979; Ku 1997: 4 13). The increasing role of supranational and global actors, such as international organizations and transnational corporations, has become more significant (e.g. Yeates 1999), but these have been in existence for a long time. We suggest that globalization is better understood as a capitalist development process and a structural force driven 900 2017 John Wiley & Sons Ltd

by inexorable economic requirement and political decision. As a capitalist development process, globalization now is not completely distinctive from the international economy in the past centuries, while the driving logic of capitalism for constantly increased profitability is still behind the development (Hirst and Thompson 1999: 2 3). However, the compression of time and space, brought about by advances in knowledge and technology, has remarkably increased interconnections worldwide (George and Wilding 2002: 19 20). As Yeats (2008) notes, globalization refers to an increasing enmeshment of the lives of people and places around the world. In the social sciences, globalization also implies a methodological shift from nationalism to transnationalism, emphasizing the institutions, links, activities and processes cutting across, rather than just occurring within, countries (Yeats 2008). Many social policy issues have been addressed by the methodological shift and presented as the studies of global social policy. First and most popularly, global social policy focuses on the policy advocacy of international organizations, both governmental and non-governmental, and how national social policies or welfare reforms have been shaped, moderated and transformed by such policy advocacy. For instance, Deacon (2008) outlined key international organizations, such as the United Nations, the World Bank, the Organisation for Economic Co-operation and Development and the International Monetary Fund, involved in global social governance, and how these international organizations shaped national social policy by reviewing the development of global social rights, redistribution and regulation. Fergusson and Yeats (2014) compared the policy discourses of seven international organizations concerning youth unemployment, and further identified the highly active role of these international organizations in framing unemployment policy for the youth. Based on an in-depth analysis of the major documents of international organizations, Gliszczynski and Leisering (2016) demonstrated that their organizational domains and global discourses on development constrained the concept of social cash transfers in the form of fragmented and incomplete universalism. Second, following the impacts of regional and world financial crises, many studies explore the scope and degree of national welfare reforms in response to these crises. For instance, Ku (2003) examined Taiwan s welfare reforms during the 1998 Asian financial turbulence, which aggregated massive pressure for the KMT government to spend national resources to save businesses; however, increasing ill feelings of unemployment and income disparity were linked to the KMT s failure in the 2000 presidential election, marking the beginning of consolidated efforts towards Taiwan s democratization. Furthermore, Mok (2011) compared national policy responses in East Asia in coping with the 2008 global financial crisis. The crisis created various relief programmes, including job creation and training schemes, large infrastructure projects and tax reductions, as well as education and healthcare provisions, although these changes did not result in a fundamental social policy paradigm shift in the region. Based on the experiences of selected advanced welfare states in the West, Vis, Kersbergen and Hylands (2011) found that the 2008 global financial crisis induced some temporary expansion of social programmes for the sake of the Keynesian demand management policy; 2017 John Wiley & Sons Ltd 901

