Restricted by the no haste, be patient policy and other regulations, businessmen investing in China would rather leave their profits and foreign reserves in third countries than remit them back home. Currently, companies listed on the TAIEX and the TAISDAQ cannot invest more than 20 percent of their net capital in China. If their total investment in China exceeds US$50 million, they have to apply for permission, and cannot raise funds by issuing shares.
If businessmen remit their profits back to Taiwan, the money cannot be deducted from the invested capital. In other words, once their investment in China has reached the ceiling set by the government, they will not be able to increase their investments in China if they remit their profits. As a result, businessmen would rather deposit profits in third countries for future needs.
Moreover, the government's reviews of applications to invest in China have not only delayed opportunities, but caused a lot of trouble for investors. In February, for example, Asustek Computer Inc (
Under the trend of globalization, the government's control mechanism on capital is unable to effectively restrict capital flows to China, and will further make investors refuse to send their profits back home. The MAC has proposed setting up offshore banking units in Taiwan, which no doubt will be beneficial for local businessmen transferring money across national boundaries. But as long as the policy itself is not changed, there will be more investors investing in China in secret, and overseas capital deposits will only increase.
Tung Chen-yuan is a doctoral candidate at the School of Advanced International Studies, Johns Hopkins University.
Translated by Jackie Lin
RSS