A regulation allowing Taiwanese banks to invest in China passed preliminary review in the legislature yesterday amid a chaotic session in which pan-green lawmakers refused to recognize the result.
The legislators said the committee convener had handled proceedings unfairly.
The regulatory relaxation appears to open a door for Taiwanese banks to make inroads into China's financial market through the establishment of subsidiaries, since opening branches is not possible under Taiwanese law because there is no bilateral supervisory agreement.
Eighty four lawmakers endorsed the proposed amendment to Article 36 of the Statute Governing Relations Between Peoples of the Taiwan Area and the Mainland Area (
After passage in yesterday's Home and Nations Committee, the amended article promoted by Chinese Nationalist Party (KMT) Legislator Lee Jih-chu (李紀珠) would be referred to cross-party negotiation before being introduced to the legislature for a second reading.
Lee expected the amendment to finish its third reading within the current legislative session ending in December. Yet the timetable could be delayed for four more months if the pan-green camp demands partisan negotiations before further review, she said.
The amended article allows local banks to set up branches and subsidiaries in China directly or indirectly via a third country and to invest in Chinese rivals.
In addition, the finance sector would be removed from the "prohibited items" for investment in China, and responsibility for the matter would be shifted from the Ministry of Finance to the Finance Supervisory Commission (FSC).
Banks would be required to apply for permission from the FSC before establishing a branch in China, but the FSC would have few discretionary powers. Applicants fulfilling all the relevant criteria would be automatically granted permission, Lee said.
Lee added that it was imperative to pass the amendment if the government really takes the goal of enhancing the competitiveness of Taiwan's banks seriously.
"According to China's WTO commitments, foreign banks can establish wholly foreign-owned branches in any Chinese city and provide local and foreign currency to Chinese individuals. It's time to lift [Taiwan's] restrictions," Lee said.
Taiwanese banks are only allowed to establish representative offices in China, with government officials saying that the ban on opening branches in China is due to a lack of a "memorandum of understanding" (MOU) concerning financial supervision.
Although some pan-green politicians including Democratic Progressive Party Legislator Tsai Chi-chang (
Taiwan Solidarity Union Legislator David Huang (
"Furthermore, it would be a great risk for financial businesses to invest in China without the protection of a MOU and the public would have to shoulder the consequences," Huang said.
Meanwhile, Mainland Affairs Council (MAC) Vice Chairman Johnnason Liu (
He said the amendment would not resolve the MOU problem, on the contrary, loosening restrictions would only cause greater disorder in bank management, Liu added.
The FSC said, according to current international practice, signing a formal bilateral MOU is not necessarily a matter of high politics and sovereignty.
"It can be done as long as there are communication conduits and cooperation mechanisms between the home and host countries," the commission's spokesperson Susan Chang (
Local financial institutions said they welcomed the plan.
"We do hope for opportunities to develop in China's financial market where Taiwanese banks enjoy advantages of language and culture [in competing with foreign rivals]," said Lee Chang-ken, chief strategy officer of Cathay Financial Holding Co (國泰金控), the nation's largest financial group by assets.
Additional reporting by Jewel Huang
With an approval rating of just two percent, Peruvian President Dina Boluarte might be the world’s most unpopular leader, according to pollsters. Protests greeted her rise to power 29 months ago, and have marked her entire term — joined by assorted scandals, investigations, controversies and a surge in gang violence. The 63-year-old is the target of a dozen probes, including for her alleged failure to declare gifts of luxury jewels and watches, a scandal inevitably dubbed “Rolexgate.” She is also under the microscope for a two-week undeclared absence for nose surgery — which she insists was medical, not cosmetic — and is
CAUTIOUS RECOVERY: While the manufacturing sector returned to growth amid the US-China trade truce, firms remain wary as uncertainty clouds the outlook, the CIER said The local manufacturing sector returned to expansion last month, as the official purchasing managers’ index (PMI) rose 2.1 points to 51.0, driven by a temporary easing in US-China trade tensions, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday. The PMI gauges the health of the manufacturing industry, with readings above 50 indicating expansion and those below 50 signaling contraction. “Firms are not as pessimistic as they were in April, but they remain far from optimistic,” CIER president Lien Hsien-ming (連賢明) said at a news conference. The full impact of US tariff decisions is unlikely to become clear until later this month
GROWING CONCERN: Some senior Trump administration officials opposed the UAE expansion over fears that another TSMC project could jeopardize its US investment Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) is evaluating building an advanced production facility in the United Arab Emirates (UAE) and has discussed the possibility with officials in US President Donald Trump’s administration, people familiar with the matter said, in a potentially major bet on the Middle East that would only come to fruition with Washington’s approval. The company has had multiple meetings in the past few months with US Special Envoy to the Middle East Steve Witkoff and officials from MGX, an influential investment vehicle overseen by the UAE president’s brother, the people said. The conversations are a continuation of talks that
CHIP DUTIES: TSMC said it voiced its concerns to Washington about tariffs, telling the US commerce department that it wants ‘fair treatment’ to protect its competitiveness Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday reiterated robust business prospects for this year as strong artificial intelligence (AI) chip demand from Nvidia Corp and other customers would absorb the impacts of US tariffs. “The impact of tariffs would be indirect, as the custom tax is the importers’ responsibility, not the exporters,” TSMC chairman and chief executive officer C.C. Wei (魏哲家) said at the chipmaker’s annual shareholders’ meeting in Hsinchu City. TSMC’s business could be affected if people become reluctant to buy electronics due to inflated prices, Wei said. In addition, the chipmaker has voiced its concern to the US Department of Commerce
RSS