Improving farmers’ productivity and income has long been the goal of the government’s sustained efforts, while policies such as encouraging young farmers to return to their hometowns and launching crop insurance are also aimed at alleviating population aging and stabilizing farmers’ income. However, the challenges faced by the agricultural structure are long-standing issues. In the short term, it is absolutely impossible to have policies that can achieve benefits overnight.

To increase the income of farmers, it is possible to begin with costs and incomes. In terms of costs, for example, we can improve farming techniques to increase farmers’ productivity. As for incomes, we can help farmers expand domestic and foreign markets. Generally speaking, if the climate and soil conditions remain unchanged, good farming techniques can result in crops of good quality, which can be sold for higher prices. However, it takes a certain amount of time to conduct research and development before high-quality crops can be developed, not to mention that not all farmers can benefit from them. Therefore, exploring markets often becomes the direction of the central government’s and local governments’ efforts.

As far as market exploration is concerned, China has a large population and is in close proximity to Taiwan. Many people thus argue that, given China’s vast market and the fact that the whole world gravitates towards China, Taiwan should find a way to enter the Chinese market. On the surface, such an argument seems to be quite convincing. During former President Ma Ying-jeou’s eight-year presidency, the main objectives were to explore the Chinese market by, for example, bringing Chinese tourists to Taiwan and engaging in the contractual cultivation of agricultural and fishery products with China. Although noticeable results were achieved by these policies within short periods of time, there is no such thing as free lunch in the world. The government was too naive to realize that the Chinese market is owned by the Chinese Communist Party (CCP).

In fact, what Jack Ma (former chairman of Alibaba Group), Ma Huateng (chairman of Tencent), Liu Chuanzhi (founder of Lenovo) and Robin Li (founder of Baidu) have experienced is very representative of China’s current policy of “advances by the state sector and retreats by the private sector”. Though all of the above-mentioned Chinese corporations have a huge market share domestically, they have all succumbed to China’s political system in which the state can take all. This has also lent credence to what Jack Ma said during the “China Finance 40 Forum” (CF40) held on 24th October last year: “China’s finance does not have any systemic risks, because there is not a system at all.” In other words, while many people can see the huge demand from China’s market, they often ignore the biggest market risk, i.e., the CCP.

Judging from the previous ban on Chinese tourists’ visits to Taiwan and the recent prohibition of Taiwanese pineapple from being exported into China, there are industries that are not only excessively reliant on the Chinese market, but also face a plethora of alternatives. The latter point is even more important. Take the tourism industry. There are many tourist destinations that Chinese tourists can choose from, and Taiwan is only one of those countries. Banning tourists from visiting Taiwan has not harmed China in any way.

As for the agricultural industry, there are many fruits that can be readily consumed as substitutes for pineapples. China also produces huge amounts of pineapples. Though they might differ in taste from Taiwanese ones, that does not affect China. From the perspective of Taiwan, because government policies were heavily reliant on China, some of Taiwan’s domestic industries are held hostage by China, since the overseas markets are controlled by the Chinese government.

Unlike the tourism and agricultural industries, Taiwan’s semiconductor industry, which has attracted attention recently, has a low degree of substitutability. There are few chips that offer the same quality as Taiwan’s. It is therefore absolutely impossible for China to unilaterally prohibit the shipment of Taiwan’s chips to China for any reason. Meanwhile, under Taiwan’s democratic systems, the government cannot forcefully require manufacturers not to sell chips to China. However, if China steals the intellectual property of our country’s semiconductors or maliciously poach talents in order to steal commercial secrets, our government will need to think about its science and technology policies towards China.

In addition to the substitutability of products, the bargaining power or price-setting ability of producers might also be factors when China considers whether to impose sanctions on a Taiwanese product or not. Last year, whether the “Early Harvest list” of the “Cross-Straits Economic Cooperation Framework Agreement” (ECFA) would be unilaterally terminated by China caused heated discussions. However, the producers of products that can be included on the list have a certain degree of price-setting power and the ability to lobby the two governments.

At the same time, many of the manufacturers on the “Early Harvest list” also have factories in China and have helped created China’s impressive working populations. As these manufacturers have higher bargaining power and contribute to the Chinese economy, the cost of China’s unilateral termination of the “Early Harvest list” will not be low.

To Taiwan’s ordinary farmers, in contrast, China’s ban on Taiwanese pineapples can, on the one hand, impact them (whose bargaining power is low) and go on to cause a certain degree of disruption to Taiwanese society. On the other hand, the ban will not impact China itself. As with the case in which China has chosen to target wine and lobsters in order to sanction Australia, it is farmers that are likely to become the victims of China’s economic sanctions.

Finally, while Chinese tourists, students, milkfish and pineapples were cited as political achievements in the past, they have now become tools for sanctioning Taiwan. Furthermore, as China’s restrictions on Taiwanese products continue to toughen, our government can think about alternatives as soon as possible to lessen the impacts of China’s ban on Taiwan. After all, as crops come in a huge variety and have high substitutability (while farmers have a low tolerance to economic risks), they will inevitably be China’s first choice for disrupting Taiwan’s internal economy.

(Tsai Ming-fang, Professor at Department of Industrial Economics, Tamkang University, Taiwan.)

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