Sun, Mar 10, 2002 - Page 1 News List

Lee calls for sanity over China-investment policy

CROSS-STRAIT POLICY As protesters took to the streets, the former president was joined by acclaimed author and China critic Gordon Chang in shooting down proposals to allow Taiwan's chip manufacturers to invest in China

By Monique Chu  /  STAFF REPORTER

At a conference held at the Far Eastern Plaza Hotel yesterday, US author Gordon Chang, left, and former president Lee Teng-hui explain why investors looking for greener pastures in China can expect a high-risk environment.


Former president Lee Teng-hui (李登輝) yesterday joined visiting US author Gordon Chang (章家敦) in calling for sanity over Taiwan's impending policy reversal that would allow key high-tech manufacturers to migrate to China.

Lee questioned the government's plan to allow local chipmakers to build eight-inch wafer foundries in China, one of the most thorny issues facing the DPP administration.

"What on earth are they [the policymakers] thinking about?" Lee said when asked to comment on the matter. "Both the US and Japan forbid their semiconductor companies to shift their manufacturing bases to China. It's odd for Taiwan to be so generous."

Lee was also critical of local investors' eagerness to move their operations to China, and questioned the government's ability to control capital flow from Taiwan to China. Lee pointed out that China still has around 300 missiles pointed at Taiwan, a figure that swells by 50 or so a year.

The nation's two largest chipmakers, Taiwan Semiconductor Manufacturing Co (台積電) and United Microelectronics Corp (聯電), have applied for permission to build eight-inch wafer foundries in China.

Premier Yu Shyi-kun said on Friday that the government is working towards allowing local chipmakers to set up plants in China under the principle of "effective management." But the administration, Yu said, is still pondering when to lift the ban.

Yesterday around 1,000 protesters took to the streets to voice their dissatisfaction with the likely lifting of the ban.

Lee urged Taiwan's businesses to focus on innovation, such as speeding the semiconductor industry's progress on building 12-inch wafer foundries in Taiwan, so as to gain an upper hand against their counterparts elsewhere.

Chang, author of a book titled The Coming Collapse of China, urged Taiwanese businesses to diversify their investments instead of targeting China as the sole destination for their investments.

Saying Taiwan's investment in China is an economic issue, Chang lamented what he said was Taiwanese investors' lack of understanding of "the instability of the mainland."

"Taiwanese businessmen focus on what they see on the surface -- low costs and low wages. And they think that's an irresistible draw. But low costs are just part of the story when investors look to expand abroad. Political risks are an issue that also need to be studied," Chang said.

Multinationals in the US and Europe have tried to invest in as many countries as possible for various reasons, including to diversify their risks, Chang noted.

"But Taiwanese businessmen put almost all their investments in one country, the PRC, and they have picked one of the riskiest countries in the world," Chang said.

The Cornell-educated US attorney has been involved in the legal aspects of various mergers and investments in China over the past two decades.

But in the wake of the publication of his first book last autumn -- seen by many as an eye-opener for China optimists -- Chang decided to leave his base in Shanghai for the US.

Chang predicted in the book that China's communist regime would collapse in five to six years, a decade at most, as top leaders in Beijing will be unable to cope with various obligations following the country's accession to the WTO.

Critics of the book, however, argued that Chang's prognosis is debatable.

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