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.
EDITORIAL CARTOON
On Monday, Chinese President Xi Jinping (習近平) spoke during the opening ceremony of this year’s World Health Assembly (WHA). For the first time in the assembly’s history, attendees, including Xi, had to dial in virtually. Xi made no acknowledgement of the Chinese government’s role in causing the COVID-19 pandemic, nor was there any meaningful apology. Instead, he painted China as a benign force for good and a friend to all nations. Except Taiwan, of course. The address was a reheated version of the speech Xi gave at the 2017 World Economic Forum in Davos, Switzerland. Xi again attempted to step into the
EDITORIAL CARTOON
The World Health Assembly (WHA) held its annual meeting this week; Taiwan was still not represented. Its journalists were also barred from covering the online-only proceedings, despite the nation’s clearly demonstrated pandemic expertise that has set an example for the world. When the SARS epidemic reached Taiwan from southern China in 2003, dozens of lives were lost, but its health experts learned the importance of general testing, masks, technology to locate infected persons, swift decisions and quarantines. The lessons were applied immediately across Taiwan when COVID-19 arrived this year. From 2009 to 2016, Taiwan participated as an observer in the assembly under
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