however, the financial constraints soon forced political actors to make tough choices and introduce austerity policies. All the above studies recognized the impact of regional and world financial crises in initiating new social programmes, but seemed not to result in a significant shift of their welfare regimes. A more fundamental question emerges. If the policy advocacy of international organizations and the impact of regional and world financial crises all contribute to initiate new social programmes, why are these efforts limited to global social policy and welfare regime? A possible answer can be found in the nature of globalization. Thus, third, globalization, as a continuing cross-border flow of people, goods, services, ideas, capitals and opportunities, has been a structural force that changes the national entity of social policy and its policy-making. National states in an increasing competitive global world must accept performance competitiveness as a constraint on the pursuit of other goals, as Gough argues (1996: 215). The possibility of policy advocacy and regime shift is closely linked to the state capacity to deliver more welfare; however, this capacity has been eroded by the constraint on tax increases, which vary in relation to state resources and the degree of state participation in global competition (Ku 2004). To contest the worldwide constraints of globalization, some scholars presented arguments for the building of several regional-based social policies as part of a general global governance strategy (Yeats and Deacon 2009). This strategy offers a better opportunity for smaller and developing countries to access policy development and discussions in a regional formation. As Yeats and Deacon insisted: In principle therefore, through intergovernmental agreements, regionalism would make possible the development of regional social policy mechanisms of cross-border redistribution, regulation and rights as well as facilitating a number of other cross border cooperation mechanisms. (Yeats and Deacon 2009: 473) However, regionalism is not necessarily a way out of global constraints because regional co-operation or intergovernmental agreement involves give-and-take negotiations, and they must also be consistent with the broader rule of world trade. Given the underdevelopment of global social governance, wealth and opportunities are not likely to be distributed equally, and usually favour those with capital more, rather than the workers. The recent development of Brexit from the EU, the most successful regional mechanism so far, fully shows the complicated internal relationship in the EU. Similar situations are also evident in the Asian context. Following the establishment of worldwide international platforms such as the World Trade Association and the Free Trade Agreement, East and South East Asian countries have moved more rapidly towards regional multigovernmental networks, including the Asia-Pacific Economic Cooperation and its Trans-Pacific Strategic Economic Partnership Agreement, the Association of Southeast Asian Nations that has gradually integrated China, Korea and Japan to become a huge regional mechanism covering a 902 2017 John Wiley & Sons Ltd

population of over 2 billion, and the newly China-dominated regional organizations such as the Asian Infrastructure Investment Bank and the One Belt and One Road (referring to the Silk Road Economic Belt and the 21st Century Maritime Silk Road ). Due to the absence of democratic politics, the regional negotiating frameworks in Asia are fields of political powers. Eventually, East and South East Asia have formed two big camps of regional mechanism separately dominated by two superpowers, America and China. Owing to the radical differences in economic scale, the regional mechanism is easily centred on large and powerful economies, such as Germany and France in the EU, and China and Japan in Asia. For smaller economies in the region, to be or not to be in the regional mechanism is a hard choice, which is the case for Taiwan. In the following sections, this article interprets the very different policy directions towards China insisted by the two main parties, implying varied policy responses towards globalization and regionalization dominated by China, and how Taiwan s relationship with China shapes social development and people s welfare expectations. President Ma Ying-jeou s Peace Bonus with China China, as a rising superpower in Asia and in the world, has been an important permission to participate in regional and global markets. Moreover, China claims sovereignty over Taiwan, which places the Taiwanese government in an even more difficult situation in relation to policy-making towards regional and global integration. Since its democratization in 2000, Taiwan has experienced changing ruling parties three times, the DPP during 2000 08, the KMT during 2008 16, and the DPP again from 2016, which also changed its recognition and policy towards China. The economic factor plays an important role in pushing the development of cross-strait relation between Taiwan and China. Prior to the 1990s, Taiwan experienced a radical economic restructuring because of rising labour costs and social movements against environment pollution. Thus, China s underdevelopment became an important and attractive area for Taiwanese factories and firms looking for sufficiently cheap workers and relaxed regulations against pollution. Moreover, China suffered from America s embargo policy since the Tiananmen Square Protest in 1989, and the investments from Taiwan became an important source of modern manufacturing and capital necessary for Deng Xiaoping s opening-up policy and economic reforms. Afterwards, Taiwan s outbound investments to China without governmental permission have raised worries about Taiwan s dependence on China. In 2001, the DPP President Chen Shiu-bian concluded his policy as proactive liberalization cum effective management : the former recognized a more liberalized policy as the cornerstone of Taiwan s integration into the global economy, whereas the latter intended to reverse Taiwan s dependence on China through state intervention (Wu 2016). This is actually a failed policy if we examine it in relation to the economic performance at that time. Taiwan accumulated a lot of trade surplus from China, which increased remarkably from US$7 billion in 1991 to US$22 billion in 2002. However, 2017 John Wiley & Sons Ltd 903

