STAR Businessweek - 23 June 2018

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US-China: Why Taiwan is back on the agenda

AN AMERICAN WORLD CUP A CARIBBEAN OPPORTUNITY?

BY ED KENNEDY, STAR BUSINESSWEEK CORRESPONDENT

Right now is a major time in the world of football, aka soccer (and hereafter called football to keep fans of ‘the beautiful game’ happy). This past week has seen the Caribbean family following the 2018 World Cup in Russia, looking to cheer on neighbours across the Caribbean Sea in Panama, Mexico and Colombia, alongside admiring the giants of the game like Brazil, Argentina and Germany.

A US Senate delegation visiting Beijing in March expected its conversations with Chinese officials to be dominated by talk of a trade war between the two countries and President Donald Trump’s plans to meet North Korean ruler Kim Jong Un.

The then Taiwan leader Ma Ying-jeou (left) and Xi Jinping, China’s president, at a November 2015 Summit seen as a milestone in thawing relations between the two neighbours

Instead the five-member delegation — visiting on the same day that Mr Kim was in the Chinese capital — received an earbashing from Chinese officials seething over Taiwan.

Continued on page 4

Since the 2016 election of Tsai Ing-wen (above) as Taiwan’s president, relations with China have deteriorated Page 3

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ATTRACTING AIRLIFT: HOW CAN CARIBBEAN ISLANDS INCREASE AIRLIFT?

BY CATHERINE MORRIS, STAR BUSINESSWEEK CORRESPONDENT

The STAR Businessweek

BY CHRISTIAN WAYNE – EDITOR AT LARGE

Let me begin by thanking the readers who reached out to us over the past few weeks - your letters, emails, and calls - in response to our stories on Guyana’s future oil prospects in Holding Georgetown Over the Barrel and our recent 2-part series on #GreenTech that illustrated the intriguing work budding agricultural technology entrepreneurs in Barbados and Saint Lucia have embarked upon.

Keep writing us at starbusinessweek@stluciastar.com for a chance to have your letter published in our Letters to the Editor section.

The 2018 FIFA World Cup is in full-throttle with hundreds of thousands of fans from around the world descending on Russia to witness their team vie for a chance at football glory and victory bragging rights for the next 4 years. Of course, there’s also the economic side of the FIFA World Cup and the equally fierce competition amongst national governments for rights to host the Cup in 2026. For more on World Cup 2026, check out our cover story An American World Cup - A Caribbean Opportunity?

The cost of inter-regional air travel in the Caribbean has been a problem for as long as I and many of our readers can remember but with Barbados announcing a new airport tax just on the heels of the Saint Lucian airport tax increase, the issue of over-priced Caribbean travel is again a hot-button issue. For more, read Attracting Airlift: How can Caribbean islands increase airlift? beginning here on page 2

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Most Caribbean countries offer their carriers incentives such as rebates, discounts on airport fees, revenue guarantees or promotional funding

A

ir traffic is vital to island economies but getting (and keeping) carriers interested requires careful coordination and negotiation.

Air travel has come a long way since the Wright brothers first took to the sky in 1903. That pioneering first flight lasted 12 seconds. Today the longest route in the world is a staggering 17.5 hours, from Auckland to Doha, and will soon be surpassed by the 19-hour journey from Singapore to Newark, New Jersey, set to launch in October.

With long-range jets taking over the skies, distance is no longer a hurdle to growth for the Caribbean tourism industry. Provided they can stomach the long flight time, passengers will be able to travel non-stop from all over the world for a taste of Caribbean sunshine.

As these new markets, new routes and new customers become a reality, industry and governments must build new relationships with airlines and cement longstanding partnerships, as well as address longstanding barriers to growth within the sector.

CO-ORDINATION AND COMMUNICATION

Caribbean aviation and tourism stakeholders came together this month for the Caribavia meet-up, held in The Bahamas. The three-day event tackled one of the region’s most pressing problems - how to increase airlift.

