Don't gut Taiwan for China's sake

The "no haste, be patient, while keeping roots in Taiwan" policy restricting Taiwan business investments in China is beginning to falter. The Legislative Yuan, the Mainland Affairs Council and business and industrial groups are in heated debate about lifting the policy. Formosa Plastics president Wang Yung-ching (王永慶), joined by other well-known business leaders, have suggested to President Chen Shui-bian (陳水扁) "that Taiwan's economy is dying and the CPR needed is the opening up of investments in China."

The divisions between those who advocate "no haste, be patient" and "total liberalization" are increasingly polarized. Both sides press their cases with emotional appeals based on their political or commercial positions, without offering comprehensive reasonings.

How would "a total liberalization" impact the political safety and economic development of Taiwan? There is no clear agreement on this. Advocates of "no haste, be patient" worry about the outflow of large amounts of capital to China, fearing Taiwan would gradually bleed to death. They say bank loans would increase, creating a chaos in Taiwan's financial system. They feel authorizing investment in China by high-tech industry would crush the competitiveness of Taiwan's own high-tech industry while massive investment in China's petrochemical industry would hollow out the industry here.

Those who support "total liberalization," however, believe that as investors worldwide rush to invest in China, and Taiwan's traditional industries face increasing hardship, investment in China will be the only way for Taiwan businesses to survive.

Taiwan businesses have already invested extensively in China. In the past 10 years, Taiwan businesses have invested more than US$60 billion. More than 30,000 Taiwan businesses have operations in China and provide more than 3 million employment opportunities there. Wang's son, Wang Wen-yang (王文洋), for example, is in the process of establishing an 8-inch wafer fab in Shanghai.

Investments in China by local businesses accounts for 4.4 percent of Taiwan's GDP -- a clear indication that Taiwan relies more on China than any other country. The greater the dependency, the greater the security risk to Taiwan and the greater the negative impact on our political stability and economic development. China is also relying on Taiwanese businesses to threaten the Taiwan government, damage its internal security, weaken its sovereignty and create political chaos.

Over the years, Taiwan businesses have contributed a great deal to the development of China's economy. Just exactly how much money has been made by Taiwan businesses in China and how much have they taken back to Taiwan? Have the extensive investments emptied out capital from Taiwan, caused its financial system to hemorrhage and hollowed out the traditional industries? No one seems to care.

The way to deal with the difficulties the traditional industries face is to improve their business management and revive their creativity and their technology. However, many big enterprises are screaming to be allowed to relocate to China instead. They are relying on escape to survive. They want to leave their dead-beat loans behind for the banks to deal with while they enjoy a second chance in China.

"The opening up of three links" has also helped some troubled traditional industries to hold onto their illusions. Many have decided to join the gold rush to China instead of taking risks here. The "no haste, be patient" policy only restricts certain capital-intensive and high-tech industries, as well as the upstream, midstream, and downstream businesses of the petrochemical industry. Discarding this policy for a "total liberalization" policy will only corrupt Taiwan's political and economic development and lead it into a bottomless pit. This is part of China's unification strategy -- drag Taiwan down via the economy.