The Ministry of Economic Affairs on Thursday published a draft amendment to the Measures Governing Investment Permits to the People of the Mainland Area (大陸地區人民來台投資許可辦法) for public review. It is to collect public opinion over the following 60 days before convening a cross-agency meeting to finalize any changes and implement the amendments.
The amendment aims to eliminate the substantial influence of Chinese capital on Taiwanese companies and prevent sensitive national security information and technology patents from falling into China’s hands.
At a time when Taiwan is rolling out the red carpet for more foreign companies and returning Taiwanese firms to invest in the nation amid changing global macroeconomic and geopolitical circumstances, the government is moving to redefine the status, proportion and structure of Chinese investment, and to close the loopholes that could be used by investors to skirt regulations on Chinese capital.
It has become urgent for the nation to tighten the rules on Chinese capital in light of the National Security Law that Beijing imposed on Hong Kong last month. The law has shaken the territory’s “one country, two systems” foundation and blurred the boundary between Hong Kong capital and Chinese funds.
According to Article 3 of the measures, any company with more than 30 percent direct or indirect Chinese ownership, or those at which more than half of the board directors are Chinese, is considered a Chinese company.
However, some Chinese companies have been found to have invested in Hong Kong or foreign companies and continued to reinvest in other such firms until the ratio of Chinese shareholding in the subsidiaries fell below 30 percent so that they would be regarded as non-Chinese capital in Taiwan.
It is not uncommon for Chinese capital to come to Taiwan under the guise of Hong Kong or other foreign investment.
The draft amendments would include a “layer-by-layer” review mechanism to thwart attempts to dilute apparent Chinese shareholding through repeated reinvestment. It would also bar companies run by the Chinese Communist Party, government or military from investing in Taiwan, the ministry has said.
China’s attempts to bolster its economic influence around the world has come under increasing scrutiny by other governments. The ministry’s move follows tighter investment regulations for Chinese firms in the US, Japan and Germany.
However, there is the question of whether Hong Kong capital can still be regarded as foreign capital following the implementation of the National Security Law. The territory has long served as a springboard for Chinese capital to enter Taiwan, with many Hong Kong-registered companies receiving funds from China or their top management being inseparable from China.
While the amendments seek to tighten the controls on Chinese capital, the new rules would still be based on investor status, shareholding proportion and boardroom structure, which would make it difficult to distinguish Hong Kong capital from Chinese funds.
The ministry is correct in wanting to shore up Taiwan’s financial defenses in light of the situation in Hong Kong and China’s military threats against Taiwan.
However, the government risks finding itself in a bind: On the one hand, it must address the problem of Chinese funds entering the nation under the guise of Hong Kong investment, while on the other it should find a way to distinguish genuine Hong Kong-based investment from Chinese capital. A one-size-fits-all approach is not the solution.
It can avoid such a regulatory impasse by bolstering the review mechanism for Hong Kong capital and requiring a higher disclosure obligation for investments from the territory.
In the past month, two important developments are poised to equip Taiwan with expanded capabilities to play foreign policy offense in an age where Taiwan’s diplomatic space is seriously constricted by a hegemonic Beijing. Taiwan Foreign Minister Lin Chia-lung (林佳龍) led a delegation of Taiwan and US companies to the Philippines to promote trilateral economic cooperation between the three countries. Additionally, in the past two weeks, Taiwan has placed chip export controls on South Africa in an escalating standoff over the placing of its diplomatic mission in Pretoria, causing the South Africans to pause and ask for consultations to resolve
An altercation involving a 73-year-old woman and a younger person broke out on a Taipei MRT train last week, with videos of the incident going viral online, sparking wide discussions about the controversial priority seats and social norms. In the video, the elderly woman, surnamed Tseng (曾), approached a passenger in a priority seat and demanded that she get up, and after she refused, she swung her bag, hitting her on the knees and calves several times. In return, the commuter asked a nearby passenger to hold her bag, stood up and kicked Tseng, causing her to fall backward and
In December 1937, Japanese troops captured Nanjing and unleashed one of the darkest chapters of the 20th century. Over six weeks, hundreds of thousands were slaughtered and women were raped on a scale that still defies comprehension. Across Asia, the Japanese occupation left deep scars. Singapore, Malaya, the Philippines and much of China endured terror, forced labor and massacres. My own grandfather was tortured by the Japanese in Singapore. His wife, traumatized beyond recovery, lived the rest of her life in silence and breakdown. These stories are real, not abstract history. Here is the irony: Mao Zedong (毛澤東) himself once told visiting
When I reminded my 83-year-old mother on Wednesday that it was the 76th anniversary of the founding of the People’s Republic of China, she replied: “Yes, it was the day when my family was broken.” That answer captures the paradox of modern China. To most Chinese in mainland China, Oct. 1 is a day of pride — a celebration of national strength, prosperity and global stature. However, on a deeper level, it is also a reminder to many of the families shattered, the freedoms extinguished and the lives sacrificed on the road here. Seventy-six years ago, Chinese Communist leader Mao Zedong (毛澤東)
RSS