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More liberal cross-strait policy urged

Business leaders and economists yesterday urged the government not to reverse its policy of liberalizing China-bound investment, saying such a move would hurt the nation's economic development.

The remarks came after the Presidential Office announced a "seven-point" conclusion following a meeting of senior Cabinet and Democratic Progressive Party members. They said the government's move to review cross-strait policies is a reaction to China's passage of its "Anti-Secession" Law last month, but also to Chinese Nationalist Party (KMT) Vice Chairman Chiang Pin-kun's (江丙坤) trip to China last week, in which Chiang came to an agreement with Beijing officials.

The new policy aims to prevent any further private agreements by unauthorized groups or political parties, they said.

But they noted that the sixth conclusion states that the government should not simply open cross-strait investments while ignoring "effective management."

The government, opposition parties and private businesses reached a consensus in August 2001 to implement the so-called "active opening, effective management" trade policies for China-bound investment.

POLICY QUESTION

Cabinet Spokesman Chou Jung-tai (卓榮泰) stressed yesterday the policy remains unchanged. He said that the government must not ignore the "effective management" part.

Hsu Sung-ken (許松根), an industrial economist at the Academia Sinica, said effective management is indeed needed given the hostility posed by Beijing, especially after the passage of its Anti-Secession Law.

"Protecting our technology is a basic principle to ensure industry competitiveness ... furthermore, companies such as UMC have received government subsidies, so it is inappropriate for them to export technology to China," Hsu said.

The administration's latest move triggered speculation that it may implement stricter China-bound investment regulations, at a time when several government agencies are probing United Microelectronics Corp (UMC, 聯電) for possible illegal investment in a Chinese chipmaker.

Among the China-bound investment applications which await permission from the Ministry of Economic Affairs are proposals for two 10-inch wafer manufacturing plants, naphtha crackers and investments in IC design and IC packaging and testing. Those applications may be affected by the re-evaluation of investment rules.

Still, Luo Huai-jia (羅懷家), executive director of the Taiwan Electrical and Electronic Manufacturers' Association (電電公會), said political disputes should not influence economic development.

"To strengthen local industries' competitiveness, the government should not suspend the investment projects in China, or freeze negotiations on direct cargo flights as planned after the Lunar New Year," Luo said.

The government's sluggish moves to liberalize cross-strait investment has displeased local businesspeople, who urged the government to accelerate deregulation.

One such case is that of Douglas Hsu (徐旭東), chairman of the Far Eastern Group (遠東集團), who has repeatedly called for the liberalization of China-bound investment.

BUSINESSPEOPLE UNHAPPY

"Some Taiwanese businesspeople are unhappy with the government's slow progress in opening up cross-strait investment, but they remain silent to avoid getting in trouble," said Tsai Horng-ming (蔡宏明), deputy general secretary of the Chinese National Federation of Industries (全國工業總會).

Instead of trying to block investment from flowing into China, the government should help local industries take advantage of the massive and growing market, said KMT Legislator Lee Jih-chu (李紀珠), who is also an economics professor at National Chengchi University.

"We have to admit the fact that our economic dependence on China is growing, while China's dependence in Taiwan is declining," Lee said.

"Other foreign companies have already introduced the technologies that we ban in China," the lawmaker said.

If the government keeps preventing businesses from capitalizing on China's cheap labor and resources, companies such as UMC will find a way to invest there anyway by getting around regulations, Lee said.

China has become Taiwan's largest trading partner, with the bilateral trading volume reaching NT$7.66 billion in January -- a 42.5 percent jump from a year ago, according to statistics from the Ministry of Economic Affairs.

An unnamed banking executive told the Central News Agency yesterday that the banking sector will respect the government's decision in terms of adjusting its cross-strait policies.

But the executive expressed the hope that the government will continue a policy of openness when it comes to cross-strait trade and investment.
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