Vice President of ICF Aviation Consulting Jared Harckham, who spoke at the conference, said destinations need to address a number of factors when pitching an airline but the most crucial element is to present a united front.

“If a destination wants to pursue new service, the best way to do that is with stakeholders coming together and talking to the airlines with one voice.”

When it comes to discussions with airlines, almost everyone has a stake in the outcome. From government and tourism agencies to hotel associations, airports and chambers of commerce.

These participants have to band together and sell the destination based on accurate, comprehensive and detailed market research, according to Harckham.

“It needs to be a co-ordinated effort. It is important to come to the airlines with a clearly defined opportunity. The most important thing is to have a well-thoughtout, well-structured, business case. The more information, the better. It saves the airline time, it captures their attention and they will take you more seriously as a destination.”

Above all, an airline wants to know that a destination will be profitable . . . and can sustain that profitability. To convey this, destinations need to communicate effectively with carriers, speaking their language to close the deal. When assessing the merits of a route or hub, airlines examine a number of factors including whether they have the right fleet to fly that route, if it fits with their

existing network and whether it coincides with their brand strategy. This type of route forecasting is a science, according to Harckham, and also encompasses trade links, migration flows, tourism attractions and infrastructure. “Airlines want sustainable opportunities.”

SWEETENING THE DEAL

The Caribbean is a disparate region with certain similiarities. With every destination relying on the sun, sand and sea model, competition for carriers is extremely fierce.

As the fight to secure more routes and stand out from the crowd increases, so too does the relative bargaining power of airlines.

It is now extremely common for destinations to pitch something above and beyond a comprehensive business plan. Most Caribbean countries offer their carriers incentives such as rebates, discounts on airport fees, revenue guarantees or promotional funding.

While some argue that incentives are a step too far - failing to lower costs for the consumer and forcing destinations to take on too much financial risk - Harckham believes that they are a necessary evil, and have become so commonplace that they are now industry practice. “Airlines tend to expect something to be put on the table, whether as a good faith gesture or enough to guarantee that they will make money. It is a negotiation.”

Harckham urges destinations to weigh up how far they are willing to go and to consider the ultimate pay-off in the longterm. “It is worth getting it right on air service development. It is really important to understand the value of the service and what you are willing to spend to get that.

The benefits are more flights, more revenue for the airport and more economic impact for the community. One flight can be worth tens of millions of dollars. It is usually a good investment.”

REAPING THE REWARDS

Air transport stimulates economic growth, increases employment, improves competitiveness and raises incomes. The direct and indirect benefits are far-reaching and long-term. In a report released at its AGM last month, the Caribbean Development Bank (CDB) said the air transport industry could contribute US$4.4bn to the regional GDP, provided certain steps were taken. These include full liberalisation of the Caribbean airspace, reduction in airport charges and aviation taxes, and improvements to infrastructure and regulations.

Continued on page 5

THE BIG READ: TAIWAN

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US-CHINA: WHY TAIWAN IS BACK ON THE AGENDA Long a bone of contention, the island of 23m is again at the centre of growing tension

F

BY TOM MITCHELL IN BEIJING, DEMETRI SEVASTOPULO IN WASHINGTON AND EDWARD WHITE IN TAIPEI; FT CORRESPONDENTS

or Washington the “One China policy” is the “bedrock” of SinoUS relations. Under a diplomatic fudge that has lasted four decades, the US formally recognises Beijing but also maintains unofficial ties with the island of 23m people.

The meetings came just weeks after the Senate had passed, and Mr Trump had signed, the Taiwan Travel Act, which formally encouraged more exchanges between US officials and their counterparts on the free, democratic and self-governed island. For Chinese officials, Taiwan is an inalienable part of their sovereign territory that they believe they will one day recover.

In an effort to calm his angry hosts at the National People’s Congress on March 28, Steve Daines, the Montana Republican who led the US delegation, focused his closing remarks on their concerns about US-Taiwan relations.

