As Taiwan and China engage in the second round of negotiations on a proposed economic cooperation framework agreement (ECFA), it might be worthwhile to look at the long-term consequences of increasing Chinese investment in Taiwan.
Earlier this week, this paper referred to a recent report about possible People’s Republic of China (PRC) funding and involvement in the consortium of Hong Kong-based firms that has sought to acquire Nan Shan Financial Life Insurance Co. Earlier this month, financial regulators said they still had more than 40 unanswered questions about the application by one of the principal investors, China Strategic.
Nan Shan is the nation’s second-largest life insurer, with more than 4 million customers. If the Investment Commission approved the acquisition, this would be the largest takeover of a local financial group by foreign buyers in the nation’s history, which explains why regulators and the media have paid special attention to the case. However, Nan Shan is only one among many Taiwanese corporations from numerous sectors that are — or soon will be — coveted by Chinese and/or Hong Kong-based investors.
In the immediate term, attempted investments are already proving problematic. Nan Shan is one example; China Mobile’s attempt to acquire part of Far EasTone Telecommunications Co is another. What hasn’t been explored, however, are the long-term consequences of those acquisitions, even if, in the eyes of financial regulators, the investments are legal. Deals that involve murky and ill-defined consortiums, such as the one for Nan Shan, are especially troublesome. The reason for this stems from the fact that cross-strait investment — and by extension an ECFA — are all based on vague assurances by Beijing that, in the short term, may actually be implemented.
But what happens five, 10 years down the road after those companies have been acquired? What would Taiwan do if, say, the Hong Kong investors involved in the Nan Shan bid were exposed as having been controlled and financed by the PRC, or if Chinese firms, or the government, suddenly took over those Hong Kong investors? It is difficult to imagine that Nan Shan, or Taiwanese authorities, would decide to annul the investment, and next thing you know, Nan Shan would be controlled by Chinese investors and the personal information of more than 4 million Taiwanese made available to Chinese authorities.
What we must bear in mind is that despite laws that limit the share that Chinese investors can own in the Taiwanese financial sector — which prompted Chinese firms to turn to Hong Kong as an investment springboard — it will be next to impossible to ensure that the shareholder structure of those investing firms does not change in China’s favor at some point. In other words, the Chinese government could be using legitimate Hong Kong investors as Trojan Horses — legitimate on paper, but used as a means to an end — to penetrate the Taiwanese market.
Ironically, it is Hong Kong that provides the clearest warning to Taiwanese. In the years prior to handover in 1997, Beijing made a number of vague promises that the rights and welfare of the people of Hong Kong would be preserved. As Hong Kong academic and former legislator Christine Loh (陸恭蕙) wrote recently in her history of the Chinese Communist Party (CCP) in Hong Kong, however, the devil is in the details. Little by little, the people in the special administrative region found that those vague promises foundered on the shores of the core interests of the CCP. Universal suffrage was delayed time and again. Harsh security laws were implemented. Certain liberties were curtailed — all in the name of Beijing’s core interests: stability and one-party rule.
If Taiwanese are not careful, it could happen here.
For China observers, especially those in Taiwan, the past decade has brought awareness of an increasing obsession by the Chinese Communist Party (CCP) with control. It seeks to control not simply national policy, but all aspects of its citizens’ lives. Not a week passes without some new aspect of Chinese life being brought under CCP control. This forces obvious questions: Why this obsession? And what is driving it? When any one-party state, which already controls government, yet seeks to expand and tighten that control, it bodes ill. With a country the size of China, it bodes ill for Taiwan, Asia and the
Taiwan is now entering a period of maximum danger from the Chinese Communist Party (CCP) and its People’s Liberation Army (PLA) due to an accelerating Chinese military challenge now emboldened by a shocking dive in American strategic credibility occasioned by its humiliating withdrawal from Afghanistan. This means there is a much higher chance that in the next one to three years CCP leader Xi Jinping (習近平) may order the PLA to invade Taiwan because he believes the PLA can win and that the Americans can be dissuaded from coming to Taiwan’s aid in time. It is still possible for Taiwan and Washington
Another year, and another UN General Assembly is convening without Taiwan. Today marks the opening of the assembly’s 76th session at the UN headquarters in New York City, with the option to attend remotely because of the COVID-19 pandemic, which once again promises to be its main focus under the theme “Building resilience through hope.” As they do every year, the Ministry of Foreign Affairs and overseas compatriot groups are organizing campaigns to call for Taiwan’s participation in the global body. However, unlike previous years, Taiwan seems to be riding a higher wave of support than usual. The pandemic has exposed countless shortcomings
In an op-ed on Friday, Chen Hung-hui (陳宏煇), a former university military instructor, applauded the government’s efforts to reduce the “supply, demand and harm of cannabis.” (“Cannabis use booms on campuses,” Sept. 10, page 8). Chen recounted a story of a boy who partied with the “wrong crowd,” smoked cannabis and died. This story cannot be true, because cannabis is not deadly. Consuming too much can feel mighty unpleasant, but it will not kill a person. This fact is not only backed up by science and statistics from the US Centers for Disease Control, but is well-known in countries where cannabis