during the same period, governmental statistics showed that Taiwanese private capitals have invested over US$24 billion in China, occupying about 70 per cent of the total foreign direct investment (FDI) outflow in Taiwan, whereas the FDI inflow in Taiwan was only US$17 billion. A tricky picture emerged. Taiwan became reliant on China s market for profits, but China was also the major competitor for Taiwanese private investments, as well as other foreign capital (Ku 2004). To restore Taiwan s competitiveness in the global economy, the DPP government promised more reforms with respect to finance and taxation, and more investments in human capital and infrastructures. However, realizing these promises is not that easy. To cope with the growing global competition, a more open and deregulated economy encourages more private and foreign investments in Taiwan; however, this also risks, on the one hand, an even speedier migration of Taiwanese businesses to China, and, on the other hand, a great loss of government revenue, particularly if tax credit is adopted as an incentive. The loss of government revenue eventually reduces the public resources available for more investments. Furthermore, without these investments, restructuring Taiwan s economy towards high value-added industries, which enhances Taiwan s competitiveness, becomes difficult. This scenario constructs a major dilemma, which fundamentally changes the traditional explanation of East Asian development (e.g. Amsden 1989; White and Wade 1988; Wade 1990), especially regarding the role of the state in directing economic development. The shortage of public funds eventually confined the DPP s policy choices to the capacity for policy implementation, especially as more necessary investments, such as human capital and infrastructure, were needed to improve national competitiveness, on the one hand, and to the increased benefits required to enhance the welfare demands of the people suffering from the integration with China and the DPP s legitimacy, on the other hand. The clash between economy and welfare is growing day by day. The slogans of We Want Jobs, Anti-poverty and Affordable Education became the main theme in every social movement throughout the DPP ruling from 2000 to 2008 (Chang and Ku 2014). Given that China has successfully upgraded itself to be a global power, not just for its world factory of production, but also for its potential as a world market of consumption in the 21st century, Taiwan cannot possibly escape China s giant influences. The policy of turning China s threat into the Peace Bonus became a powerful weapon, giving the KMT and President Ma the opportunity for a political comeback in 2008 and, since then, a faster integration with China appeared. First, the visitors from China were estimated at about 200,000 annually before 2008, and this number jumped to nearly 900,000 in just one year. In 2015, over four million Chinese visitors came to Taiwan, 40 per cent of the total foreign visitors, whereas Taiwanese visitors to China were about three and a half million, increasing from 188,744 in 2008, which is equivalent to one in every six Taiwanese persons (data from Tourism Bureau). Second, Taiwan s exports to China increased from below 20 per cent of the total exports before 2000 to nearly 30 per cent in 2015, implying the fact that China has become the most important exporting country, beyond America and Japan. Third, Taiwan s investments to China 904 2017 John Wiley & Sons Ltd