According to three people who attended the meeting, the senator concluded by saying that “we only have one embassy in China, here in Beijing, and one ambassador who is sitting right next to me” as he gestured towards Terry Branstad who took up the ambassadorship last year.

The senator’s deft diplomatic response is a reminder that, for Beijing, Taiwan and other “core interests” related to territorial sovereignty could be the real tripwires in the world’s most consequential bilateral relationship, rather than more visible friction over trade and North Korea. Indeed, for decades it was Taiwan — rather than China’s more recent militarisation of outposts in the South China Sea — that was viewed as the most likely trigger for any clash between Chinese and US forces.

Under a diplomatic fudge that has lasted four decades, the US formally recognises Beijing but also maintains unofficial ties with the island of 23m people

Taiwan is also a key link in the “first-island chain” — stretching from South Korea in the north to the Philippines in the south — that restricts China’s ability to project power into the western Pacific. US support for Taiwan through arms sales is a critical component of the regional balance of power.

Chinese officials are therefore extremely sensitive about the opening this week of a $250m headquarters building in Taipei, for the American Institute in Taiwan. The AIT building, situated in an affluent area of the Taiwanese capital, is an embassy in all but name, staffed by US diplomats and tasked with normal consular functions.

The opening ceremony was on Monday 11th June, the day before Mr Trump’s Singapore summit with Mr Kim, guaranteeing that it will be eclipsed by the historic meeting in the south-east Asian city state.

Chinese officials are obsessed with who will represent the US president in Taipei.

Attendance by a cabinet-level official would likely jeopardise Mr Xi’s willingness to cooperate on everything from pressuring Mr Kim to abandon his nuclear weapons programme to reducing China’s trade surplus with the US. “If [a high-level US official] goes to Taiwan, Trump should not expect China to offer help on big international issues,” says Shi Yinhong, a foreign affairs expert at Beijing’s Renmin University. “China will also increase pressure on Taiwan in all respects.”

US representatives who attended the opening included Marie Royce, assistant secretary of state for educational and cultural affairs and Republicancongressman Gregg Harper.

“The Chinese are pressuring us every day about who will represent the administration in Taipei,” says one US diplomat.

Chinese officials are wary of the Trump administration’s commitment to the One China policy, and with good reason.

Five days after the Taiwan Travel Act

became law — and one day after Mr Xi warned the world that “ all acts and tricks to split China are doomed to failure” — a US deputy assistant secretary of state, Alex Wong, gave a speech in Taipei that seemed calculated to enrage the Chinese president further.

“We’ve done much to deepen USTaiwan relations but my message is ‘let’s do more’,” Mr Wong told an audience that included Tsai Ing-wen, the island’s president and leader of the pro-independence Democratic Progressive party. “Taiwan’s democracy and resulting development are an example for the entire Indo-Pacific region . . . The US commitment to the Taiwan people, to their security, to their democracy, has never been stronger.”

Continued on page 7

TO CHANGE

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AN AMERICAN WORLD CUP A CARIBBEAN OPPORTUNITY? Continued from page 1

Trump even went so far as to give personal assurance to FIFA that he would not seek to obstruct the visa process for teams, officials and fans visiting for the Americas’ 2026 World Cup, even though he likely won’t be a sitting President The World Cup could have a total impact on the Russian economy of nearly $31 billion, organisers predicted back in April

As well as news from Russia, recent days have also seen news break that the Americas will host the Cup in 2026. A winning jointbid by the United States, Canada and Mexico will see a North American World Cup for the first time since the United States hosted the event in 1994.

Everyone loves a great sporting party - and many in the Caribbean will look forward to a ‘flow on’ bump in the tourism business - but what does 2026 really mean for our region?

Should we view this news as a blueprint to build our own bid for a major event like the World Cup? Or, in this time and era, is hosting a major event a far greater risk than any reward it may bring?

