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President Ma interviewed by Bloomberg News

President Ma Ying-jeou was interviewed by Bloomberg News on November 19. Interview topics included cross-strait ties, Taiwan's economic development, the Cross-Strait Trade in Services Agreement, the student movement, and achievements during President Ma's tenure.
A transcript of the interview questions with a translation of the president's responses follows:
Q: Does the calligraphy [two Chinese characters that say "everlasting peace"] indicate your vision for cross-strait relations?
President: Basically our goal and vision is to maintain sustainable peace and prosperity across the Taiwan Strait.
Q: Mr. President, thank you for having us today. It's a great honor to be here with you after such a historic meeting in Singapore last Saturday. I know you've said some things about that meeting: one, that hopefully it's a bridge, that you've constructed a bridge that future leaders will be able to use. We wonder, as an architect of a bridge, that you wouldn't build a bridge if you didn't hope that people would use it. Do you have any concerns about the future, if that bridge will be used or not?
President: I consider my meeting with mainland Chinese leader Xi Jinping (習近平) as the first step toward building this bridge across the Taiwan Strait. Leaders of the two sides can take this bridge to meet and hold talks in the future. Of course both sides will have to abide by traffic rules—the 1992 Consensus.
Q: Does that bridge go anywhere else? Because it seems to us that building that bridge across the strait is the first step in allowing Taiwan to build bridges to other countries. Do you see that meeting in Singapore opening the door for other Taiwanese presidents to meet with the Prime Minister of Singapore or Malaysia or Indonesia or other neighboring countries around the region?
President: At this point, we don't want to make that kind of assumption. However, our experiences over the past seven years have shown that improved cross-strait relations have created a more friendly international environment for Taiwan. As we have often said, cross-strait ties and international relations used to form a vicious cycle, but they have become a virtuous cycle today.
Q: Turning to the economy and your biggest customer, 40% of Taiwanese exports go to China. There's a big debate right now about the state of the Chinese economy. Is it slowing down, is it going to have a hard landing, or does China have prospects for rapid growth for many decades to come? I'm wondering, from your perspective, what is your assessment of the state of the Chinese economy?
President: Taiwan experienced its first change of governing party in 2000. The Democratic Progressive Party (DPP) came into power and in the eight years up to 2007, Taiwan's trade with mainland China increased at the fastest rate ever. Trade volume grew 2.8 times while investment increased 3.8 times. In 2000, mainland China (including Hong Kong) accounted for about 24% of our total exports. By the end of 2007, that figure had risen to 40%. Since I took office, the proportion has actually dropped—to 39%, and sometimes even lower. In fact, although cross-strait trade volume has increased, it accounts for a smaller share of our total trade. Why? Because we've diversified our export markets. For example, over the past seven years, trade with the Association of Southeast Asian Nations has climbed from 14% to 19% of our total trade. That shows we can't stop trading with mainland China, because they're our biggest trading partner, just as they are for 17 of their 23 neighboring countries or areas. Given the mainland's market and manufacturing capabilities, there's no way their neighbors won't develop trade relations with them. We can't put all our eggs in one basket. But we shouldn't keep all of our eggs out of the biggest basket, either.
Q: One other challenge that Taiwan has had is that as relations, economic ties, with mainland China opened up in recent years, as you said, middle-class wages have stagnated, job growth has not been strong as manufacturing, investment, move to mainland China. Is there anything that you, looking back, wish you had done; is there anything that your successors can do to strengthen middle-class wage growth in future years?
President: In fact, the situation that you just described developed more than a decade ago before I took office. Taiwan's pay levels were at their highest in 2000, when the DPP came into office. But wages gradually declined after that. What you just said is correct. We have seen a relocation of manufacturing businesses to mainland China, taking with them job opportunities. After we took office, we encountered a global financial crisis, which affected wage growth. However, wages have steadily increased since 2008, showing noticeable growth in the past few years. But they have not exceeded their past levels yet. The main reason for that is the relatively low cost of living in Taiwan. That is a major factor. Prices for public facilities, gas, and electricity are comparatively low. As a result, wage growth has been relatively slow. We've adopted legislation and other benefit programs to encourage businesses to raise salaries, and have made a little headway. But as I just said, prices are now relatively low in Taiwan, lower than in Hong Kong, Singapore, and the Republic of Korea. That impedes significant wage growth in Taiwan.
Q: I'm just wondering, would a cheaper currency help make Taiwan more competitive, and help boost wages?
President: The foreign exchange rate is determined by market supply and demand. The government cannot manipulate the currency. Of course many businesses would like the government to adjust the exchange rate between the NT dollar and US dollar so that exports can flourish. But the government's position is that it may not be appropriate to boost exports by relying solely on exchange rates. If every country did that, it would be pointless for us to do the same. We have to devote our efforts toward industrial restructuring so that our economy becomes innovation-driven, and not only efficiency-driven. We have recently introduced the Productivity 4.0 project to further enhance our industrial structure. The situation will change for the better after we improve our competitiveness.