further increased from 27.7 per cent of its total outbound investment in 1999 to 60.6 per cent in 2007, reaching a historic high of 85 per cent in 2011 (Lee and Chu 2016). All these figures revealed that President Ma s policy advanced cross-strait integration. Eventually, the Cross-Straits Economic Cooperation Framework Agreement (ECFA) was signed by both governments in 2010, which has been regarded as the most important achievement of President Ma s China policy, as well as the economic policy. Lee and Chu commented that: After 2008, economic integration was steered by intergovernmental dialogue and cooperation. Ma s new China policy approach turned market-driven integration into government-promoted integration. The ECFA led to routine institutionalized contacts. China responded to President Ma s more friendly approach with the slogan peaceful development and envisaged even deeper integration. (Lee and Chu 2016: 420) Based on the successful experience of the ECFA, President Ma further pushed the ratification of the Cross-Strait Service Trade Agreement (CSSTA) which, however, provoked a critical response within Taiwan. On 18 March 2014, a massive student movement against the CSSTA, the Sunflower Movement, was suddenly staged and occupied the Legislative Yuan, Taiwan s national parliament, for 24 days. Outside the Legislative Yuan, a hundred thousand students and social activists gathered and protested against President Ma s further integration with China. This movement led to the collapse of the KMT in the local election of November 2014 and, finally, in the Presidential election of January 2016. All official negotiations with China were almost stopped by the Sunflower Movement until now. Why did the Peace Bonus become a movement towards the distrust of President Ma and his party? The reasons can be found from the social development and welfare expectations induced by the integration with China. Social Development in Change: Did the Peace Bonus Benefit All? Taiwan, as well as Korea, Singapore and Hong Kong, has long been regarded as a typical case of East Asian economic miracles in the last century. The theory that explains their success stories of economic restructuring from poor to well-off and from less-developed to developed, largely focuses on the developmental state. As Castells defined (1992: 56), a state is developmental when it establishes as its principle of legitimacy its ability to promote and sustain development, understanding by development the combination of steady high rates of economic growth and structural change in the productive system, both domestically and in its relationship to the international economy. When welfare was also recognized as an important aspect of East Asian development in the 1990s, a similar theoretical theme was applied to interpret the distinctive characteristics of welfare systems in East Asia, by naming them developmental or productivist welfare regimes, consisting of 2017 John Wiley & Sons Ltd 905

two central components of a growth-oriented state and subordinating all state policies to economic/industrial objectives. By constructing a new set of 15 indicators for the factor and cluster analyses of 20 countries with data from the 1980s and 1990s, Lee and Ku (2007) concluded that a new group formed by Taiwan and Korea strongly demonstrated their developmentalism in social policy, unlike that of Esping-Andersen s (1990) existing three regimes. The KMT, as the sole ruling party of Taiwan in the last century, was actually the real founding father of Taiwan s developmental welfare regime. Economic growth is therefore traditionally the core element of the KMT s policies, and President Ma is no exception. Welfare and related policies are usually regarded by KMT politicians and policymakers as by-products of economic growth. In Ma s presidential campaign in 2000, on the one hand, he criticized the DPP and President Chen s failure to restore the same economic growth as when the KMT was in power, and, on the other hand, he promised the people that he would realize a 6 per cent annual growth rate, a 3 per cent and below unemployment and US$30,000 GDP per capita before 2016. The political slogans revealed his simple thought that welfare will improve as long as the economy grows. The latter turned into President Ma s nightmare. Figure 1 shows the unemployment change since 2000. Owing to the 2008 Global Financial Crisis, total unemployment reached a historic high of 5.9 per cent, which was almost twice than Ma s promise, and higher than the period when the DPP were in power. As the Global Financial Crisis calmed down and with the improving relationship with China, Figure 1 Unemployment rate, 2000 15 Source: Compiled by the authors, drawing on data released by the website of National Statistics, http://www.stat.gov.tw/mp.asp?mp=4 (accessed 4 July 2017). 906 2017 John Wiley & Sons Ltd

total unemployment gradually went down, but was still not better than before. The most critical aspect that can be observed from figure 1 is youth unemployment. In 2000, the youth unemployment rate was only 7.4 per cent, gradually increasing to about 10 per cent before 2007, followed by a big jump to 14.5 per cent in 2009. The KMT and President Ma certainly blamed this on the unexpected impact of global events. However, the youth unemployment rate remained at the level of 12 per cent, which even increased afterwards. This finding can be interpreted as the reason behind the Sunflower Movement gathering where numerous young people rallied against the KMT and President Ma. Moreover, the ill feeling was significantly increasing in the workforce significantly because workers regular earnings had not increased over the last 15 years. We may examine this in figure 2. The average monthly regular income for all Taiwanese workers fluctuated around the level of NTD 35,000, equivalent to US$1,100, during 2000 15. For the youth, their average monthly regular income for the first job remained at NTD 25,000, despite the CPI increasing over 20 per cent during the same period. Thus, nearly all workers felt they had insufficient income in their daily spending. Figure 2 also shows the Gini coefficient in Taiwan as more equal than in Hong Kong and Singapore, for instance, but the ill feeling of poverty and inequality seems to be increasing, especially compared to their situations in the 1980s and 1990s. Table 1 examines this issue further with detailed long-term data. First, we may note the changes of times between the top and bottom 20 per cent of households before and after the public transfers. The income disparity before public transfers was about four times in the 1980s, steadily increasing to about six times by the end of 1990s, whereas Figure 2 Changes in monthly regular earnings and Gini coefficient, 2000 15 Source: Compiled by the authors, drawing on data released by the website of National Statistics, http://www.stat.gov.tw/mp.asp?mp=4 (accessed 4 July 2017). 2017 John Wiley & Sons Ltd 907

