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Law won't impact economy: analysts

The nation's economy is unlikely to be affected by the passage of China's "anti-secession" law, as no timetable for unification is specified in the law's content, market watchers said yesterday.

On the local bourse, the benchmark TAIEX declined 48.72 points to close at 6,155.51 yesterday, while the local currency slid NT$0.012 to close at NT$30.862 against the US dollar.

The law, a draft of which was approved in committee late last year, is aimed to help China assert its legal claim over Taiwan. It allows the use of "non-peaceful means" to prevent Taiwan from seeking formal independence.

Though it may sound threatening, the law does not give a definite schedule for military action by China to push for unification with Taiwan, which means "it does not have specific lethality in its content," said Wu Pei-wei (吳佩偉), a fund manager with ABN AMRO Asset Management in Taipei. "Therefore, it will not have any impact on Taiwan."

Most foreign investors will retain a positive view of Taiwan and other Asian countries, Wu said, adding that only retail investors might be swayed by the law's passage.

As the stock market did not experience major fluctuations, the government did not activate the National Stabilization Fund (國安基金) yesterday.

The fund will come into the stock market to maintain order only when non-economic factors disturb market transactions.

Wu Chung-shu (吳中書), a research fellow at Academia Sinica, said the nation's mighty economic momentum trumps political fluctuations when foreign traders assess their investment portfolios in Taiwan's stock market.

"The pressure to be applied by the passage of the law will not be that great, as the issue has been discussed for a long time," he said. "The government's follow-up reaction ... [is] more important."

David Hong (洪德生), acting president at the Taiwan Institute of Economic Research (台經院), agreed that the government's dealing with the new cross-strait situation will play a key role.
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