Q: What concrete measures, do you think, can be taken to encourage companies to increase wages?
President: Tax relief is one measure we are considering. If firms raise wages, they may receive a tax break—that's one thing we are currently promoting.
Q: One of our colleagues in our office here told me about a book that's been written recently about the future of Taiwan. It supposes that in 2030, mainland China is the world's most powerful country, but the student leaders from the Sunflower Movement can't find work in Taiwan—they don't have jobs—because Taiwan has still not been able to pass the trade services act, it's still not been able to build on the relationship across the strait, and so Taiwan has been left isolated from the world. I wanted to ask you if you think that is fact or fiction?
President: I don't think the situation will be that bad. More and more people realize that, even though politically the mainland may not be that friendly toward us, our economic relationship with them has reached a point where we can't just arbitrarily say we don't want it anymore, and that will be the end of it. In particular, when we look at the past seven years, the growth of our trade and investment with the mainland has actually slowed down, because of our efforts toward a more globalized strategy. Nevertheless, competition is heating up, because they've also increased their productivity. So we have to pick up the pace, and not let them catch up so quickly.
Engaging with the mainland is an absolute must. No country in the world can say it does not want to engage with mainland China. You may not like their system, and you may not support their undemocratic practices, but when it comes to the economy, the cruel reality is that you have to have a cool head and a pragmatic attitude to deal with these issues. Because once you fall behind, it's very hard to catch up again.
Q: Despite this long record of achievements, the poll numbers have not been as high as one might think for this type of record. Do you have any thoughts about what, perhaps, made the difference, and maybe your own strengths and weaknesses as a leader?
President: Our administration has implemented many reforms. Some people do not support these reforms because they are affected. For example, we have introduced a market-based formula for gas and electricity prices. Some people believe that these prices should not go up, and if they do, the government should offer subsidies. But we cannot do that because it would not be in Taiwan's long-term interests. These issues often lead to dissatisfaction with me, and may be the reason for my low poll numbers.
But the situation has been improving, especially where policies the government has promoted really touch people's lives. That includes foreign affairs, like the recent meeting between myself and Xi Jinping. People have slowly come to realize that everything we've done has benefitted Taiwan. There are many other good policies, but they weren't publicized enough, leading to a lack of awareness. This may have led people to short-change us. I do notice those things, but I don't dwell on them. Why? Because if I dwell on them too much, there's no way to implement certain reforms.
For example, according to the most recent opinion polls, 60 percent of the people are satisfied with the way we handled the Ma-Xi meeting.
Q: You have had a lot of interaction with China, highlighted by your meeting with Xi Jinping. Have you come to the conclusion that the eventual emergence of a democratic China is more likely or less likely than when you became president?
President: I think the mainland won't change quickly, because they're simply too big. Also, in many areas, they are still getting familiar with systems that didn't exist before. Nevertheless, when we compare the current situation to the period before the emergence of the Internet, the pace of change has increased. If a society's prosperity continues to grow, more constituents, especially the middle class, will want a role in the formulation of public policy. They will not be able to gain such a role overnight, but the demand for participation will continue to exist. As for our interactions with the mainland, I believe that, in the long term, the mainland will change, just not that fast.
Everyone knows that each year on June 4, I issue a statement urging the mainland to respect dissidents and make amends for the Tiananmen Square Incident. I have done that consistently and persistently. Why? Because I definitely don't think it's a hopeless case.
During the formal part of my meeting with Mr. Xi, I mentioned Taiwan's democratic development and achievements. When I have the opportunity, I remind them that the people of Taiwan cherish these values. If they improve in this area, we can narrow the gap between the two sides.
In fact, none of the examples I give are Western concepts of freedom of expression. In China some 2,500 years ago, Zichan [an official from the state of Zheng in the Spring and Autumn Period (770-476BC)] maintained a public forum where people expressed different views. Respect for dissent is not just a Western phenomenon. Such views also existed in ancient China. I want to let the mainland know that we do not cater to Western values, but aim to restore the ideals of our ancestors.
Q: We've talked a lot about the reforms you've pushed through, including meeting with Xi Jinping. Even though it might not be the popular thing to do right now, do you think history, when it looks back on your administration, that opinion is going to be better than the poll numbers show today?
President: I think there will be different views. In Taiwan society, political antagonisms run deep. So sometimes, no matter what I say or how well I do, there's no support. But since I know that, I've never been afraid to do what I should do. I think that after a certain period of time, people will be able to understand.
【Source: Office of the President】