In its efforts to portray itself as an investment haven for multinationals, the People’s Republic of China has shown itself to be far more accommodating to foreign companies than governments. Such has been its thirst for foreign investment as it modernizes that even companies headed by pro-independence Taiwanese have been treated with silk gloves.
Over the years, this strategy bore fruit for Beijing as foreign companies rushed to establish themselves despite growing criticism of China’s human rights record. This two-track approach — kind to businesses, intransigent with governments — has created a buffer between politics and business such that one does not threaten to undermine the other even during political crises. This helps explain, for example, why the corporate sector — even in Taiwan — showed itself so willing to resume operations in China after the Tiananmen Square Massacre in 1989.
The same applied to tensions over the US bombing of the Chinese embassy in Belgrade in 1999, the occasional spat over Japanese leaders visiting the Yasukuni shrine, or accusations of Chinese spying. Governments spar rhetorically, but no one does anything to prevent economic exchanges.
One recent case, however, is threatening to undermine China’s image as an investment hub: the Rio Tinto spy scandal. Beijing’s National Secrets Protection Bureau claims that the Australian firm has spied on Chinese steel mills for six years, which it claims resulted in the mills overpaying US$102 billion for iron ore. Four Rio employees in Shanghai, including Stern Hu (胡士泰), an Australian, were detained last month on suspicion of stealing state secrets.
Some analysts have said that China may be using the accusations to put itself in a position of strength in iron ore price talks with Rio Tinto. Some also say the accusations lack transparency, are vague and hardly credible. For example, China’s claim that it overpaid US$102 billion for iron ore is odd given that Rio Tinto’s total iron ore revenue over the past six years was US$42.6 billion.
Depending on how the case goes and how the alleged spies are treated in a country that has a history of dealing swiftly with such individuals, the potential exists for the conflict to become political — for politics to intrude upon economics. In recent months, relations between Australia and China have become tense, largely the result of allegations of Chinese spying on Australian government officials and, in the past two weeks, Beijing’s campaign against the Melbourne International Film Festival over a film about the life of Uighur leader Rebiya Kadeer.
Since Deng Xiaoping’s (鄧小平) famous southern tour in 1992, China has dramatically improved its image as a place where foreign businesses can invest. Changes, including legislative reforms, have alleviated apprehensions among multinationals that in times of crisis they could be the targets of retribution or that their assets could be nationalized.
But the accusations of spying against Rio Tinto involve a China that is far more assertive than it was a mere decade ago, which means that its flexibility toward economic partners may be something of the past. In times of aggressive nationalism, that flexibility is bound to disappear altogether.
If it mishandles the Rio Tinto case, China could very well face its first crisis of foreign investor confidence.
The Chinese Communist Party (CCP) has long been expansionist and contemptuous of international law. Under Chinese President Xi Jinping (習近平), the CCP regime has become more despotic, coercive and punitive. As part of its strategy to annex Taiwan, Beijing has sought to erase the island democracy’s international identity by bribing countries to sever diplomatic ties with Taipei. One by one, China has peeled away Taiwan’s remaining diplomatic partners, leaving just 12 countries (mostly small developing states) and the Vatican recognizing Taiwan as a sovereign nation. Taiwan’s formal international space has shrunk dramatically. Yet even as Beijing has scored diplomatic successes, its overreach
After more than a year of review, the National Security Bureau on Monday said it has completed a sweeping declassification of political archives from the Martial Law period, transferring the full collection to the National Archives Administration under the National Development Council. The move marks another significant step in Taiwan’s long journey toward transitional justice. The newly opened files span the architecture of authoritarian control: internal security and loyalty investigations, intelligence and counterintelligence operations, exit and entry controls, overseas surveillance of Taiwan independence activists, and case materials related to sedition and rebellion charges. For academics of Taiwan’s White Terror era —
After 37 US lawmakers wrote to express concern over legislators’ stalling of critical budgets, Legislative Speaker Han Kuo-yu (韓國瑜) pledged to make the Executive Yuan’s proposed NT$1.25 trillion (US$39.7 billion) special defense budget a top priority for legislative review. On Tuesday, it was finally listed on the legislator’s plenary agenda for Friday next week. The special defense budget was proposed by President William Lai’s (賴清德) administration in November last year to enhance the nation’s defense capabilities against external threats from China. However, the legislature, dominated by the opposition Chinese Nationalist Party (KMT) and Taiwan People’s Party (TPP), repeatedly blocked its review. The
In her article in Foreign Affairs, “A Perfect Storm for Taiwan in 2026?,” Yun Sun (孫韻), director of the China program at the Stimson Center in Washington, said that the US has grown indifferent to Taiwan, contending that, since it has long been the fear of US intervention — and the Chinese People’s Liberation Army’s (PLA) inability to prevail against US forces — that has deterred China from using force against Taiwan, this perceived indifference from the US could lead China to conclude that a window of opportunity for a Taiwan invasion has opened this year. Most notably, she observes that
RSS