THE 2026 WORLD CUP

The 2026 World Cup will be a notable event for many reasons. The Cup has had joint hosts prior, with Japan and South Korea splitting duties in 2002, but never have three nations shared the honours. The US will host 60 matches (including finals), Canada and Mexico 10 each. All up, it’s hoped the Cup will bring $5 billion of new economic activity, and up to $4 billion minus costs.

There is, of course, the elephant in the room: the Trump era has seen relations fray between the three North American nations over NAFTA and other disputes. Fans of Trump say he is balancing the scales on relations; critics say he is a wrecking ball. Either way, while Trump will not be president by 2026, many will be nervous for the years of planning ahead. Even if going with the lone other host bid from Morocco didn’t have the glam and oomph of a three-way bid.

Before the bid Trump even went so far as to give personal assurance to FIFA that he would not seek to obstruct the visa process for teams, officials and fans coming to the

US in 2026.

Beyond the highly politicised relations, 2026 will also bring new controversy elsewhere.

The number of teams will expand from 32 to 48, risking further the quality of play at a knockout tournament. Many games in the current World Cup - like Portugal vs Spain, Australia vs France, and Germany vs Mexico - have been competitive affairs. Others games far less so. It’s wonderful that more nations will participate but it risks viewership if competition becomes truly uneven.

2026’s dynamics are unique, yet doubt over the value of major events is a constant in this era.

THE IMPLICATIONS

Once upon a time winning the right to host a major sporting event was massive news; highly prized and truly desired. Yet recent years have come to see hosting major events like the Olympics as akin to a poison pill - one even more unwelcome due to the challenging economic times we live in. It’s true, though, that there have been pockets of success.

Barcelona’s hosting of the 1992 Olympic Games is widely viewed as a tremendous success. Major infrastructure was built, and since then the city has gone from strength to strength as a global sporting capital.

The same with Sydney 2000, and London 2012. The former showcased a confident and cosmopolitan city ready for a new millenium; the latter reaffirmed what the world loves about ‘The Big Smoke’.

Other hosts, like Athens in 2004, Beijing in 2008 and Rio in 2016 have had mixed results. Many articles could be written on the reasons. In brief, Athens encountered financial troubles, Rio political upheaval, and Beijing the CPC’s sometimes odorous use of the Games as a propaganda piece, but all share a common issue. Cities and nations that seek to use the games as a launch pad may find it’s

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ATTRACTING AIRLIFT

more like quick sand. Similar history is seen in other major events, and the Caribbean has experienced this too.

Continued from page 2

THE LOCAL EQUATION

The West Indies hosting of the Cricket World Cup in 2007 was a great success in many ways. It showcased local athletes on home turf as well as impassioned fans and outstanding volunteers who gave their time to ensure every cricket fan enjoyed the best of Caribbean hospitality. As with all who work to make a major event a success, such great contributions must always be acknowledged.

Yet these contributions do not, by default, require a major event to shine. Many who would regard 2007 as a template for future major events in the region will need to think carefully. It’s clear that Caribbean nations will deliver the goods when it comes to being great hosts; it’s far from clear what enduring economic benefits they will gain from hosting a major event once again.

It’s true that public investment in the Caribbean has had a mixed record of success, mirroring the results of many host cities and nations. Part of this is owed to a local strength: a private sector tourism industry that entices people the world over. Many cities seek a major event to ‘put them on the map’ but the family of Caribbean nations is already among the most beloved in the world.

JUNE 23, 2018

The US will host 60 matches (including finals), Canada and Mexico 10 each.

All up, it’s hoped the Cup will bring $5 billion of new economic activity, and up to $4 billion minus costs

Barbados Prime Minister Mia Mottley told reporters last week, “For those who may be worried, may I remind persons that in Saint Lucia they raised their fee at the airport through similar taxes and, in spite of that, they saw not a reduction in travel but an 11% growth in tourism.”

