The government risks rendering Taiwan's economy irrelevant if it continues to drag its feet on embracing economic integration with China, officials from the American Chamber of Commerce in Taiwan said in a report.
"Probably Taiwan's biggest risk that it faces today is irrelevancy. If China continues along the path that it is, no one will need Taiwan as this so-called gateway," said Richard Henson, president of AmCham.
In the chamber's 2002 White Paper -- officially released yesterday -- it is suggested that the Taiwan government "accept economic reality. Cross-strait business will continue to expand."
"With the accession of Taiwan and China to the WTO, businesses on both sides of the Taiwan Strait stand to gain from unrestricted investment and trade and the free movement of goods, services and people," the paper says.
David Hoffman, co-chair of the chamber's telecommunications committee, said restricting the free flow of elements so vital to multinational companies would seriously degrade Taiwan's potential status as a gateway to China.
"The worst case scenario is that greater China businesses cannot be run efficiently from Taiwan and they move to China. That is the likely outcome and that's the key threat," Hoffman said.
The message from the chamber is in stark contrast to the government line that liberalizing economic links with China would constitute a national security risk by siphoning off vital capital and resources and making Taiwan's economy overly reliant on its political rival.
Peter Kurz, co-chairman of the capital finance committee, said that the easing of links with China could in fact help resolve some of Taiwan's lingering domestic problems, such as its ballooning level of non-performing loans. Part of the problem arises when bank financing for local projects ends up being diverted to China for the establishment of manufacturing plants and equipment, Kurz said.
"These Taiwanese banks are in fact financing these operations in China without being able to access information on what they are financing," he said.
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