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Editorial: Investment needed to counter China

After the APEC meeting in Chile last November, Chinese President Hu Jintao (胡錦濤) declared in an interview in Brazil that he was willing to normalize relations with South and Central American and Caribbean states. This was the signal of the start of a new charm offensive by China in the US' backyard and aimed at Taiwan's own diplomatic efforts. China's "united front" organizations are now holding meetings in these countries to promote peaceful unification and squeeze Taiwan's room for diplomatic maneuver in the region.

At the UN summit earlier this month, Hu promised that China will give US$10 billion in low-interest loans, trade tax exemptions and two years of debt relief to the world's 50 poorest countries. He said that China had decided only to offer this assistance to the 39 of these 50 countries that have diplomatic relations with China, while excluding the 11 countries that recognize Taiwan. Instead of making assistance to poor countries its guiding principle, this is clearly a highly politicized offer from China that puts pressure on Taiwan's diplomatic allies.

It is plain for all to see that China is trying to undermine Taiwan's diplomatic position. Taiwan's government will be guilty of professional negligence if it doesn't take effective steps to consolidate Taiwan's diplomatic ties with these countries.

In the past, Taiwan used the offer of loans and economic development funding in its efforts to build up diplomatic relations. During elections in the recipient nations, this aid was often targeted by various parties for their own political ends. The funding was sometimes even siphoned off for private use, which led to little benefit in the recipient countries, and criticism in Taiwan that we were engaged in "dollar diplomacy."

Taiwan's diplomacy differs from that of other countries. Naturally, in helping developing countries, and consolidating diplomatic ties, Taiwan is making its contribution and doing its duty as a member of the international community. This is something that both the government and the opposition can agree upon. The question in relation to the government's new NT$7.5 billion (US$226 million) Jung Pang aid project is how to improve the mechanism of distributing aid to achieve its strategic goals.

Under this new plan, the NT$7.5 billion will be disbursed to Taiwanese businesspeople investing in Central and South America. This is a change in direction from past aid projects, in which money was given directly to recipient governments. Under this project, Taiwanese businesspeople will take the lead, opening markets and developing investment and commercial opportunities. When their investments prove successful, the host country will benefit, and the influence of Taiwan in these countries will also increase. This is a win-win situation. It will also avoid the pitfalls of direct aid, in which aid funding becomes the object of political squabbling and presents numerous opportunities for corruption. This is a creative way of dealing with the problem.

Taiwan has already signed a free trade agreement with two Central American nations, and because of free trade agreements between Central and South American nations and the US, this has won it improved access to the North American market. China's textiles are facing dumping charges in both US and European markets. In response, Taiwan can make use of the resources and labor of Central and South America to persuade Taiwanese businesspeople to turn away from the self-destructive "go west" policy.

This works to the advantage of Taiwan's trade, diplomacy and national security. Nevertheless, most of Central and South America is made up of developing nations, and still lacks investment information and pre- and post-investment guidance. The government must take the initiative and provide detailed programs to remove the obstacles that exist for Taiwanese businesspeople in these countries.
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