Beijing's rhetoric could hurt its economy

Eyeing an educated and inexpensive labor market and access to the massive European market, some high-tech companies, including Hon Hai Precision Industries Co (鴻海) and Asustek Computers Co (華碩), have set up factories in the Czech Republic and are considering further investment there.

While the government talks about diversification, the Taiwan-based foreign business community, however, is encouraging deeper economic ties with China.

The American Chamber of Commerce in Taipei (AmCham) said last week in its 2004 White Paper that Taiwan's status as a regional economic hub would be in jeopardy without direct transportation links across the Taiwan Strait.

Multinational companies here are facing increasing difficulties in carrying out a regional business plan from Taiwan without direct transport connections with China, AmCham said.

This is forcing them to relocate senior executives for Greater China operations from Taiwan to Singapore, Hong Kong or Shanghai, it said.