Since President Ma Ying-jeou (馬英九) took office in May last year, financial analysts have shown an alarming tendency to attribute rises on the Taiwanese stock market to “closer relations with China” or the signing of agreements between Taipei and Beijing, while drops on the local bourse have often been blamed on rallies organized by the Democratic Progressive Party (DPP). Those assessments — which are picked up by news wire agencies and newspapers — often ignore macroeconomic variables and regional trends that explain stock fluctuations far better than local political developments.
For example, a modest rise on the Taiwanese stock exchange on July 27 was far more likely to have resulted from global optimism about a financial recovery than the “election” the previous day of Ma as chairman of the Chinese Nationalist Party (KMT). And yet, news agencies — quoting or paraphrasing analysts from global financial institutions, both “local and international,” as a reporter at a major wire agency told me during a telephone interview on July 29 — wrote that the 0.79 percent rise was the result of Ma’s election and a congratulatory missive from Chinese President Hu Jintao (胡錦濤).
That very same day, every market in Asia was up, not because of developments in Taiwan or even warming ties across the Taiwan Strait, but because investor sentiment was turning optimistic, as a number of wire agencies reported.
This begs the question: Why are financial analysts and news agencies attributing fluctuations in the Taiwanese stock exchange on local-specific events rather than general macroeconomic trends?
Part of the answer lies in the general belief that Ma’s KMT is pro-business, while the DPP is against business (ironically, during his second term, former president Lee Teng-hui [李登輝] of the KMT was far more radical in his opposition to cross-strait economic liberalization than former president Chen Shui-bian [陳水扁] of the DPP was during the first two years of his first term). Still, given the DPP’s pro-independence ideology, the perception that the pan-green camp is not “business friendly” — especially on cross-strait investment and integration — is almost universal, which invites the belief that its actions are aimed at derailing efforts to increase cross-strait financial cooperation launched by the Ma administration.
These perceptions alone, however, do not explain why financial analysts would deliberately attribute stock exchange negatives to the DPP and positives to the KMT. Something else must be at play, such as institutional biases or self-interest.
Starting in the mid-1990s, the nature of Taiwanese investment in China changed dramatically after a revaluation of the New Taiwan dollar severely increased the cost of manufacturing domestically, forcing Taiwanese companies to increase their investments abroad. Cultural and linguistic affinities, along with cheap labor and investment incentives, made China a logical choice. Over the years, the size of the Taiwanese companies investing in China also increased dramatically, as did the nature of the products that were manufactured there. In recent years, powerful companies in the electronics and computer sectors, among others, have established a foothold in China.
At least part of the billions of dollars required by those companies to develop business operations in China likely came in the form of loans by financial institutions and other private investors, who have an interest in seeing those investments prosper. Anything that threatens the return on investment — such as tensions in the Taiwan Strait, the threat of embargoes or war — is therefore unwelcome by banks and investors who have a stake in stability.
Given, as we have seen, the DPP’s pro-independence mandate and Beijing’s claims on Taiwan, the DPP has therefore come to be seen as a “destabilizing” factor, while the KMT, which favors cross-strait economic integration and warmer ties with Beijing, is now perceived as a “stabilizing” force. For Taiwanese companies operating in China (many, though not all, are either pro-KMT or silent about their pan-green political inclination lest they be singled out by Chinese authorities, as has happened in the past) and their financial backers, the KMT is seen as a far safer option when it comes to safeguarding their financial interests.
What this means is that the same financial institutions that lend money to Taiwanese companies operating in China will tend to produce, or develop intimate relations with, analysts who rather than being neutral, will politicize their assessments in a way that reflects the financial priorities of their masters. If this means portraying the KMT as business-friendly, or overemphasizing local developments in a way that favors the KMT as a means to explain fluctuations in the financial market, so be it.
Equally important is the fact that many Taiwanese firms, for reasons ranging from insuring their business interests to raising enough capital, have formed multinational corporations (MNCs) with other countries to operate in China. Usually on a bigger scale, those MNCs require huge amounts of capital that can only be obtained from major financial lenders (according to statistics, 400 of the Fortune 500 multinational companies have made direct investments in more than 2,000 projects in China). Given the stakes, those lenders will also seek to ensure that their investments are shielded from the possibly disruptive consequences of rising tensions in the Taiwan Strait.
Consequently, MNCs and their international financial backers will tend to disparage the DPP while encouraging the KMT to consolidate stability by accelerating economic integration with China. (This view in part stems from the contentious theory in political science that increased trade between two entities will, over time, reduce the likelihood of conflict or war by raising the cost of conflict.) Maximizing investments and protecting financial interests register far more with those multinationals and financial institutions than the question of Taiwanese sovereignty, which is the raison d’etre of the DPP.