FIFA World Cup 2018, Germany vs Mexico. Mexico upset defending champions Germany 1-0

In 2017, Saint Lucia came under fire for a significant increase in its airport tax system - introducing a US$35 Airport Development Tax and increasing the Airport Departure Tax for foreign visitors from US$25 to US$63. Justifying the hike, government said the additional revenue would be used to fund tourism growth and airport development.

Saint Lucia currently collects around US$15m in airport taxes each year, part

of which will be used to secure a major expansion of the Hewannora International Airport. The phased US$100m redevelopment includes construction of a new terminal and air traffic control tower.

Saint Lucia is not alone in its attitude to air traffic taxes and fees. A 2015 CDB study found that, for American Airlines, six out of their ten highest taxed destinations were in the Caribbean.

The end goal of any

airlift strategy is growth.

This is best achieved by keeping both customers and carriers happy. Productive, informed and co-ordinated negotiations with airlines will help establish new routes, but filling those routes requires less taxes, charges and rigid regulation.

A fully liberalised market with more competitive pricing helps elevate the entire economy and generate long-term business for both destinations and the airlines that serve them.

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DEVELOPMENT

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CUTTING MONEY TRANSFER FEES COULD UNLOCK $15BN FOR DEVELOPING COUNTRIES. HERE’S HOW

BY ALAN SAFAHI, WORLD ECONOMIC FORUM

T

he turn of the century marked a period of rapid migration: the total number of international migrants has increased by 60% since 2000. With more than 250 million immigrants and migrant workers needing to send money home to families in their native countries, the need for simpler, faster and more cost-efficient money transfers continues to grow.

But the cross-border payments industry remains a fragmented legacy sector beset by inefficiencies, long settlement times, where payments can take days to arrive at the destination account, and high transaction fees.

Additionally, the payments’ landscape is devoid of meaningful competition.

Western Union and the three other largest money transfer operators (MTOs) account for approximately 25% of global remittance volumes. The remaining 75% is processed by thousands of small to mid-size MTOs which are hampered in their ability to scale owing to resource and latency constraints, illiquidity and a growing reluctance from banks to service smaller MTOs due to compliance overheads and moves to reduce the risk of their portfolios.

The World Bank estimated that, by the end of 2017, officially recorded remittances (excluding corporate payments) to developing countries would grow by almost 5% from the previous year and account for approximately US$450 billion of money sent overseas. Furthermore, global remittances, which includes money flown

to high-income, developed countries, was expected to rise by almost 4% to $596 billion.

As the global economy continues to improve, the World Bank reports that in 2018 remittances to developing countries with low-to-middle incomes are expected to grow at a modest rate of 3.5% to $466 billion whilst global remittances are expected to grow by 3.4% to $616 billion.

These figures highlight the importance of remittances to low-income and lower-middleincome countries — inflows which contribute significantly to developing countries’ GDP and account for 75% of total remittances worldwide.

Bill Gates, an advocate of sector regulation, noted in 2011 that if the transaction costs on remittances worldwide were cut from an average of 10% to an average of 5%, it would unlock $15 billion a year for developing countries.

Scalability issues have prevented smallerlevel MTOs from being able to compete with the sector’s “Big Four”. This lack of competition and continued inability to challenge the large MTOs is directly responsible for remittance fees remaining so high at around 8% — an exploitative level which adversely affects the millions of immigrants and expats who are unbanked yet need to send money home to support their families.

In Q3 2017, the global average cost to send $200 remained flat at 7.2%. This is a significantly higher figure than the target set in Sustainable Development Goal 10, which was 3% in 2017. These high transaction fees disproportionately affect those who can least afford it. Sub-Saharan Africa in particular suffers the worst of the high remittance fees with regional average costs sitting at 9.1% for each transaction.

For less-developed countries suffering from under-employment, mass inflation or political instability, remittances are relied upon as a vital injection of income into their economies.

