Fri, Dec 23, 2005 - Page 1 News List

China muscles in on yuan exchange

RAW DEAL An opposition legislator said the Bank of China requires Taiwanese banks in Hong Kong to call Taiwan a PRC province to access the Chinese currency

By Shih Hsiu-chuan  /  STAFF REPORTER

Legislators across party lines yesterday accused the Chinese government of attacking the nation's sovereignty by requiring Taiwanese bank branches in Hong Kong to refer to Taiwan as a province of the People's Republic of China.

"China has asked Taiwanese banks in Hong Kong to add "Taiwan, Province of People's Republic of China" in their titles before being allowed to exchange currency with Chinese banks," People First Party (PFP) Legislator Wu Ching-chih (吳清池) said in the legislature's Home and Nations Committee yesterday.

Responding to Wu's claim, Fu Don-cheng (傅棟成), head of the Mainland Affairs Council's Department of Economic Affairs, said the government was already aware of the matter.

Because of the absence of a cross-strait currency exchange agreement, Taiwanese banks in Hong Kong must use Hong Kong or overseas banks to convert New Taiwan dollars into the yuan or vice versa.

Wu said the Bank of China's Hong Kong branch had issued a statement to Taiwanese banks indicating how they could conduct transactions with Chinese banks with Beijing's blessing.

"The document, given to 14 Taiwanese banks in Hong Kong, said that one of them can be elected as a clearing bank to conduct currency exchange directly with the Bank of China's Hong Kong branch instead of through intermediary agencies, on condition that they change their names," Wu said.

The document apparently perplexed representatives from Hong Kong's Taiwanese banks, who appealed to Wu and four other legislators from the Democratic Progressive Party and the Chinese Nationalist Party (KMT) for help during the WTO summit.

"The representatives told us that because they have no difficulties conducting currency exchanges using the yuan at present, the document seemed to be a trick by China to downgrade the nation's sovereignty," Wu said.

"If this trick works, I fear that our banks will be asked to change their names in the same way if they want to establish branches in the Chinese market," he said.

The Home and Nations Committee was reviewing opposition-sponsored amendments to the Statute Governing the Relations Between the People of the Taiwan Area and the Mainland Area (兩岸人民關係條例). PFP Legislator Christina Liu (劉憶如), among several other opposition legislators, used the occasion to ask the council to start currency exchanges with the yuan within Taiwan proper.

The government has been testing an exchange service in the outlying islands of Kinmen and Matsu since Oct. 3, but it does not have a firm timetable to set up a similar regime around Taiwan.

Council Chairman Joseph Wu (吳釗燮) said that the timing of any new system of yuan exchange depended on the experiences of Kinmen and Matsu, where some "abnormal phenomena" had already been detected.

"About two months after the service opened in Kinmen and Matsu, the volume of yuan in circulation increased rapidly rather than decreasing as we expected. We need more time to observe the effectiveness of the experimental stage," he said.

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