Lastly, we must turn to the convergence of the business sector and the rise of media conglomerates for possible conflicts of interest, which could also account for the bias against the DPP in news reporting. Over the past decade or so, the number of leading companies in the information sector has drastically narrowed.
News organizations like Thomson Reuters, Dow Jones and Bloomberg have branched off into other sectors and bolstered their empires through mergers and acquisitions. Thomson Reuters, for example, which has more than 50,000 employees and operates in 93 countries, now operates in the scientific, tax, accounting, legal and media sectors, with revenues last year totaling US$13.4 billion. Like any other major company, Reuters Thomson has sought to expand in China, hoping to tap into the potential 1.3 billion customers there. One recent example of this is the Scientific business of Thomson Reuters, which in September last year formed a partnership with the Investment Promotion Agency of the Ministry of Commerce of the People’s Republic of China to create a “World Innovation and Investment Promotion Platform” to boost the soft infrastructure of China’s high-tech zones, Xinhua/PRNewswire reported on Sept. 10.
As Mark Garlinghouse, vice president for Asia Pacific at Thomson Scientific, said: “The Scientific business of Thomson Reuters has long been a recognized information partner of top Chinese universities and government institutes such as the Chinese Academy of Sciences, China’s largest government research institute … We also provide patent, scientific and technical information to … well-known Chinese companies.”
This is just one example among many of media companies diversifying their business and entering lucrative marketss with both the private and government sector in China. As incentives increase, and with the promise of lucrative contracts with the cash-heavy Chinese authorities always in the background, it is likely that pressure — subliminal or as the result of direct external persuasion — will eventually build for those companies to “adjust” the information they provide in their news coverage so that it dovetails with their business interests. Time Warner’s ownership of CNN, Disney’s ownership of ABC and General Electric’s ownership of NBC are all examples of conglomerates imposing added business pressures on news organizations.
It is quite possible that portraying the KMT-CCP dyad in a favorable light — at least on the financial front — while painting the DPP in negative terms is the latest iteration of this phenomenon.
As long as big business, MNCs and their financial backers see the DPP as a “destabilizing” threat to Taiwan Strait economic integration, we can expect that the media conglomerates that are increasingly beholden to (if not part of) those giant, multifaceted corporations will continue to disparage the DPP and favor the KMT via stock market analysis.
J. Michael Cole is a writer based in Taipei.
The US intelligence community’s annual threat assessment for this year certainly cannot be faulted for having a narrow focus or Pollyanna perspective. From a rising China, Russian aggression and Iran’s nuclear ambitions, to climate change, future pandemics and the growing reach of international organized crime, US intelligence analysis is as comprehensive as it is worrying. Inaugurated two decades ago as a gesture of transparency and to inform the public and the US Congress, the annual threat assessment offers the intelligence agencies’ top-line conclusions about the country’s leading national-security threats — although always in ways that do not compromise “sources and methods.”
Let’s begin with the bottom line. The sad truth of the matter is that Beijing has trampled on its solemn pledge to grant Hong Kong a great deal of autonomy for at least fifty years. In so doing, the PRC ignored a promise Deng Xiaoping (鄧小平) made to both Great Britain’s Prime Minister Margaret Thatcher and the wider world back in the early 1980s. This was at a time when Beijing, under Deng and his successors, appeared to be seeking an equitable accommodation with the West. I remain puzzled by China’s recent policy shift. Was it because Hong Kong was perceived
The recent removal of items related to Japanese Shinto culture from the Taoyuan Martyrs’ Shrine and Cultural Park has caused an uproar. The complex was built as a Shinto shrine by the Japanese during the colonial period, but was transformed into a martyrs’ shrine commemorating veterans of the Chinese Civil War after the Chinese Nationalist Party (KMT) retreated to Taiwan in 1949. Figurines of the Japanese sun goddess Amaterasu Okami were allowed into the shrine for a cultural event last year, attracting throngs of visitors to see the Shinto decorations and practices. However, some people accused the Taoyuan City Government of
The recent meeting in New Delhi between US Secretary of State Antony Blinken and Russian Minister of Foreign Affairs Sergey Lavrov — the first such high-level interaction since the start of Russia’s full-scale invasion of Ukraine — suggests that diplomacy might no longer be a dirty word. The 10 minute meeting on the sidelines of the G20 gathering occurred after US National Security Adviser Jake Sullivan reportedly urged Ukraine to show Russia that it is open to negotiating an end to the war. Together, these developments offer a glimmer of hope that a ceasefire is within the realm of the possible. The
RSS