The Annual Threat Assessment report published by the US Office of the Director of National Intelligence on April 9 says that China’s power is spreading around the globe, and that its influence has expanded to military capabilities, space, the Internet and intelligence. while increasing military activities around Taiwan.
To maintain national security and prevent sensitive technology and personal assets from being stolen by China, countries such as the US, Canada and Japan, as well as European nations, have enacted legislation to strengthen the review of overseas investments by Chinese companies.
On the other hand, the Taiwanese government, especially the Ministry of Economic Affairs’ Investment Commission, has repeatedly neglected its duty to screen Chinese investments that disguise China’s aim to infiltrate Taiwan using mergers and acquisitions. Letting them get away with it is heartbreaking.
The following examples are proof: A report published by US think tank the Project 2049 Institute said that the Chinese state-owned company China Ocean Shipping Co (COSCO) acquired Orient Overseas Container Line (OOCL) in 2018, and then leased a Port of Kaohsiung terminal under the name of OOCL. This gives COSCO access to and control over important port facilities, and is a detriment to Taiwan’s national security.
The other example is that of Science Park Logistics Co (SPL). Originally a partly public company, SPL is now controlled by Chinese capital. It was established in 1998, with Taiwan Sugar Corp and China Airlines as majority shareholders. SPL is tasked with transporting high-tech products and preventing the leakage of business secrets and confidential information. Therefore, it enjoys preferential tax rates and exclusive access to land for warehousing.
From 2017 to 2018, through a series of manipulative equity transactions, SPL fell into the hands of Chinese-funded Kerry TJ Logistics Co (KTJ), which controls most of SPL’s shares and operating rights.
In February, Hong Kong Kerry Logistics Network, the parent company of Taiwan’s KTJ, said that it would be acquired by China’s SF Express, which would control Taiwan’s KTJ and deepen cooperation between Taiwan, Hong Kong and China.
The government must urgently follow the practices of the Committee on Foreign Investment in the United States (CFIUS), which is similar to the Investment Commission.
The US passed the Foreign Investment Risk Review Modernization Act (FIRRMA) in 2018, expanding the act’s authority to review mergers and acquisitions by foreign companies — especially Chinese investments — to prevent harm to US companies, the national economy and military security.
FIRRMA increases the scope of CFIUS’ jurisdiction to include: sensitive real-estate transactions, such as property located near US military bases or sensitive government agencies, or near airports or sea ports; transactions that alter the rights of foreigners in US companies, such as the number of board seats; companies that design transactions to avoid CFIUS supervision; and cases that allow foreigners to obtain important sensitive, non-public technology or infrastructure designs.
Additionally, FIRRMA extends the initial review period from 30 days to 45 days. If any part of a transaction is related to a list of 27 key industries — including communications, semiconductors, telecommunications, and aircraft manufacturing, involving engine parts, computer storage devices and military equipment such as missiles — that must be proactively declared within 45 days, otherwise the CFIUS can levy a fine equal to 1 percent of the transaction value or US$300,000.
Yu Hsing-pang is a university professor based in Taipei.
Translated by Lin Lee-kai
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