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Comparison of Mainland China and Taiwan

Comparison of Mainland China and Taiwan. Similar pattern, different timing?. Comparison. area mainland: 9,596,961 km 2 Taiwan: 35,980 km 2 population mainland: 1.35 billion Taiwan: 23 million. Political similarities. Chinese Communist Party (CCP) Marxism-Leninism and Mao Zedong Thought

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Comparison of Mainland China and Taiwan

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  1. Comparison of Mainland China and Taiwan Similar pattern, different timing?

  2. Comparison • area • mainland: 9,596,961 km2 • Taiwan: 35,980 km2 • population • mainland: 1.35 billion • Taiwan: 23 million

  3. Political similarities • Chinese Communist Party (CCP) • Marxism-Leninism and Mao Zedong Thought • “Deng Xiaoping Theory” • “Three Represents” • Nationalist Party (KMT or GMD) • the “three principles of the people” • both CCP & KMT borrowed party-building principles from Soviet Union in 1920s

  4. Political similarities • Leninist party-state in mainland and Taiwan • political liberalization in Taiwan since 1980s • organizational principles of party-state • party as the guardian of the people • strict party hierarchy and discipline • no organized opposition to party leadership is allowed

  5. Comparison • P.P.P. GDP (2004-2012) • mainland • $7 trillion to $13 trillion • Taiwan: $0.6-0.9 trillion • trade volume (2004-2012) • mainland • $1.1 trillion to $3.8 trillion • Taiwan: $0.3-0.6 trillion

  6. Time-lagged development • Land reform • Taiwan (1950s) and mainland (1970s) • economic takeoff • Taiwan (1950s- ) and mainland (1980s- ) • tariff rebates • Taiwan (1950s- ) and mainland (1980s- ) • special economic zones • Taiwan (1960s- ) and mainland (1980s- )

  7. Time-lagged development • Promotion of small and medium size enterprises • Taiwan (1960s- ) and mainland (1980s- ) • depreciation of currency exchange rate • differences • decentralization in mainland (1980s- ) • foreign direct investment in mainland (1980s- ) • significantly contributed to export upgrading • technology-oriented selection criteria (1995- )

  8. Export dynamics • Continuous upgrading in the structure of exports • inclusion of more sophisticated commodities • development of new markets • growth in export volume • structural changes cause the growth in export volume

  9. Evidence from Taiwan

  10. Taiwan’s export upgrading • 1940s: agricultural exports • import manufactured consumer goods • 1950s: import substitution growth • export of processed agricultural commodities • import decreasing share of manufactured consumer goods • 1960s: export diversification growth • export of processed agricultural and industrial commodities

  11. Taiwan’s export upgrading • 1960s: export diversification growth • import food, manufactured consumer goods and producer goods • 1970s: import & export substitution growth • increasingly sophisticated commodities • after 1986 • exports of labor-intensive goods decrease • exports of hi-tech products increase

  12. Evidence from mainland

  13. Mainland’s export upgrading • Before 1978: • emphasis on self-reliance and inward-looking • trade based on self-sufficiency • 1978-1985 • increased exports of petroleum & raw materials • 1985-1995: “export substitution” growth • export of labor-intensive manufactured consumer commodities

  14. Mainland’s export upgrading • after 1995: further diversification • attempt to export more sophisticated commodities • exports of hi-tech product • total US$480 billion in Q1-3 of 2013 • 29% of total exports from mainland • 88% are exported by foreign-invested enterprises • less innovation-driven than in Taiwan

  15. Market share development • Flying-geese model • more advanced economies loses comparative advantages in labor-intensive industries • movement of industries through foreign direct investment • does not seem to hold true for manufactured commodities that require • high R&D expenditure • rapid product and process innovation

  16. Export of office machinery • Can’t be explained by flying-geese model • Taiwan became major developer, producer, and exporter • special case • 1 category • 8 years

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