Table 1 Income disparity and efforts of public transfers, 1980 2014 Average disposable income per household of each fifth Ratio difference Year Lowest 20% Highest 20% Ratio of income share of highest 20% to that of lowest 20% Without current transfers (1) With current transfers from government (welfare) With current transfers to government (taxation) Total (2) With current transfers (1) +(2) 1980 102,772 428,911 4.17 4.30-0.04-0.09-0.13 4.17 1985 134,105 603,196 4.50 4.64-0.04-0.10-0.14 4.50 1990 193,685 1,003,925 5.18 5.52-0.23-0.11-0.34 5.18 1995 296,166 1,581,581 5.34 5.93-0.50-0.09-0.59 5.34 2000 315,172 1,748,633 5.55 6.57-0.88-0.14-1.02 5.55 2001 279,404 1,785,550 6.39 7.67-1.13-0.15-1.28 6.39 2002 292,113 1,799,733 6.16 7.47-1.18-0.13-1.31 6.16 2003 296,297 1,799,992 6.07 7.32-1.12-0.12-1.24 6.07 2004 297,305 1,791,796 6.03 7.41-1.24-0.15-1.39 6.03 2005 297,694 1,796,884 6.04 7.45-1.26-0.15-1.41 6.04 2006 304,274 1,827,387 6.01 7.45-1.29-0.15-1.45 6.01 2007 312,145 1,866,791 5.98 7.52-1.40-0.14-1.54 5.98 2008 303,517 1,834,994 6.05 7.73-1.53-0.16-1.69 6.05 2009 282,260 1,790,418 6.34 8.22-1.75-0.13-1.88 6.34 2010 288,553 1,787,312 6.19 7.72-1.42-0.11-1.53 6.19 2011 296,352 1,827,354 6.17 7.75-1.43-0.16-1.59 6.17 2012 301,362 1,846,116 6.13 7.70-1.42-0.16-1.58 6.13 2013 309,459 1,882,680 6.08 7.53-1.31-0.14-1.45 6.08 2014 317,144 1,919,937 6.05 7.40-1.20-0.14-1.34 6.05 Source: Compiled by the authors, reorganizing data released by the website of National Statistics, http://www.stat.gov.tw/mp.asp?mp=4 (accessed 4 July 2017). Notes: Average disposable income unit = NT$. Ratio is between top and bottom household income. 908 2017 John Wiley & Sons Ltd

