A few days ago, Chinese government-backed company Tsinghua Unigroup Ltd — China’s largest chip designer — issued an announcement saying that the company planned to acquire stakes in large Taiwanese integrated circuit (IC) packing and testing firms. There were also reports that the company had been putting pressure on the government to open up the local IC design industry to Chinese investors.
The Ministry of Economic Affairs, which has all along promoted such deregulation and opening up, has said that it would scrutinize Tsinghua’s investment plan in close detail. However, because the Chinese government stands behind Tsinghua, other nations are submitting similar investment plans to even stricter reviews.
When it comes to industries of strategic value and national importance, a government has a great responsibility to provide adequate protection.
Consider the US. In July, Tsinghua Unigroup offered US$23 billion for Micron Technology, a big US manufacturer of DRAM chips, but the US government came up with several reasons to block the deal. The most important among the reasons offered was national security.
If even Washington blocks Tsinghua from investing in nationally important industries, why does Taipei think it can open the doors to such investment without consideration?
Based on national security concerns, many governments are placing restrictions on the investments and other commercial activities of foreign firms.
Here are just a few examples: In April 2003, the US government cited national security concerns as a reason to block Chinese investors from acquiring Global Crossing, a telecommunications company that provided worldwide computer networking services and was a tier 1 carrier. That same year, Hong Kong businessman Li Ka-shing’s (李嘉誠) Hutchison Port Holdings Trust wanted to invest in the development of a bulk terminal run by Jawaharlal Nehru Port Trust in Mumbai, only to have the investment rejected by the Indian government because the Cabinet Committee on Security said that the port was too close to India’s Southern Naval Command and that a facility operated by Chinese investors so close by would be a major national security concern.
One of the many ways that the US and India differ from Taiwan is that the two nations do not have to worry about being annexed by China. Despite that, their governments still want to prevent any negative eventualities that could arise in connection to Chinese investments.
The reason for such considerations is of course that they are concerned over China’s fundamental character as a dictatorship and that this could result in Chinese companies operating in ways that are different from how normal markets operate, such as investing in and running operations for political rather than commercial reasons.
The threat that China poses to Taiwan is much more direct than that, so of course there is absolutely no reason for the government to make light of allowing Chinese investors to acquire Taiwanese companies. Doing so would be tantamount to abandoning all pretense of protecting national security.
Huang Di-ying is an attorney and spokesperson for the Democratic Progressive Party.
Translated by Perry Svensson
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