For the unbanked in these countries, many families are forced to either send money home in non-secure manners, such as posting cash, or rely on remittance processors as a lifeline, making the existence of exorbitant remittance fees even more frustrating for those involved.

So what is preventing small to midsize MTOs from scaling successfully? ZED

Network has identified three primary factors: banking compliance, cash flow restrictions and technology challenges: 1) Banking: Banking infrastructure support and regulatory compliance mechanisms are integral to the operations of the majority of cross-border MTOs, But increasing numbers of banks won’t sponsor small to midsize operators because of the high monitoring and compliance overheads aimed at reducing money laundering and financial crime.

Additionally, there is a worrying trend of banks shutting their accounts with MTOs to de-risk their portfolios.

2) Cash flow: There is an opportunity cost of having funds tied up in various currencies in various locations. This cash flow requirement is a major obstacle to the growth of MTOs as it locks up large amounts of re-investable capital.

3) Technology: Most MTOs have limited IT teams with an even more limited budget to work with. Even with the demand from their customers, most MTOs are unable to develop the requisite technological infrastructure to facilitate meaningful business scaling, with most of their resources going towards overhead compliance instead.

In order for MTOs to be able to overcome these scalability obstacles and grow, they need a compliance-friendly, easy to integrate system for global payments that will reduce inefficiencies, costs and transaction fees — all while remaining compliant with KYC and AML regulations. This is why ZED Network believes that small to midsize MTOs need to adopt blockchain or distributed ledger technology which will serve to enhance transparency, speed and regulatory compliance, all while reducing remittance fees for the end user. Without this adoption, small to midsize MTOs will find themselves permanently priced out of the market.

Blockchain-based remittance solutions will rapidly and effectively eliminate the dependencies that smaller MTOs have on banks and will reduce operating expenses, freeing up necessary capital that can be used to further grow their operations. This in turn will allow for these MTOs to drive down transaction fees and increase competition in the industry. More importantly, the social benefits will include financial inclusion for the billions of people currently ignored by traditional payment providers.

The Saint Lucia Government Gazette Company Registration Name: Affordable Housing Inc. Description: Real estate, construction, and security Directors: Marcus Mitchell; Kieran Hilaire; Ryan Hilaire Date Incorporated: 08-Jun-18 Chamber: SEDU, Saint Lucia

Name: S.W.A.T. Caribbean Ltd. Description: Security services, consultancy, and training Directors: Robert Gajadhar; Aaron Henry; Joy Chin Slick; Marlon Bernard Date Incorporated: 08-Jun-18 Chamber: Peter I. Foster & Associates Chambers, Saint Lucia

THE BIG READ: TAIWAN

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US-CHINA: WHY TAIWAN IS BACK ON THE AGENDA Continued from page 3

Mr Trump tested Beijing’s sensitivities over Taiwan before he even became president. In December 2016, the then president-elect shattered almost 40 years of diplomatic precedent by accepting a phone call from Ms Tsai.

Unlike Taiwan’s Nationalist party, whose leaders fled to the island in 1949 after losing a civil war to Mao Zedong’s Chinese Communist party, Ms Tsai and the DPP do not accept the “1992 consensus” under which the Communist and Nationalist parties agreed that there is only one China, albeit with different interpretations of what that means.

Alarmed by what they saw as Mr Trump’s provocative gesture — and his subsequent comments that US commitment to the One China policy was a chip that could be withheld for concessions during trade and other disputes — Chinese officials delayed for three weeks the first telephone call between Mr Xi and Mr Trump as presidents. When the two leaders finally spoke in February 2017, Mr Trump confirmed his commitment to the One China policy, setting the stage for a year of stable relations.

That period of relative calm has been overturned by the passage of the Taiwan Travel Act, the appointment of John Bolton— a noted China hawk — as national security adviser, and Mr Trump’s threat, made in early April, to impose punitive tariffs on as much as $150bn worth of Chinese exports in retaliation for alleged theft of US companies’ proprietary technologies. In January 2017 Mr Bolton wrote “it is high time to revisit” Washington’s commitment to the One China policy.