a big increase happened at the beginning of the 2000s, from 6.57 times to 7.67 times in just one year, which has never returned to below seven times since then. The government enhanced its efforts to address the worsening income disparity, to which we can observe the changes of times after public transfers. During the 1990s, the real income disparity was well controlled below six times because of governmental public transfers. However, in the 2000s, the real income disparity was still increasing, even though the government had made a great deal for a more equal income distribution. For instance, public transfers successfully reduced the income gap from 8.22 to 6.34 times in 2009, which was the peak of the Global Financial Crisis, implying the effectiveness of governmental efforts. Second, welfare and taxes are two fundamental policy instruments to remedy income distribution and poverty reduction, especially for the disadvantaged population groups. Taxation is important not just for its effects on income distribution, but also on financing all governmental efforts, including welfare. Table 1 also shows the impacts of public transfers by welfare and taxes from 1991 to 2010, respectively. We find that, in the case of Taiwan, welfare indeed affects income distribution. For instance, in 2009, the government successfully reduced income disparity by 1.88 times, in which welfare contributed 1.75 times, equivalent to 93 per cent of efforts, compared with the 0.13 times by taxes. Taxes contributed a minor role in income distribution from the 1990s and 2000s. Without a healthy financial support from taxation, governmental welfare efforts are limited and short term. This partially explained the reason why the government failed to further reduce income disparity. Third, we may look into the difference of average disposable income between the top and bottom 20 per cent income households. For the top 20 per cent households, their disposable income retained a steady increase from NTD 1,748,633 in 2000 to NTD 1,919,937 in 2014. There was a slight decrease in 2009, but it soon reverted to the normal level. However, for the bottom 20 per cent of households, their disposable income was floating around NTD 300,000, without significant signs of increase. All the above indicators demonstrated that the KMT and President Ma were unable to realize their promises of a better life, and that the youth and disadvantaged population groups suffered more from his policy. Policy Debate: Globalization through or bypassing China? The worsening social development issues forced President Ma Ying-jeou to claim the equity of redistribution as key goal of social policy in Taiwan, especially with the coming of the presidential campaign for his second term in 2012, during which he came under sharp criticism for increasing poverty and income inequality in Taiwan. Eventually, he won the election with a majority vote of 51.6 per cent, decreasing from the 58.45 per cent majority vote in 2008. Obviously, equal redistribution became a key concern in Taiwan, and the 2012 Social Welfare Policy Guideline processed during the election campaign was finally announced just before polling day. The 2012 Guideline states that the country s social welfare policy is based on the Constitution s essential protection of basic human rights of citizens. 2017 John Wiley & Sons Ltd 909

The policy passively intends to eliminate social injustice and to help the disadvantaged by safeguarding the basic living conditions of all citizens and the happiness and harmony of families. Actively, it aims to highlight the values of mutual assistance and solidarity in the society and to reduce the gap between rich and poor, giving every generation a fair opportunity for development and allowing the fruits of economic growth to be shared by all citizens. Therefore, the government upholds three guiding principles of equity, inclusion and justice for social welfare policy. As Chang and Ku (2014: 93) commented, the Guideline promises a new era of Taiwan s democratization, implying a great opportunity for President Ma and his party to bring the people new hope. With a good social welfare policy, the challenge is the ability to make it happen. Unfortunately, timing no longer favoured the KMT and Ma, and the uneven distribution of the Peace Bonus among the Taiwanese population is the key issue leading to the collapse in the presidential election of 2016. First, owing to the KMT s efforts to ratify the ECFA and the CSSTA that benefited larger-sized businesses in expanding their market in China, some surveys revealed the positive party image perceived by the Taiwanese people. For instance, figure 3 compared the party images between the KMT and the DPP with respect to their relations with businesses over ten years. The KMT Figure 3 KMT and DPP s relations with businesses Source: Compiled by the authors, drawing on data released by the website of Taiwan Indicators Survey Research, http://www.tisr.com.tw/ (accessed 4 July 2017). 910 2017 John Wiley & Sons Ltd

was stably perceived, at over 50 per cent, as the party with good relations with businesses, compared to the DPP at about 10 per cent. This image was further enhanced by President Ma s economic growth first policy and neglect of social policy. Figure 4 shows the response of the Taiwanese people to the question of which party cares more about Taiwan s interests. The KMT s score decreased, especially at President Ma s second term from 2012, compared with the DPP s significantly increasing score during the same period. Second, even though the Taiwanese people did not like Ma s China policy, how they perceived their relationship with China, as an opportunity or risk, remained a dilemma. Figure 5 revealed the results of two surveys immediately before and after the Sunflower Movement. We found that over 50 per cent of respondents regarded China as a risk, implying that Ma s Peace Bonus was not equally shared by most Taiwanese. However, even in the heated social atmosphere from the opposition to further integration with China, the respondents who regarded China as an opportunity increased by 10 per cent, compared to those who considered China as risks, which decreased by the same percentage. We may have an interpretation about the overall picture in Taiwan. Since Taiwan s economic integration with China in the 1990s, Taiwan s economy Figure 4 Which parties care more about Taiwan s interests? Source: Compiled by the authors, drawing on data released by the website of Taiwan Indicators Survey Research, http://www.tisr.com.tw/ (accessed 4 July 2017). 2017 John Wiley & Sons Ltd 911

