A series of negotiations between Straits Exchange Foundation Chairman Chiang Pin-kung (江丙坤) and China’s Association for Relations Across the Taiwan Straits Chairman Chen Yunlin (陳雲林) has produced 15 agreements, but Taiwanese are undoubtedly disappointed about the implementation and results of these agreements.
The agreements were pushed through hurriedly, with the Chinese dominating the negotiations. Furthermore, they are mired in problems, including slow or non-existent implementation, monopolization by a minority of entrepreneurs resulting in the uneven distribution of benefits, commercial disputes and having their benefits overblown by government propaganda so that the public is disappointed by the actual results.
It was announced that the seventh round of talks between Chiang and Chen will include the signing of a cross-strait investment protection agreement. This development is worrying because the effects of a such an agreement would be much more far reaching than the previous agreements.
Media reports from both sides of the Taiwan Strait say that the agreement is set to work both ways, meaning that it would affect the security and property of all people investing between Taiwan and China.
The agreement is also said to include the issue of allowing a greater inflow of Chinese investments in Taiwan. This is likely to bring about a major shift in cross-strait relations and would effect Taiwan’s survival and development. This is a major issue that all political forces in Taiwan must face up to, no matter whether they belong to the pan-blue or pan-green camps.
Chinese capital has been flowing into Taiwan through various channels for quite a long time. Through these investments, China aims to shake the foundations of Taiwan as a nation. Some prominent examples are the joint bid by China Strategic Holdings and Primus Financial Holdings to acquire Nan Shan Life Insurance, as well as the Data Systems Consulting case and the Huawei Technologies case.
The National Security Council has said publicly that it would maintain tight control over certain companies that have Chinese investors, but it is not yet clear how effective that control would be. The truth is that all businesses that have Chinese investors have a dual mission: They want to do business, but they also have political motives.
In Hong Kong, the most serious problem with Chinese-owned businesses is the lack of mechanisms for corporate oversight, and this has had a negative influence on Hong Kong’s economic development. The bankruptcy of the Guangdong International Trust and Investment Corp and the debt crisis of Guangdong Investment Ltd are typical cases in point.
If the deregulation of Chinese investment is a done deal, then Chinese capital will penetrate throughout Taiwan. If that were to happen, the governments on both sides of the Strait would have both their ability to govern domestically and monitor and control internationally put to the test.
The sad thing is that since President Ma Ying-jeou (馬英九) took office, his administration has kept opening the nation to China and deregulating cross-strait ties. However, the Ma administration has been the subordinate and passive party in the negotiations, and has fallen short or failed to deliver on the agreements it has signed. It has proved incapable of monitoring and managing the situation.
One can only hope that the legislature will perform its oversight duties effectively. Democratic Progressive Party lawmakers, as the opposition party, should do their best to keep an eye on what is going on before agreements are signed and use legislation to regulate the process.
It is worth referring to the way the US has handled such issues. Four years ago, then-US president George W. Bush signed the Foreign Investment and National Security Act of 2007, after which the US Treasury Department formulated the Regulations Pertaining to Mergers, Acquisitions and Takeovers by Foreign Persons, whose function is to govern the implementation of the act.
The 2007 law and associated regulations are designed to ensure that US national security is not harmed or threatened in the course of economic and trade dealings with other countries, especially China.
Tung Li-wen is an advisory committee member of Taiwan Thinktank.
TRANSLATED BY JULIAN CLEGG
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