An official said Thursday that fraud and corruption in China have eaten up between 13 percent and 17 percent of its gross national product and that the country's competitive edge has been overstated.
Lee Kao-chao (
He also said that Taiwan, Hong Kong and China should make good use of their individual advantages and cooperate between themselves to face global competition.
Lee made the remarks at a symposium on how Taiwan industry can deal with globalization by entering the greater China market, which was sponsored by the non-profit Taiwan Institute of Economic Research and attended by businessmen as well as government officials.
Lee said that as manufacturers seek to globalize and cope with competition from their rivals, they have moved their production bases out of Taiwan in droves, citing as an example that Taiwan's information technology industry last year used China as the base for overseas production. More than 85 percent of Taiwan-produced keyboards, mice and scanners were made in China last year, making competitiveness between the two sides of the Taiwan Strait even more fierce, Lee said.
He also quoted an article carried by the Aug. 30 edition of the International Herald Tributune that said the advantage of the China market is mainly "cheap labor, not rapidly rising skills."
The article said that "almost all the high-tech Chinese output depends on Taiwanese and other foreign know-how and on tax breaks," and that China's export competitiveness remains concentrated in labor-intensive products of foreign-owned factories."
Lee said that although the mainland economy continues to grow rapidly, its legal system is not yet healthy and complete, local protectionism is rampant, its policy lacks transparency, corruption among its cadres is serious, and the practice of bogus products and rampant tax evasion have resulted in tax revenue losses of up to 100 billion yuan yearly.
Official statistics from China also show that up to 66 percent of state-owned enterprises fake their financial reports, up to 50 percent of individual companies evade taxes, and between 15 percent and 20 percent of the budget earmarked for infrastructure construction is siphoned off through fraud, bribery and shabby public works.
The pursuit of mutual benefits and prosperity have been the hub of Taiwan's China policy. Taiwan, with its geographical and cultural advantages and its rich experience in international trade, should make good use of the advantages of Hong Kong and China, he said.
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