Foreign businesspeople often threaten the government by saying that they will pack up and leave unless direct transportation links across the Taiwan Strait are established. But foreign investors set a new record last year by making net investments of NT$719.4 billion (US$22.35 billion) in the nation's stock market.
Although the market didn't meet the expectations of foreign investors, offering them barely satisfactory returns on their investments, Taiwan's stock index, the TAIEX, did rise by 408 points, or 6.65 percent, last year.
Many people give foreign investors credit for this result. But over the past year, the government has refused to yield to pressure from the pan-blue camp and foreign investors, nor has it yielded to China on the trade issue. That is the main reason the stock market saw a small increase.
Pan-blue leaders have joined hands with foreign investors to put pressure on the government, demanding immediate cross-strait flights and permission to set up chipmaking and other plants in China. Fortunately, the government has continued its efforts to prevent Taiwanese industry from becoming further undermined.
This persistence has finally paid off. The economy took off in the last quarter of last year, with growth estimated at 5.28 percent, while unemployment fell to 3.94 percent -- the lowest figure in five years. Foreign investors pumped more than NT$700 billion into Taiwan. Companies which have kept their main production lines in Taiwan, in line with the "no haste, be patient" policy, remain valuable investment targets.
This is proven by the fact that foreign investors made net investments in Taiwan Semiconductor Manufacturing Co, Powerchip Semiconductor Corp, United Microelectronics Corp and AU Optronics last month. These companies have invested heavily in Taiwan, accumulated advanced technologies, increased their international competitiveness and attracted foreign investment, which has pushed up the TAIEX.
Many disagree with this argument. They say that it is because the government relies on ideology to govern the nation that the TAIEX's performance last year lagged far behind South Korea's and Japan's stock markets -- which rose by 53 percent and 42 percent. They believe that if direct cross-strait transportation was allowed and if regulations on investing in China were relaxed, the stock market would have grown by much more than 6.65 percent last year. This is an idea held by all pan-blue media outlets and academics who put "China" at the core of their thinking.
But it is diametrically opposed to thinking which centers on Taiwan. After President Chen Shui-bian (陳水扁) said in April last year that without effective management, he would rather not have any opening, the ban on companies investing more than 40 percent of their net value in China has not been relaxed, there has been no response to the issue of advanced wafer foundries and packaging and testing plants moving to China, and direct transportation links still have not materialized. As a result, the fourth quarter last year still saw stable growth of 5.2 percent.
That reality indicates that effective management is the right course of action.
We could even say that if there had been no active opening in 2001, the TAIEX would have outperformed the South Korean and Japanese stock markets, while foreign investors would have made huge profits.