The government is expected to lift various restrictions on Taiwanese investments in China in the near future once the resolutions of the Economic Development Advisory Conference have been put into effect.
Morris Chang (張忠謀), chairman of Taiwan Semiconductor Manufacturing Co (台積電), the nation's largest contract chip foundry, announced after the conference that his company would hasten its plans to invest in China as the government has replaced its "no haste, be patient" (戒急用忍) policy with a policy of "proactive opening and effective management" (積極開放, 有效管理).
The public, as a result, is concerned about the possible impact it will have on cross-strait relations.
The direction of capital flows has been a key issue in debates over the new policy.
People who are opposed to the policy have cited statistics showing that most of the capital that flowed to China has never flowed back to Taiwan.
They fear that Taiwanese investments in China may empty the nation of capital and investments.
People who are in favor of the new policy, however, have cited Taiwan's massive trade surplus with China over past years, which even exceeds the total amount of the nation's capital invested in China.
In my opinion, whether or not the above perspectives tally with the truth, to judge the advantages and disadvantages of the policy simply by the direction of capital flows is biased.
In fact, it is not necessarily disadvantageous when capital flows out of Taiwan.
Nor is it necessarily advantageous when capital flows in if the flow is triggered by non-economic factors.
From the point of view of the economy as a whole, a vigorous domestic economy does not depend on massive amounts of capital but on a proper environment and good opportunities for investment.
China is a case in point. It has attracted capital from all over the world because of its fair investment environment and opportunities.
For the exactly the same reason, Taiwan's capital, as well as its other resources for that matter, will certainly flow to areas and industries that ensure optimum profit amid today's tide of globalization.
Let's set aside the question of whether the government is able to compel local companies to repatriate the profits of their foreign investments, in addition to taxes or stock dividends for their shareholders.
Even if the government is able to do so, what will happen to the capital after it flows back? How will local banks use the money?
Surely they will invest it in areas and industries that ensure optimum profit.
When Taiwan is easing its restrictions on cross-strait trade, what the government should do is to establish efficient and sound mechanisms for cross-strait capital flow instead of establishing mechanisms to draw back capital from China.
Only by allowing the capital to flow according to regular economic patterns and market trends can our nation "turn stagnant water into flowing water."
Taiwan's future development does not lie in massive capital but in an appropriate position within the structure of globalization which allows Taiwan to promote competitiveness and advantages of its own.
How could the government forget the "knowledge-based economy" it has been promoting so loudly over the past two years?
Paul Hsu is a chair professor of management at the Far Eastern Group.
Translated by Eddy Chang
Saudi Arabian largesse is flooding Egypt’s cultural scene, but the reception is mixed. Some welcome new “cooperation” between two regional powerhouses, while others fear a hostile takeover by Riyadh. In Cairo, historically the cultural capital of the Arab world, Egyptian Minister of Culture Nevine al-Kilany recently hosted Saudi Arabian General Entertainment Authority chairman Turki al-Sheikh. The deep-pocketed al-Sheikh has emerged as a Medici-like patron for Egypt’s cultural elite, courted by Cairo’s top talent to produce a slew of forthcoming films. A new three-way agreement between al-Sheikh, Kilany and United Media Services — a multi-media conglomerate linked to state intelligence that owns much of
The US and other countries should take concrete steps to confront the threats from Beijing to avoid war, US Representative Mario Diaz-Balart said in an interview with Voice of America on March 13. The US should use “every diplomatic economic tool at our disposal to treat China as what it is... to avoid war,” Diaz-Balart said. Giving an example of what the US could do, he said that it has to be more aggressive in its military sales to Taiwan. Actions by cross-party US lawmakers in the past few years such as meeting with Taiwanese officials in Washington and Taipei, and
The Republic of China (ROC) on Taiwan has no official diplomatic allies in the EU. With the exception of the Vatican, it has no official allies in Europe at all. This does not prevent the ROC — Taiwan — from having close relations with EU member states and other European countries. The exact nature of the relationship does bear revisiting, if only to clarify what is a very complicated and sensitive idea, the details of which leave considerable room for misunderstanding, misrepresentation and disagreement. Only this week, President Tsai Ing-wen (蔡英文) received members of the European Parliament’s Delegation for Relations
Denmark’s “one China” policy more and more resembles Beijing’s “one China” principle. At least, this is how things appear. In recent interactions with the Danish state, such as applying for residency permits, a Taiwanese’s nationality would be listed as “China.” That designation occurs for a Taiwanese student coming to Denmark or a Danish citizen arriving in Denmark with, for example, their Taiwanese partner. Details of this were published on Sunday in an article in the Danish daily Berlingske written by Alexander Sjoberg and Tobias Reinwald. The pretext for this new practice is that Denmark does not recognize Taiwan as a state under