Give This Guy a Break!

Chinese premier Zhu Rongji once called Chen Shui-bian's presidency a joke. Outside China, conventional wisdom increasingly seems to agree. Since Chen's election in March, Taiwan's stock market has plunged by more than 30%, a slide that pundits say represents a vote of no confidence in the President's abilities. Chen's approval rating, meanwhile, has fallen to less than 40%, from a high of 77%. His Premier, Tang Fei, resigned after less than half a year in office. Chen is taking heat for everything. The economy is in the doldrums. A banking crisis is looming as problem loans pile up. The delicate relationship with Beijing has stalled, and no one can control the Vice President, Annette Lu, who pokes China in the eye at every opportunity. (In an official report, Beijing recently called the Taiwan situation grim.) All of this adds up to a sense that Chen has squandered the promise of his election, an opinion shared, apparently, by his close adviser, Lee Yuan-tseh. A Nobel laureate, Lee said recently that the President talked too much without giving the people a clear direction where he was going.So is Chen toast? Is his presidency a disaster? Not at all. The slump in Taiwan stocks has more to do with global worries over the declining earnings of semiconductor companies than with Chen. Taiwan's stock-market index is packed with technology stocks; so is NASDAQ in the U.S., which has also dramatically declined since March. The market is simply saying that if Silicon Valley isn't doing well, neither should Taiwan's tech stocks.On the political front, it's true that Chen's minority Democratic Progressive Party (DPP) has been slow to get up to speed. One reason for that is the Kuomintang (KMT), the DPP's rival, which dominates the legislature and has tended to put partisan interests above those of the nation. But the DPP's emergence as Taiwan's ruling party has already helped heal the most divisive social and political wound on the island: the rift between Fujian-dialect-speaking locals and the Mandarin-speaking mainlanders who have dominated local politics for a half-century. The topic of schism is no longer prominent in public discourse. As for the economy, Taiwan does indeed face serious problems. But Chen hasn't been idle. In a departure from past KMT policies, Chen is promoting bank mergers to help shore up the weakest institutions. And he says he will lift many restrictions on foreign banks wishing to compete in Taiwan. Although capital is still over-regulated, the question is no longer whether financial reforms will come, but when and to what degree. Chen is waffling on some economic issues. But his hesitance is often understandable. Taiwan, like many other places, is grappling with a dual economy: one part is old, inward-looking and inefficient; the other is new, knowledge-intensive and globally competitive. By letting the New Taiwan dollar find its own, lower level and by lifting regulations governing capital flows to China, Chen could encourage Old Economy companies to revive themselves by relocating to the mainland. But China isn't making it easy. Beijing recently said it would take stock of the political views of potential investors from Taiwan, particularly their level of support for Chen's DPP. The threat was later quietly dropped, but a sense of uncertainty had been sown. The reality is that both sides need each other. It is China, not Taiwan, that could face devastating unemployment after joining the World Trade Organization.Is Chen handling the cross-Strait relationship well? Beijing clearly does not think so. But by now, even the mainland's most stubborn hawks must know that war against Taiwan is a non-starter: it's impossible to define victory in any way that makes sense. Chen said recently he was proud to be a Chinese, a signal to Beijing that he is willing to be conciliatory. The communists, however, apparently want him to genuflect more unambiguously. China should know that putting a timetable on reunification is unwise as long as Taiwan's people are not ready for it. Chen knows his constituency better than Beijing and is calculating that he needs to proceed slowly. Chen can do better at his job, yes, but during his first six months in office he has not done badly. In the U.S., Bill Clinton didn't exactly light up the scoreboard in his first two years, but his performance improved considerably. Give Chen a chance. The conventional view about him is simply unfair. Sin-ming Shaw is a visiting scholar at the Fairbank Center for East Asian Research at Harvard University