The Mainland Affairs Council (MAC) said yesterday it would set up a communication network with Taiwanese businessmen in Hong Kong and Macau to effectively regulate the way they direct their investments.
The measure came after Taiwan's investments in Hong Kong soared by nearly 300 percent last year, as a result of a Closer Economic Partnership Arrangement (CEPA) between Hong Kong and China, the council said.
Rejecting China's proposal to sign a CEPA with Taiwan, the council regarded the pact as part of China's strategy to achieve unification with Taiwan through trade.
Last year, Taiwan poured US$640 million in investments into Hong Kong, a 283.86 percent increase compared with the amount in 2002, said Chang Yung-shan (
This happened because local, Chinese and overseas investors may set up new manufacturing operations in Hong Kong, in order for the products to qualify under CEPA rules of origin, according to which they would not be subject to tariffs in the Chinese market, Chang said.
Taiwanese businesses monthly investments in Hong Kong and vice versa from January to October last year were largely the same in terms of volume, but investments in Hong Kong sharply increased in November and December, the council said.
According to the council, this coincided with the Hong Kong Trade and Industry Department's announcement of the application procedures for a Certificate of Hong Kong Origin on Nov. 14 last year.
Most investments from Taiwan went to Hong Kong's financial and insurance sectors, with electrical and electronics products the next most popular, the council said.
"Hong Kong's financial system is sound but China's is poor. We are discussing with the CEPA how to effectively regulate Taiwanese investments in Hong Kong," Chang said.
"The pact could only work under the `one country, two systems' formula," he said.
Analyzing political developments in Hong Kong, Chang said China has been increasingly emphasizing the "one country" part of the formula.
The "two systems" part is under threat as China tries to wrest control of Hong Kong's democracy, he said.
Hong Kong investments in Taiwan dropped by 32.33 percent last year, amounting to only US$44 million. Hong Kong businessmen invested mainly in Taiwan's retail industry and electrical and electronics products, Chang said.
The overall trade volume between Taiwan and Hong Kong last year was US$30.1 billion, a 7.79 percent decrease compared with 2002, he said.
The volume of trade between Taiwan and China via Hong Kong amounted to US$12.7 billion from January to November last year, a 15.95 percent increase compared with the same period in 2002.
Taiwanese products exported to China via Hong Kong reached US$10.77 billion from January to November last year, an increase of 14.32 percent compared to 2002.
The value of Chinese products exported to Taiwan amounted to US$1.95 billion between January and November last year, a 25.85 percent increase from the same period in 2002, the council said.
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