After the recent uproar caused by rumors that Beijing's Taiwan Affairs Office had ordered the closure of a petrochemical plant run by Taiwan's Chi Mei Corp (
The government should also further clarify the rational nature of the "no haste, be patient" policy which it has long advocated. Through these, the government should try to break the long-running conflict between national security and economic development in its cross-strait trade policies.
Taiwan is a major capital exporting country. According to statistics from China's Ministry of Foreign Trade and Economic Development, approved investments by Taiwanese firms in China have reached almost US$50 billion. Add to this the reinvestment of business profits and securities investments, and we have an estimated US$100 billion. Taiwanese businesses not only provide job opportunities in China, but also boost the development of local industries. Taiwanese businesses, therefore, are making a significant contribution to China's economy.
Beijing is also well aware of the important role Taiwanese businesses play in its economic reforms -- as well as their impact on the "unification" issue. That is why China has made a point of courting Taiwanese businesses since the early days of cross-strait business exchanges. In 1988, the State Council passed a set of regulations encouraging Taiwanese investment. Beijing also passed a "Taiwan Compatriots Investment Protection Law" in 1994, updated in 1999. When stating his "eight points" in 1995, President Jiang Zemin (江澤民) made a point of "Not letting political disagreements affect or disturb cross-strait economic cooperation, and protecting all the legitimate rights of Taiwanese businesses under any circumstances."
But can these laws and statements really guarantee protection of the rights of Taiwanese businesses? In fact, the above-mentioned laws contain many overlapping "protections" and "guarantees," but they are all vague and general. There have been controversies over their application because most of these statutes are more like announcements and contain only general principles. And the communist party controls the power to interpret them.
Also, the rule of law has yet to mature in China. Ideological leanings allow the party's views to override the law. Legal force can hardly stem the party's will.
Shouldn't Taiwanese businesses making large-scale investments in China also raise their risk awareness? In Chi Mei's example, I am not surprised to see China using political maneuvers to influence economic activities. In a system that lacks a supervisory mechanism, the force of law becomes seriously unstable.
The current interest in cross-strait trade is quite an extraordinary phenomenon between any hostile states. This phenomenon contains two inherent forces. One is the "push" formed by Taiwan's industrial readjustment -- which is a natural result of market movements driven by geo-economic factors -- and the shared language and ethnic backgrounds of the two sides. China offers Taiwanese businesses the possibility of achieving the rational goals they pursue -- lower costs and higher competitiveness.
But there are multiple purposes behind China's preferential treatment for Taiwanese businesses. There are "economic factors," such as using Taiwanese capital to boost up its economy and create jobs. There are also "non-economic factors," such as blurring the dividing lines across the Strait in the business sectors and using Taiwanese civic power to influence Taiwan's government policy.
The cross-strait political environment, however, still remains risky since China has not renounced the use of force against Taiwan. Apart from considering the survival and development of businesses, the government also has to actively seek ways of reducing the external costs incurred on Taiwan's national security by the deepening trade relations. Hence the formulation of the no haste, be patient policy.
On a more proactive side, the "Keep your roots in Taiwan, upgrade industries" strategy, which is derived from the no haste policy, is designed to ease the increasingly serious industrial competition across the Strait, maintain Taiwan's industrial advantage and avoid a dilution of Taiwan's industrial upgrading program. On a passive side, the Taiwan government has no way of protecting its businesses in China because Beijing has not renounced the use of force against Taiwan.
Therefore, the government has to be very careful about investments in China and take a gradual approach. The core policies are about putting controls on investments in the infrastructure and high-tech industries, as well as investments worth more than US$50 million, because these industries are a very important factor in Taiwan's economic stability. They also play an very important role in the readjustment of Taiwan's industrial structure. A high awareness of the risks posed to Taiwan's economic security is therefore inherent in the policy formulation.
The "no haste" policy needs to be fine-tuned along with the changing overall framework of cross-strait trade and economic interaction. The government agencies concerned are now evaluating the content and direction of the readjustments. In the future, static control measures may be replaced by dynamic guidance.
But the spirit of "ensuring economic security" and "strengthening risk awareness" inherent in the no haste policy will be maintained. Only in this spirit can we properly handle trade and economic exchanges across the Strait, and take care of both "national security" and "economic development."
Hong Chi-chang is a DPP legislator.
Translated by Francis Huang
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