Bonnie Glaser, an Asia expert at the Center for International and Strategic Studies, says that as a result it was once again “very difficult if not impossible” for Beijing and even his own officials to work out where Mr Trump stood on Taiwan. In response to passage of the act, Lu Kang, chief spokesman for China’s foreign ministry, said it “sends out wrong signals to ‘pro-independence’ separatist forces in Taiwan”.

Several people familiar with the situation say Mr Trump later worried that Mr Wong’s speech could damage his efforts to cut a trade deal with China.

Indeed, many Chinese analysts and officials think the US president views Taiwan primarily as a useful pressure point in his dealings with Mr Xi. “Trump sees Taiwan as a small chip in a bigger negotiation with China,” says Sima Nan, a prominent Beijing-based commentator.

In the speech to the American Chamber of Commerce in Taipei, Mr Wong doubled down on his praise for Taiwan with thinly disguised criticism of China.

“Dynamic, broad-based and sustainable

US national security adviser John Bolton who has called for the US to ‘revisit’ its One China policy

The American Institute in Taiwan signals the ‘strength’ of US-Taiwan ties

economic growth can never hinge on the whim of a dictator,” he said. “Unfortunately there are actors who fail to give due respect to the obligations they voluntarily signed up for. When economies, large or small, are able to flout the rules, cheat their trading partners, force intellectual property transfer, protect national champions, steal trade secrets and use market-distorting subsidies, it undermines the integrity of the entire rules-based system and . . . the prosperity of the entire region.”

Not surprisingly, Ms Glaser says: “The Chinese [have] started raising Taiwan in every conversation they have at any level with a US official. This was not true during the Obama administration.”

Just as Chinese officials were lulled into a false sense of complacency about their seemingly stable relationship with the US for most of last year, current and former US diplomats say they forgot how big an irritant Taiwan could be during Ma Ying-jeou’s eight years as president of the island, from 2008 to 2016.

Under his leadership, the Nationalist party steered Taiwan towards an ever closer economic relationship with China, culminating in a historic cross-straits summit between Mr Ma and Mr Xi in November 2015.

“During the Obama administration, crossstraits relations were very positive and very stable, which provided lots of room [for the US] to grow political, economic and security

ties with Taiwan,” says Evan Medeiros, a former Asia adviser to the Obama White House.

When Mr Ma was elected in 2008, there were no daily flights between Taiwan and China. By 2015 there were 120 and the number of Chinese tourists visiting Taiwan annually also peaked at 4.2m. But the Nationalists pushed the rapprochement too far, sparking mass protests and paving the way for Ms Tsai’s landslide election victory just two months after the Ma-Xi summit. Taiwan’s new president came into power with a clear mandate for a radically different approach to relations with China.

“We got a bit complacent about Taiwan after eight years of Ma Ying-jeou,” says one US diplomat. “Tsai Ing-wen’s election changed the equation.”

Ryan Hass, a former adviser to the Obama White House on China now with the Brookings Institution, agrees. “We experienced an anomalous period when Ma, Obama and Xi were in office where relations between Taipei, Washington and Beijing were largely constructive,” he says. “Some of the muscle memory in Washington atrophied a bit. With the elections of Tsai and Trump, things have reverted back to the historical mean of increased sensitivity around Taiwan.”

The shift in cross-strait relations under Ms Tsai was taken as an affront by China and has sparked what Taiwanese officials call a “hybrid warfare” campaign by Beijing. In addition to freezing all official communications with Taiwan, the Chinese government is pressing the dwindling number of countries that still recognise Taipei to move their embassies to Beijing and using overt displays of military power.

Chinese regulators have even started a campaign to reprimand foreign companies that inadvertently list Taiwan as a country on website drop-down menus — a development last month condemned by the White House as “Orwellian nonsense”.

