The announcement on Wednesday last week that Far EasTone Telecommunications Co intended to sell a 12 percent stake to China Mobile Ltd following a decision by the government to allow Chinese institutional investors to invest in Taiwan’s equity market was understandably welcomed by financial analysts. But behind the deal — which will require government approval — lies a world of dangers.
While a 12 percent minority stake in a firm may appear innocuous, the target sector — telecommunications — is a sensitive one, as it touches on matters of individual liberties and freedom of expression. In democratic countries, intelligence agencies must obtain a warrant before they can intercept someone’s conversations on mobile phones, land lines or via electronic means of communication such as the Internet.
As an example, whenever the Canadian Security Intelligence Service sought to intercept the communications of a domestic target, it had to, per Section 21.1(c) of the CSIS Act, apply for a warrant with the Federal Court, providing, among others, the identity of the person, the type of communication to be intercepted, the nature and location of the device(s) involved and the duration of the interception activity.
Of course, under non-democratic regimes, the prophylactic legal measures ensuring the privacy of information are either obviated or altogether nonexistent. In such systems, analog and digital communication belongs to the state and can either be censored or used as incriminating evidence when suspects are prosecuted.
No country today has refined the art of control and seizure of communication more than China, which relentlessly polices Internet chat rooms, phone conversations, e-mail, video content and SMS exchanges, as well as more traditional media such as print, radio and TV, doing so both preemptively — that is, to prevent individuals from making certain claims, or “leaking” information that is assessed as “secret” — and post-facto as evidence of subversion or “splittism.”
These efforts come in many guises, from cute cartoon reminders on Web sites and state-owned portals establishing the parameters of what users are allowed to say, to worryingly intrusive spyware targeting specific dissident groups within China and abroad, as was recently exposed in the Tracking GhostNet report.
It is with this in mind that China Mobile’s proposed investment in Taiwan’s third-largest telecoms service provider, which has a 25.5 percent share of the market of about 24.7 million subscribers, is so worrying. The problem does not lie with a Chinese company buying a stake in the Taiwanese firm, but the fact that the Chinese government has a 67.5 percent share in China Mobile. Not only does this mean that part of the NT$17.77 billion (US$528 million) investment would come from Chinese state coffers, but it would leave the door open for the introduction of Chinese individuals on the board of directors at Far EasTone.
Through this and by dint of further investments in the company, human-to-human contact, sharing of corporate data and electronic exchanges, the Chinese government could, if it chose, gain access to subscriber information (overtly or covertly) and thereby facilitate electronic surveillance of Taiwanese citizens. The implication is that the Chinese government could now monitor Taiwanese dissidents — or independence advocates — with far greater ease.
What makes this proposed investment doubly troubling is China Mobile’s chairman, Wang Jianzhou (王建宙), who during the World Economic Forum in Davos, Switzerland, last year, raised eyebrows after revealing with disquieting nonchalance the extent of the personal data his company had on Chinese subscribers as well as the willingness of his company to provide personal subscriber information to Chinese authorities on request. Although Wang has since 1999 worked in the private sector, his ties to the Chinese government include positions as technology director in the Zhejiang government, director-general of the posts and telecommunications bureau in Hangzhou, director-general of the planning and construction department at the Ministry of Posts and Telecommunications and director-general of the general planning department at the Ministry of Information Industry.
There is no doubt, therefore, that once China Mobile — and through it, Chinese authorities — wedges its foot in the door of the Taiwanese telecommunications sector, it would exploit it to collect information in as indiscriminate a fashion as it has against Chinese citizens.
This is a case that goes far beyond the maximum percentage of shares Chinese investors should be allowed to hold in a Taiwanese company. When it comes to sensitive sectors that involve personal information, Taipei should ensure that the firms involved remain out of bounds of Chinese investors, who despite their country’s move toward capitalism, remain very much beholden to the Chinese Communist Party through investment and political control. China Mobile’s bid for a 12 percent stake in Far EasTone falls in this category.
J. Michael Cole is a writer based in Taipei and a former analyst with the Canadian Security Intelligence Service.
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