Investment by local companies in China jump by 20 percent

Publicly traded companies from Taiwan invested NT$145.7 billion (US$4.4 billion) in China by the end of 2000, a 20 percent rise from three months earlier as they looked to benefit from China's cheaper production costs.

By September NT$122.8 billion was invested by public companies, according to figures released by the Securities and Futures Commission.

Rising labor and land costs and slowing economic growth domestically and abroad is forcing manufacturers to relocate production to the world's largest consumer market to expand and boost efficiency.

Asustek Computer Corp (華碩) and Gigabyte Technology Co (技嘉), the nation's two largest computer circuit board makers, increased investments in China this year to meet clients' requests and as competition forces them to cut costs as prices fall. Nearly half of the nation's 770 publicly traded companies have investments in China, the securities commission said.

Minister of Finance Yen Ching-chang (顏慶章) said this week that Taiwan must liberalize rules to allow its companies to invest more freely in China. Current regulations restrict China-bound investments to US$50 million and forbid investment in technology manufacturing such as the production of chips or notebook computers.

To bypass restrictions and raise money to grow, Giant Manufacturing Co (巨大機械), the nation's biggest bicycle maker, Uni-President Enterprises Corp (統一企業), and other manufacturers are considering selling shares in their China-based subsidiaries to trade on China's stock exchanges.

Trade with China rose 26 percent in 2000 from a year earlier to US$32.4 billion, according to the Board of Foreign Trade. Hong Kong, the main transit point for exports to the main-land, was the biggest buyer of Taiwan's goods in April.

Exports to Hong Kong accounted for more than a fifth of total exports last month.