Sun, Jul 06, 2003 - Page 3 News List

SARS won't limit cross-strait trade, expert says

SQUARED AWAY An assistant research fellow at National Chengchi University said that economic activity between China and Taiwan had returned to normal levels

By Melody Chen  /  STAFF REPORTER

The SARS outbreak may not damage trade relations between Taiwan and China as badly as first thought, research based on initial statistics regarding cross-strait economic activities over the past few months have found.

The Taiwan Research Institute's Division of Strategic and International Studies held a forum yesterday to review the impact the epidemic has cast upon cross-strait relations.

"Basically, China's economy and cross-strait economic activities had both come back to normal by the middle of June," said Tung Chen-yuan (童振源), an assistant research fellow at National Chengchi University's Institute of International Relations.

Tung presented his published paper entitled An Initial Evaluation of the SARS Impact upon China's Economy and Cross-strait Economic Relations in the forum.

"SARS has not severely shattered the manufacturing sectors operated by Taiwanese business-people in China," Tung said. "Only about 20 percent of China-based Taiwanese businessmen suffered setbacks in production and sales."

During the outbreak, travel restrictions imposed by Taiwanese and Chinese governments had caused problems for China-based Taiwanese businesspeople in terms of operation and management, Tung said.

While the epidemic peaked during April and May, many foreign businesspeople were unwilling to travel to China.

In the same period, the Chinese government banned all large-scale promotion activities and exhibitions.

"Foreign orders received by China-based Taiwanese businesspeople during the period dropped considerably," Tung said.

During the outbreak, the volume of Taiwan's exports to China did not diminish, but the disease slowed down Taiwan's investment to China, according to Tung.

"The growth rate of Taiwan's exports to China has slightly slowed down. But Taiwan's exports to China kept expanding fast," said Tung.

In the first quarter this year, the growth rate of Taiwan's exports to China stood at 29.9 percent. The rate was 20.4 and 22.2 percent in April and May respectively.

"Under the impact of SARS, Taiwan's exports could keep growing because its export volume to China largely expanded," Tung said.

A large portion of Taiwan's exports to China was manufacturing materials or semi-completed products. China-based Taiwanese factories finished the products and exported them to other countries, said Tung.

China's strength in exporting has boosted Taiwan's exports to China, according to Tung.

"Affected by SARS, Taiwan's investment to China has slowed down. But the investment could still keep growing fast this year," Tung said.

The Cheers magazine conducted a national survey of Taiwan's 1,000 leading entrepreneurs on May 8 about their willingness to invest in China.

According to the magazine survey, 75 percent of the interviewees believed that investment risks in China increased because of the recent SARS outbreak and 37 percent were considering moving their investment in China to other places.

Kao Charng (高長), director of the First Institute of Chung-Hua Institution for Economic Research, said China's strength in exports lies mainly in its insistence to keep its national currency, the yuan, low.

"China pegged its currency to the US dollars, which has performed weakly. China should gain with the yuan, but it will not do so because it is keeping its currency low to help its exports," Kao said.

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