Andrew Yang, a former Taiwan defence minister, estimates that the number of Chinese naval and air training exercises close to Taiwan-controlled territory this year is “double or nearly triple” those over the same period a year ago. Other Taiwan officials warn that such pressure is counterproductive.

James Moriarty, AIT chairman, argued in a speech last month that “every military exercise seemingly threatening Taiwan reminds Congress that China seems to have aggressive intentions against a democratic entity that only wants to be allowed to survive . . . [and] reinforces this feeling that China is an aggressive power”.

Lai I-chung, a foreign policy expert at Taiwan Thinktank, says the issue is not “whether Taiwan will give in” to Beijing but whether the US and the rest of the international community will take notice. “China won’t stop until it is stopped,” he adds.

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DEEPER LINKS NEEDED

THE PROBLEM WITH SIMPLY GROWING MORE TECH HUBS IN AFRICA

BY QUARTZ AFRICA

M

ore than 130 new hubs have opened in Africa over the last two years, and there are still not enough.

Many hubs get financial and technical support from foundations as well as tech and telco corporates, among others. More recently, Facebook and Google have both rolled out significant new Lagos centres, with NG_Hub and Launchpad respectively.

There are promises of more to come elsewhere.

The “tech hub” label includes a wide range of very different types of operations.

Many, perhaps most, are community centres in the most important way possible.

There’s immense value for aspiring entrepreneurs to be around like-minded innovators and technology dreamers if you’re in an African city where trying to be the next Mark Zuckerberg isn’t the most obvious ambition.

Then there are other venues, like those supported by Google and Facebook, which are a bit more than just being a place for good wifi and regular electricity. If you can get into their programmes, your start-up would likely get some crucial world-class technical support.

WHAT THE TECH GIANTS ARE OFFERING

Facebook’s hub will be home to workspaces and an event space, and is to host digital training programmes including Fb Start Accelerator Program and SheMeansBusiness. It will also offer grants of $20,000 in equity-free funding.

Over a three-year period, Google’s Launchpad Accelerator Africa programme will offer $3 million in similar funding to more than 60 start-ups on the continent, as well as provide mentorship and technology support.

There’s also an end-to-end model which provides community, technical support and early equity investment. One example: MEST, one of the longest-running,

headquartered in Accra, now also has hubs in Lagos and Cape Town, with Nairobi expected by the end of the year.

Many more are needed, says Rebecca Enonchong, who chairs Afrilabs, a panAfrican network of around 90 hubs across 30 countries.

“When local corporates see Facebook and Google opening up, they’ll follow. And that’s good because we need more hubs, not fewer,” she said during last month’s Vivatech event.

As Enonchong sees it, the role of tech hubs enabling start-ups by providing access to training and networking could be even more important than raising money.

THE BIGGEST NEEDS NOW, BEYOND SHEER NUMBERS

Yaba is Nigeria’s Silicon Valley (Photo: Reuters/Akintunde Akinleye)

So perhaps the most pressing need is more and different types of hubs. As the market matures, there will be demand for specialized knowledge, suggests Aaron Fu, who runs MEST Africa. “I think there needs to be a more collaborative model between hubs,” says Fu. “There could be some that specialize in different sectors that we could direct our start-ups to collaborate with.” Examples could be a UX/design centre or a fintech hub.

One of the less discussed blind spots has been the absence of close links to academic centres of innovation, similar to how Stanford University has always had close links with Silicon Valley in California.

Addressing this will require hands-on support from the local private sector, which can benefit from sharing the risks of innovation.

Julius Akinyemi, enterpreneur-inresidence at MIT Media Lab, sees this lack of a full eco-system and lack of crosspollination of ideas and skills across African tech hubs. “We need to find a solution to the private sector getting involved in R&D to fuel innovation that then creates trust in start-up companies for local funds to invest in them and create local wealth,” he says. “This is why countries in the western world benefit from institutions’ innovation to create new products and/or new market.”

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