Taipei Times: In light of the growing influence of globalization, to what extent do you think Taiwan can sustain its current "no haste, be patient" policy on managing capital flows from Taiwan to China?
Henri-Claude de Bettignies: I will be very careful not to make too many comments on Taiwan. But it seems to me that it would be very difficult to dramatically reduce the flow of investment from Taiwan to China. There is a net attraction toward the mainland here and one can understand why. There are so many opportunities in China. So many entrepreneurs here think that they can gain comparative advantage by just crossing over to China. There is a comparative advantage for the time being in developing businesses in China. So China is a magnet, a kind of Far West for Taiwan. You can try out new ventures, you can develop new manufacturing facilities and so forth. So it's very difficult to stop this.
Taiwanese have a great comparative advantage compared to others who try to invest in China. Because of your knowledge, your tradition, language and culture -- all this makes it less difficult to enter the Chinese market. And it is a very attractive comparative advantage.
The "go slow" [policy] ... what do you mean by go slow? We have to be careful when we say `go slow' because the world is changing fast, and if you go too slow, you will not jump on opportunities as they present themselves.
You see, the Japanese are going slow and they don't want change. Change is very difficult for them. And the consequence of this is that the Japanese [economy is] in a very bad situation.
Countries which are unwilling to accept the trend of change, I think, will have difficulty getting where they want to go. Because now the situation is such that you need to be flexible to react very quickly to the environment, and if you don't do that, you run the risk of being beaten by your competitor.
Of course we need to go fast with a sense of strategy [as to] where we want to go, a clear vision of the future. And if people have no vision, it'll be very difficult to develop an economy which will be competitive in the long term. So we need to develop a vision on where we want to go, and then we can discuss how to get there with a step-by-step approach. Of course we must not go too fast.
Look at China. China in a way is going very fast. The targeted annual economic growth rate of China is 7 percent. And that's quite a speedy transformation.
TT: Following China's accession to the WTO, what would be the distinctive social changes in China that you can foresee?
De Bettignies: The risk for China today is to underestimate the internal consequences of its entry into the WTO. China is assessing the benefits of its entry such as increased trade and investment. But I think the accession will have a huge consequence domestically.
For instance, it will worsen unemployment, as some companies will have difficulties remaining competitive. And if we have more unemployment, it creates more social problems. And if it creates more social problems, the government in Beijing will have tremendous difficulties in controlling the countryside. So how [Beijing] will be able to monitor this process of entry in a smooth way [is challenging] because the gap between the coastal areas and the west of the country is still very big. And if we have more and more unemployed people coming to Shanghai and Fujian, that is going to create more and more social friction, and that is going to be difficult.
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