Figure 5 China as opportunities or risks? Source: Compiled by the authors, drawing on data released by the website of Taiwan Indicators Survey Research, http://www.tisr.com.tw/ (accessed 4 July 2017). has been greatly dependent on China with respect to global production chain and potential consumption market. In spite of the distrust to China and the argument for Taiwan s independent status, the DPP struggled to determine an alternative means of bypassing China, which failed during the presidency of Chen Shu-bian from 2000 to 2008. President Ma s policy insisted China as a gateway towards regional economic co-operative platforms, which secured Taiwan s development in the era of globalization, but overlooked the negative impacts on the social development within Taiwan s society. The people were also divided. For those who began their careers in China, the massive economic transformation offered them incredible opportunities to escape from Taiwan s stagnation for over15 years. However, those who would not or were not able to catch up with the opportunities in China became worried about the risk of losing their existing lifestyles and conditions. In short, China was the biggest external factor to Taiwan s future development. Conclusion Returning to our analytic perspective of political economy, the case of Taiwan fully demonstrates its difficulties of managing people s welfare expectations in the era of globalization. As an export-led economy, Taiwan recognizes the 912 2017 John Wiley & Sons Ltd

importance of integration within the world market for its economic competitiveness, while China presents its superior advantages over regional negotiating frameworks. The policies of both the KMT and the DPP, globalization through or bypassing China, failed to secure a social development of more jobs and better payments for the Taiwanese people. Even though the great effort of President Ma turned China s threat into the Peace Bonus, that however was not equally shared by the Taiwanese population and therefore resulted in the distrust. The interplay between economic and political forces remains critical to Taiwan s policy agenda, especially if the government is able to simultaneously meet the requirements of globalization and welfare expectations. The new DPP government has brought about new tensions between Taiwan and China because of the reluctance of President Tsai Ing-wen to recognize the existing agreement by Ma. Further interactions are frozen, which induced worries and uncertainties on Taiwan s status in global competition. Regardless of Taiwan s opinion about China, an even closer interaction within the Greater China region, including Hong Kong, Taiwan and China, emerged, and this significantly impacts Taiwan s economic, social and welfare aspects. These changed the independent developments within each society, especially as China also launched its social protection reforms leading to issues such as cross-border labour mobility and related working conditions, and welfare entitlement. To be or not to be an integrated part of Greater China will surely be an extremely difficult choice to the DPP government and the Taiwanese. The experience of Taiwan under the giant shadow of China enhances the theoretical discussions on determining the factors behind the welfare development in this region, which is linked to interweaving structural forces of capitalism (and globalization), democratization (and social movement) and welfare systems. This perspective is going to be helpful in further exploring and examining the real impacts of globalization on welfare development in the Greater China region in particular, and in theoretically explaining possible future changes of the East Asian welfare regimes in general. Acknowledgements I would like to express my deep gratitude to Professor Ka Ho MOK and Dr Stefan Kühner for their advice and assistance in keeping my progress on schedule. My grateful thanks are particularly extended to the National Science Council, Taiwan for sponsoring the research project NSC 102-2410-H-002-119-MY3. Note * Yeun-wen Ku, corresponding author. References Amsden, A. (1989), Asia s Next Giant: South Korea and Late Industrialization, New York, NY: Oxford University Press. 2017 John Wiley & Sons Ltd 913

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