In Australia, liquidity of cash is normally controlled by the central bank via interest rates. Lower rates and smaller deposit ratios means more cash injected into the economy. Businesses can borrow more and expand as loans are easier, growing businesses mean more jobs and more jobs mean higher demand and higher salaries are businesses fight for skilled workers. More jobs mean more job security and lower unemployment.
Once the economy is stable, the central banks increase rates, repayments becoming higher and the excess cash in the economy is sucked back into the central bank.
This could be done with Taiwan.
The other means is to entice multinationals to build sites in Taiwan. In Australia at the Norwest Business Park in NSW, this was done with the State Government offering tax incentives. I know, I use to work for such a company.
The difference between Norwest and the special airport zone the KMT is suggesting is that the overseas companies weren’t exempt from the laws of the nation, only they had a financial incentive for a limited time to establish themselves.
In my view, rather than the KMT encourage business to flee to China totally. What they should do instead is offer tax rebates based on an import/export ratio, for example;
Taiwanese PC manufacture makes chips and components in Taiwan, when they are sent to China for assembly (where the bulky items like cases are made), Taiwan Customs put a “market value” on the components.
Then the PC is assembled in China and boxed, they are then shipped back to Taiwan. The deal is, if the item is shipped via a Taiwanese port, the Taiwan company gets a credit back based on the ratio between the manufactured components and finished product. The idea behind such a scheme is;
a) Tax incentives for manufacturing more components in Taiwan; and
b) Increase business through Taiwanese ports.
In regards to item (b), if more ships pass through Taiwanese ports, then the cost of handling drop which encourages more shipping, with more shipping other industries in Taiwan then benefit from cheaper shipping which would stimulate other areas of the economy. More shipping also means the cost to import is cheaper so food and other basics become cheaper too which would reduce the cost of living which would increase buyer power even if salaries do not increase too much.
Just a thought