President Chen Shui-bian's (
Although many predicted that Chen would relax his China policy following the Democratic Progressive Party's (DPP) defeat in last year's local government elections, his cross-strait economic policy has only changed from "active opening, effective management" to "active management, effective opening."
This has led many to feel that the government was going to tighten its cross-strait policy and, as a result, the TAIEX fell 86.28 points on Monday. However, the nation's stock market rebounded yesterday with foreign investors helping the TAIEX to rise by 129 points on a staggering turnover of NT$153.4 billion (US$4.7 billion) -- more than counterbalancing the fall of the previous day, and refuting the pessimism of Chen's critics. In fact, changes in cross-strait policy are minor adjustments that will have little impact on Taiwan's longer-term economic prospects.
Rather than dissect the significance of the new wording, it is more useful to see how the new policy will be achieved. What Chen proposed in his speech is aimed at remedying the failings of current policy, for in the past, the government has not effectively regulated investments in China.
This has led to events such as chipmaker United Microelectronics Corp investing illegally in China and many firms investing through offshore companies or failing to honor loans made to finance their China investments. It is this situation that the government should rectify.
The key point of future policy lies in whether the government can establish a mechanism to control the process and discipline of cross-strait economic and commercial liberalization. If it is able to do so, then it can control the direction of this liberalization and even impose limits if necessary. It will also be able to use this mechanism to overcome disadvantageous circumstances that it may encounter.
The government is considering commissioning both local and foreign accounting firms to investigate the finances of Taiwanese firms operating in China so as to achieve greater control over their investments through a more detailed understanding of their financial situation, technological capability and human resources. This will enable the government to guide Taiwanese businesses in their investments in China and protect the interests of Taiwan's investors. This is a good way of correcting the current undirected flood of investment into China.
No policy is permanent. It has already been seen that "active opening, effective management" has led to capital outflows and has failed to gain any gratitude from China, which continues to ignore Taiwan's existence and rejects official dialogue on direct links and protection of Taiwan's interests in China. To continue with this policy will only lead to the further decline and marginalization of Taiwan. With the change in policy, the government will be able to look at cross-strait interaction from the perspective of Taiwan's interests.
Chen's determination to put Taiwan first is the correct policy to pursue and he should be supported. If he has failed in anything, then surely it is that he realized too late the failings of the previous policy, and for this Taiwan has paid a heavy price. Now, Taiwan must wait and see what can be achieved under the new policy of "active management, effective opening."