Under the pro-China policies of President Ma Ying-jeou’s (馬英九) administration, the nightmare of Chinese investment flooding Taiwan will soon become a reality. The Ministry of Economic Affairs and the Mainland Affairs Council recently promulgated three sets of regulations on Chinese investment in Taiwan.
These regulations mark the official start of processing applications for Chinese businesses to invest in 192 business categories and allowing them to establish branches and offices in Taiwan.
These new investment regulations allow almost total access to Taiwan’s manufacturing industry, service industry, public infrastructure and even allow Chinese nationals to buy real estate, which is limited to residences for Chinese staffers, factories, business premises and offices. These regulations also state that Chinese nationals who apply for financing from financial institutions will be subject to the same regulations and standards as Taiwanese citizens.
However, they do not permit Chinese investment in select industries, such as display panels, wafers, semiconductors and Chinese herbal medicine. They also prohibit Chinese investors from transferring or selling property for three years after their registration.
On the surface, it looks as if there are protective measures to guard against the loss of Taiwan’s advanced technologies and Chinese speculation in real estate. However, the premise on which Ma is building cross-strait economic ties puts Taiwan in a subordinate position. All of the Ma administration’s talk about globalization is really just a substitute for Sinicization. Given the rapid pace at which Taiwan is becoming reliant on China, it will be unavoidable and only a matter of time before advanced technologies like display panels and semiconductors and real estate are fully opened up to Chinese investment.
Chinese investment in Taiwan was not discussed during the three meetings held between Straits Exchange Foundation (SEF) Chairman Chiang Pin-kung (江丙坤) and Association for Relations Across the Taiwan Strait Chairman Chen Yunlin (陳雲林), and no agreements have been reached on the matter. Despite the lack of agreement, the Ma administration decided to allow Chinese investment in Taiwan in a careless and hasty manner. This clearly shows that Ma’s pro-China stance involves opening up for the sake of opening up and being pro-China for the sake of being pro-China. It lacks any deep consideration of Taiwan’s national interest and security or a careful draft of complementary measures.
The Ma administration’s proposition for opening up to China has been problematic from the start. We should not forget how Chinese businesses have come to control Hong Kong since the handover: It is not something that happened a long time ago. If Chinese investment is not handled carefully and stopped before it is too late, Taiwan could very well become a second Hong Kong.
Allowing Chinese investment into Taiwan is the wrong policy and that policy will hurt rather than benefit the country.
The government continues to insist that the country needs to attract Chinese investment, despite the number of experts who have said that Taiwan’s private sector has a huge amount of excess savings and that low levels of private investment are caused by a lack of confidence and not a lack of funds. Taiwanese industry needs technological upgrading, stronger research and development abilities, and more creativity and skill in brand establishment to continue developing.
These are not areas that Chinese businesses excel in. The majority of Chinese businesses are labor intensive. Not only do these businesses fail to complement Taiwanese businesses, they can also be used by Chinese authorities to gain control over Taiwanese businesses as well as access to Taiwanese experience in technology, research and development and management. Chinese businesses could then use this knowledge to challenge Taiwanese businesses.
A large number of Chinese businesses are owned by the government and therefore could obtain official authorization to use the nation’s foreign exchange reserves. China recently bought out many businesses around the world through takeovers and mergers, especially of companies involved in raw materials and commodities. This has not only raised costs, but also affected the pace of the global economic recovery, with most nations speaking out and warning against the consequences of China’s actions.
Only the Ma administration is almost on its knees begging for large amounts of Chinese investment, thus paving the way for China to buy out all of Taiwan’s major businesses, control Taiwan’s economy and push real estate prices up, making it difficult for the ordinary citizen to afford housings.
Even worse, Chinese businesses could make use of the investment opening to take part in Taiwan’s build-operate-transfer infrastructure projects. Because they will be politically motivated government-owned companies, they will be able to undercut the competition by submitting low bids and then use these projects as bargaining chips to control Taiwanese businesses. Businesses that heed Beijing’s call will benefit, while those who don’t will be left out and may even go broke. Unification methods based on economic benefits will expand into the media and political sectors and create a lot of distorted praise about China. When this happens, Taiwan will become an economic colony of China.
China has used the same methods to control Hong Kong for years. Statistics show that Hong Kong has more than 2,700 Chinese-invested businesses, with an estimated value of US$220 billion. They are mostly concentrated in the banking, insurance and travel industries — industries where Hong Kong once excelled and where Chinese investment now account for more than 20 percent.
With Taiwan going through the toughest times of the worst global financial crisis in a century, it will be much easier for Chinese businesses to gain control over Taiwan than it was for them to gain control over Hong Kong — more so because the Ma administration has opened the doors wide open and happily welcomed Chinese investment. It may already be too late to stop Taiwan from becoming an economic colony of China.
TRANSLATED BY DREW CAMERON
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