Tue, Jul 21, 2009 - Page 8 News List

THE LIBERTY TIMES EDITORIAL: Put limits on Chinese investment

Since taking office, President Ma Ying-jeou (馬英九) has sped up the process of opening up to China, making Taiwan more reliant on its giant neighbor. His rationale is the claim that his predecessors Lee Teng-hui (李登輝) and Chen Shui-bian (陳水扁) hindered Taiwan’s economic development through isolationist policies. The two big items on Ma’s agenda are allowing Chinese investment in Taiwan and signing an economic cooperation framework agreement (ECFA).

Ma’s Chinese Nationalist Party (KMT) can boast of being in complete charge of all branches of government. The legislature does not play its role of supervisor and counterbalance to the administration and has become a mere rubber stamp for Ma’s policies.

Surprisingly, however, the legislature’s Organic Laws and Statutes Bureau recently released a research paper on the prospects for Chinese investment in Taiwan that presents strong doubts about the government’s policy of attracting Chinese investment with few safeguards. The questions raised in the report are both substantial and pertinent and should trigger some alarms. It is by no means certain, however, that this report will wake Ma and his ministers from their stupor.

The report makes two main points. First, it criticizes the Ministry of Economic Affairs’ regulations governing Chinese investment as unclear, since they make no mention of safeguarding industrial technology. The report suggests that regulations governing cross-strait commerce should clearly prohibit Chinese investment in areas that concern national security and that have a monopolistic nature.

It also suggests the government appoint a committee to establish a threshold for investment in key industrial technologies and draw up measures for protecting commercial secrets.

Second, the bureau urged the government to prevent China from coercing Taiwanese doing business in China into acting as agents for Chinese investment. The report suggests the government refer to South Korean regulations to establish the real identity of investors.

The report suggests a mechanism be established to monitor the flow of Chinese investment. It notes that China prohibits private individuals from investing abroad, which means that almost all Chinese investment abroad is state-owned capital.

Taiwan must prevent politically motivated acquisitions by Chinese investors, and regulations on cross-strait investment should include precautions against the strategic withdrawal of investments. The government should be prepared to take over businesses with Chinese investment for the sake of national security if necessary.

We have been expressing such concerns for a long time. Over the past year, we have pleaded with Ma’s government to take note of these worries, though our advice has fallen on deaf ears. Unfortunately the Ma administration has clung obstinately to its course.

China has changed its unification strategy to a carrot-and-stick approach, with economic integration the main element in the softer side of the strategy and cross-strait investment playing a key role. China’s investments abroad require official approval, which is granted according to Beijing’s interests.

Chinese investment in Taiwan will, therefore, be geared to use Beijing’s enormous foreign exchange reserves to acquire major firms and technology and to hollow out Taiwan’s industrial base. It will be used to speculate on financial markets in order to turn Taiwan into an economic colony.

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