Taiwan investment in China rose by a quarter in the first half of the year as Taiwanese companies sought to take advantage of the mainland's lower costs and faster economic growth.
Taiwanese companies invested NT$1.36 billion (US$40 million) in China in the first six months, a gain of 23.46 percent from the same period a year ago, said the Investment Commission (投審會) under the Ministry of Economic Affairs on Tuesday evening.
"The worsening investment environment in Taiwan is leading investors to focus increasingly on China," said Winston Feng, an economist at First Securities Consulting Co.
Taiwan's slowing economy is encouraging investors to turn to the mainland, where the economy grew 7.8 percent in the second quarter from a year earlier.
Taiwan's economy grew 1.06 percent in the first quarter from a year earlier, the slowest pace in 26 years, as exports fell and domestic demand sagged. Growth in the second quarter may have shrunk to 0.7 percent, the state-run Academia Sinica (
Taiwan investors also want to benefit from tax holidays and other incentives being offered by China before it enters the WTO late this year or early next year, when such benefits will diminish, Feng said.
The government restricts individual China-bound investments to US$50 million, and bans investments in China's semiconductor and notebook computer industries.
Indirect investment in China in January-June was concentrated in Jiangsu and Guangdong provinces.
The sectors favored by Taiwan-ese investments were electronics and appliances, precision instruments, non-metals manufacturing, base metals, and plastics.
Taiwanese publicly-traded companies invested NT$145.7 billion in China at the end of 2000, a 20 percent rise from three months earlier, as companies moved production to the mainland to expand operations and meet client requests.
In a sign of Taiwan's slowdown, foreign investment in the island fell 22.11 percent to US$2.80 billion in the first half of the year, the investment commission said.
The largest sources of investments came from the British Virgin Islands and Cayman Islands, the US, Japan, the Netherlands, and other European nations, the commission said.
The five sectors that attracted the most foreign investment were financial/insurance, electronics and appliances, wholesale/retail, services and base metals.
Meanwhile, approved Taiwan-ese overseas investment in the first six months reached US$2.53 billion, up 33.32 percent from the corresponding period in 2000, while outward investments in June alone rose 5 percent on the year to US$505 million.
The top five destinations for overseas investment were the British Virgin Islands and Cayman Islands, the US, other areas in the Americas as well as Singapore and Canada.
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