Taiwan economy: no longer superior to China's?

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."

Twelve percent of the workforce now earns less than $700 per month, and average monthly wages are at 1998 levels, according to labor groups.

Meanwhile, highly-skilled workers in the technology and other sectors pull in ever-fatter paychecks, sharpening inequality between the haves and have-nots. "Taiwan's social welfare system cannot solve the problem of the gap between the rich and the poor — especially the 'new poor,'" said Chiu.

For its part, China is seeing a burst of newly-minted millionaires and even billionaires, as a lucky few strike it rich amid the rising power's go-go economy. There, too, inequality has spiked sharply, with the most noticeable chasm between the urban elite and the vast ranks of the rural poor. The top 10 percent now earns 23 times what the bottom 10 percent makes, compared to just a seven-fold gap in 1998. The Gini coefficient is now 0.47.

"In China now, some people can get very rich in a very short time because of China's growing, but unbalanced economy," said Chiu. "The large cities are developing so fast — they can accumulate wealth quickly."

One of those lucky few is Chen, who made his fortune recycling material from the construction industry after growing up poor in the boonies, according to a BBC profile. (In that interview, he also confirmed that he had vowed never again to give money to his sister, who works as a hotel dishwasher, or his brother, who works as a security guard, because they squandered his money in the past.)

He's exactly the type of swaggering, nouveau riche Chinese businessman who rubs some Taiwanese the wrong way. For others, though, all the criticism over Chen's visit is just sniping. One 67-year-old woman waited all night outside his Taipei hotel after he arrived, then hit the jackpot by nabbing Chen's first red envelope.

Amid a swarm of Taiwanese TV cameras, the woman explained that she wanted to take care of her 88-year-old mother, who has lost her eye-sight.

“I’ve never touched so much money in all my life," she told reporters after receiving about $2,300 from Chen. “I’m very thankful. He is a very generous man."