Attraction of Middle Kingdom growing

Following the Sept. 11 terrorist attacks in the US, China has emerged as a relatively stable market that looks even more attractive to Taiwan business. But experts warn about the risks of Taiwan's growing reliance on the Chinese market.

Ministry of Economic Affairs statistics show that the US and Japan absorbed 20.8 percent and 19.1 percent, respectively, of Taiwan's total exports last year, which were worth US$148.32 billion. Europe absorbed 14.8 percent, countries in ASEAN 13.3 percent, and Hong Kong 11.6 percent.

China and Hong Kong together absorbed 22.8 percent of Taiwan's overall outbound shipments last year, surpassing the US as Taiwan's largest export outlet.

Taiwan's exports to China as a ratio of its overall exports rose from 11.1 percent in 1999 to 11.2 percent last year.

The percentage climbed to 12.1 percent for the first seven months of this year, according to the ministry's statistics.

The figures show that Taiwan's export sector has become increasingly dependent on the Chinese market.

With China's imminent entry into the WTO and its successful bid to host the 2008 Olympic Games, China may in turn become a more stable market, further attracting Taiwan businesspeople to invest there.

It is expected that trade across the Taiwan Strait will grow even faster after Taiwan enters the WTO, a situation which is likely to fuel further trade with and investment in China.

The Mainland Affairs Council says that 50 percent of Taiwan's overseas investments are now directed at China.

James Chou (周慶生), deputy director of the councils's department of economic affairs, questioned the point of promoting cross-strait trade if it will eventually hurt Taiwan's economy and its political independence.

As the private sector is eager to move into China, the government's trade and financial authorities should provide Taiwan businesses with sufficient and accurate information about the China market, he said.

Authorities should hammer out a detailed program on exploring the Chinese market and set up a risk-monitoring system amid growing economic exchanges between the two sides, Chou said. He warned policy makers not to dance exclusively to the tune of Taiwan's entrepreneurs.

Importers and Exporters Association of Taipei (台北市進出口公會) Chairman Lee Tung-liang (李棟樑) said external trade is Taiwan's sole tool for maintaining its economic development, adding that China is not the only market for Taiwan businesses.