Thu, Nov 15, 2007 - Page 8 News List

The security risk of losing the cap

Huang Tien-lin 黃天麟

Yahoo CEO Jerry Yang (楊致遠) and executive vice president Michael Callahan apologized to the mother of Chinese journalist Shi Tao (師濤) at a US House of Representatives hearing on Nov. 6 for divulging information that led to her son's 10-year imprisonment. It is rumored that at least four online dissidents were jailed because of information provided by Yahoo.

Yahoo is not the only foreign company that has been forced to comply with communist China's autocratic regime. In June of 2004, China forbade all Internet businesses from creating or disseminating any superstitious, pornographic, or "harmful" material to China and its people.

Accordingly, Google was forced to design a set of software that filters Web pages containing sensitive terms such as "Taiwanese independence," "democracy," "Tiananmen Square massacre," "Falun Gong" and others.

The example of Yahoo and Google should remind the Taiwanese public of the relationship between state autonomy, social security and the suggestion made by Democratic Progressive Party (DPP) presidential candidate Frank Hsieh (謝長廷) concerning the cancelation of the 40 percent cap on Taiwanese investments in China.

On March 14, 2005, Beijing passed the "Anti-Secession" Law of which Article 8 states that China shall use non-peaceful and any other necessary means to deal with Taiwanese separatist forces. China will not allow Taiwan to declare itself an independent, sovereign state.

The DPP purports to be a pan-green, grassroots party seeking sovereignty and independence, and should thus realize the threat to national and economic security posed by the migration of industry to China.

Annexation through economic means is China's primary tactic against Taiwan. The purpose of forming the Association of Taiwan Investment Enterprise on the Mainland (台企聯) in April from numerous Taiwanese enterprises -- with officials from China's Taiwan Affairs Office (國台辦) as honorary chairman and vice president of the standing committee -- is to ensure that the association issues commands that are directed by the Chinese government.

Beijing has yet to deploy the ultimate weapon of unification through economic means because the time is not yet ripe: Taiwan's large corporations, limited by the 40 percent cap on China-bound investments, still retain 60 percent of their assets in Taiwan.

If China shows its cards too early, they will choose Taiwan in order to preserve the bulk of their assets. China has attempted to eliminate this problem by using Taiwanese businesses, pro-unification academics and media outlets and other external sources to argue for the removal of the cap. It appears that the government will buckle under pressure from businesses as China had hoped.

After the investment cap is lifted, Taiwan's large, publicly traded companies will quickly invest more than 50 percent of their assets in China, whereupon they will turn their backs on Taiwan, conform to China's unification goals, and the union of the motherland will "mature naturally."

This article will not even address the more serious repercussions for Taiwan's economy.

Thus, the 40 percent investment cap should be considered in the light of state sovereignty, economic security and risk management, rather than as a problem concerning individual corporations or businesses. The Financial Holding Company Act (金控法) stipulates that investment in non-financial enterprises by finance holding companies cannot exceed 15 percent of its paid-up capital, just as the Banking Act (銀行法) stipulates that a bank may not extend more than 15 percent of its net value in credit to a party or group of companies for the purpose of financial security and risk management. The rules do not vary according to industry and are not a matter of "assessment on individual basis."

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