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Taiwan economy: no longer superior to China's?

Controversial Chinese philanthropist visits Taiwan, highlighting wealth gap and "new poor."

Chen Guangbiao
Tycoon Chen Guangbiao at his home in Beijing on Sept. 16, 2010. (Peter Parks/AFP/Getty Images)

TAIPEI, Taiwan — You might think Taiwan would welcome a wealthy visitor who wants to pass out money to the poor. But you’d be wrong.

The island was abuzz last week over the visit of one of China's top philanthropists, Chen Guangbiao, who is well-known for his flashy style. The controversy highlights the still awkward relations across the Taiwan Strait, as well as the growing rich-poor gap on both sides.

Chen insists he merely wants to return the generosity of Taiwanese who have helped China, for example with huge donations after the 2008 Sichuan earthquake. But several objections have emerged from Taiwan's rowdy political and media arena.

Some think he's tasteless and disrespects the poor by making such a show of his charity. (In China last week, he ostentatiously passed out banknotes after erecting a massive, $2.3 million "wall of cash.") One Taiwan county head rejected his visit on those grounds, promptly igniting a backlash from angry constituents who were hoping for a payola.

Others in the pro-independence opposition see him as a Trojan Horse, spreading a pro-unification message under the cover of traditional, Chinese New Year generosity. (China claims Taiwan as its territory; Taiwan insists it's an independent state.)

Such critics pointed to his itinerary, which avoids the pro-independence south to focus on several counties in the more China-friendly north. And then there's the inscription on the 50,000 "red envelopes" he's using to distribute cash, which according to Taiwan media reports reads in part "the Chinese race is one family."

Chen denied any political motive, telling reporters, according to the Taipei Times: "I don’t know anything about propaganda for Chinese reunification. I only know about charity and environmental work. I just want to do good.”

Beneath the moral and political indignation, though, there's a palpable unease with the symbolism of Chen's visit. Taiwan's development once far outpaced China's. But as China's wealth booms and Taiwan's stagnates, the island is losing its sense of economic superiority.

Taiwan's per-person wealth may still be far higher than China's, at around $18,500 compared to some $4,300. But growth rates have sagged in Taiwan while soaring to double or high single digits in China. And in the last few decades, the island has seen a growing income gap. (Measured by the Gini coefficient, inequality rose from 0.28 in 1980 to 0.34 in 2006.)

Like other advanced economies, manufacturing jobs have shrunk as factories move to China and elsewhere. Lower-paying, non-unionized service sector jobs have taken their place. The service sector is now nearly 70 percent of the economy, compared to 50 percent 20 years ago. And since the global downturn, Taiwan firms have been increasingly relying on "dispatch" or temp workers, like Japan and South Korea.

The result has been a new legion of "working poor" or "new poor," as they're called here. They may not show up on unemployment statistics. But they struggle to make ends meet with two or even three low-paying jobs, but no job security.

"Those people cannot get help because they're not ill, or victims of a disaster, and they're not poor by the government's standards," said Taiwan sociologist Chiu Hei-yuan. "So they are just helpless — and they hope to get some unexpected help from people like Mr. Chen."