President Chen Shui-bian (
On cross-strait economic exchanges, he changed the principle of "active opening, effective management" to "active management, effective opening."
Whether Chen was playing word games or signaling a substantive shift has become a focus of public debate. Given that Chen has talked much but done little in the past, it is not surprising that people regard this "shift" with some skepticism.
On the day after the speech, Premier Frank Hsieh (
These include visits by Chinese tourists to Taiwan, opening Taiwan to more foreign investment, adopting a clearing mechanism for exchanging the New Taiwan dollar and the yuan, investing in China and other matters. This was the result of the Cabinet learning from experience, when policies were rushed through and with ineffective communication between government bodies. It also indicated a step forward for the government in its collective ability to make policy.
In light of present cross-strait economic exchanges, use of the words "loosen" and "tighten" is surely inadequate. Instead, the government must come up with a more practical plan.
The "active opening, effective management" approach was doomed to fail, because it lacked a serious mechanism to back it up. As a result the "opening" to China took place willy-nilly. That hurt the economy by leading to overdependence, releasing capital flow to China but retaining debt as skilled labor flocked across the Strait. It also failed to protect the safety and interests of Taiwanese businesspeople in China.
China's economic development has entered a high-risk phase. Black holes and real-estate bubbles can happen anytime. State banks are aware of this, and thus their urgency in selling stocks to foreign investors to distribute risk. The Investment Commission under Taiwan's Ministry of Economic Affairs published figures showing that Taiwanese capital in China declined 8.73 percent in November, indicating a cooling of the "China fever."
Also, according to the most recent figures published by China's Ministry of Commerce, every month since last April -- with the exception of September -- foreign capital in China has declined. In each month during the second quarter, the decline reached as much as 10 percent, a level rarely seen in recent years. The statistics serve as a warning, and anyone in Taiwan who blindly advocates investing in China clearly has a secret agenda.
Since China refuses to have any official contact with Taiwan, it is difficult for the government to protect the rights of investors, increasing the risks for government, businesspeople and shareholders. As for China-based Taiwanese companies listing on the stock market here, the lack of government regulation means that this course of action is highly risky and may only be feasible after thorough consideration.
One example of what can go wrong is the Hong Kong investors who were duped by fake shares on the Chinese stock market, despite the close relationship between the territory and the rest of China. Surely Taiwanese policymakers aren't blind to this.