China may not discuss trade issues

"If China refuses to negotiate with us, what can we do?"

Chen Po-chih, chairman of the Council for Economic Planning and Development

Taiwan act on its own to restrict imports from China after both gain final entry into the WTO, if China refuses to negotiate a solution to bilateral trade disputes under WTO rules, Chen Po-chih (陳博志), the chairman of the Council for Economic Planning and Development, said yesterday.

He was responding to a warning by a Chinese official early this month that Beijing would refuse to deal with Taipei on trade issues. The warning was issued just days before the WTO voted to admit both countries into the organization.

"If China refuses to negotiate with us, what can we do? We can do nothing but restrict imports from China on our own," Chen told a group of visiting American scholars, who are in Taipei for the run-up to tomorrow's elections.

A refusal by China to negotiate will increase friction, which "will be very harmful for the friendship between Taiwan and China," and "would not be helpful" for cross-strait relations, he said.

Noting distrust between Taiwan and China, Chen said that "we need negotiations even more than other countries."

On the other hand, entry into the WTO provides both sides with an opportunity to improve mutual understanding and eventually ease the way to political discussions, he said.

If the two sides talk to each other, "we can accumulate mutual understanding. And when we've accumulated enough mutual confidence and understanding in economic issues, then both sides will have more confidence in the discussion of political issues," he said.

Chen said that China may attempt to manipulate Taiwan's equity markets by taking advantage of the WTO rules that require members to open financial markets to other members.

"For instance, if one Chinese investor here buys a stock and two days later China makes some friendly announcement toward Taiwan and the stock price rises, the next time [a Chinese investor] buys, other people will follow.

"But if they sell the stock just one week or several days before the announcement of a Chinese military exercise in the Taiwan Strait and the stock prices goes down, then the next time [the Chinese trader] sells, everybody will follow and this will cause unreasonable fluctuations in our stock market.

"We have to keep an eye on that," he said, but offered no solution to prevent such manipulation.

Trade from the 142 WTO member countries gave formal approval for admission in Doha, Qatar earlier this month.