Beijing’s plan to use economic means to promote unification is not some sort of secret conspiracy; it is rather an open secret. This is because Beijing has made the point clear.
However, Taiwan is filled with “courageous Taiwanese” who do not see things this way and are rather obsessed with glorious ideals, like making Taiwan into some sort of Asia-Pacific regional hub and big talk of “moving boldly into China,” for example.
After a decade of this thinking, Taiwan’s economy has ended up in really bad shape and this is why we have seen things like the Directorate-General of Budget, Accounting and Statistics revising down the country’s economic growth rate forecasts eight times in a row, while posting negative figures for both exports and private investments.
It is now plain as day how economically marginalized Taiwan has become.
Beijing’s grand plan of using economic means to promote unification has entered a new phase, because the first phase of this plan — to marginalize Taiwan’s economy has already been completed — and China has successfully attracted as much as US$500 billion, or approximately NT$15 trillion, in Taiwanese production funds.
In the meantime, it is also sucking up Taiwan’s technological and labor base in the process. Taiwan is in a very unhealthy state at the moment and is incapable of continuing to increase investments in China.
China, on the other hand, is very strong and is no longer reliant on Taiwan’s intermediate raw materials and component parts.
As a result, the focus of China’s goal of promoting unification through economic means will change from its previous emphasis. Previously, China sought to entice Taiwanese businesspeople to invest in China. Now, as part of the second phase of China’s marginalization of the Taiwanese economy, the focus is on using Taiwanese businesspeople to help China earn huge sums of foreign exchange while helping Chinese investors buy up businesses.
The “promotion” discussed cross-strait investment protection and promotion agreements already makes this goal clear.
Although the Taiwanese government has referred to these deals as simply being “investment protection agreements,” Taiwanese people need to be clear that it is promotion which is the true value at the core of these agreements. That is exactly what Beijing needs at this point in time.
It is therefore little wonder that in the days after these agreements were proposed, pro-China media outlets spoke on Beijing’s behalf using rhetoric such as “Taiwan and China have now entered the age of bidirectional investment.”
It is not only pro-China media outlets that are obeying Beijing’s wishes. The Cabinet also could not wait to talk about how it would carry out a fourth tranche of considerations on opening up to further Chinese investments in Taiwan.
They have begun to discuss relaxing restrictions on Chinese investments in Taiwan and reviving the economy, citing these as great reasons to open up Taiwan to Chinese investment.
As far as Beijing is concerned, now is without a doubt the best time for Chinese investors to get into Taiwan and acquire Taiwanese businesses.
With Taiwan so marginalized and with the stock market in such a shambles, as soon as the Taiwanese government loosens restrictions, China will easily be able to take control of Taiwan’s major businesses and even use Taiwanese businesspeople in China to indirectly control strategically important industries so as to meet their unification goals.
Taiwanese must avoid being fooled by all the pretty talk about “bidirectional investment.” While on the surface, Taiwanese capital and Chinese capital are both forms of capital, thus far, their uses have been totally different and they have had totally different effects.
In its purest sense, Taiwanese investment in China is used to set up factories there. It creates jobs in China and increases incomes and also bolsters China’s national power. Beijing does not allow Taiwanese enterprises to buy shares in Chinese businesses in China. Chinese investment in Taiwan, however, is mostly aimed at the acquisition of shares in Taiwanese companies as well as financial speculation. It will do nothing to improve employment or the economy here and it can even hurt us.
Finally, I want to implore the government to take a page from China’s book and limit Chinese investment in Taiwan solely to establishing factories. We could even consider offering Chinese investors special offers and continue to do so until the amount of Chinese investment in setting up factories in Taiwan reaches a certain level and the Taiwanese economy makes a recovery.
Then, and only then, should we discuss the issue of “bidirectional investment” of funds used in mergers and acquisitions. This would be more in line with the principle of mutual fairness and could also help guard against the crises and traps that now await us since the signing of the cross-strait agreement on investment earlier this month.
Huang Tien-lin is a former presidential adviser.
Translated by Drew Cameron
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