In a move attacked by one of his opponent's camps as "dangerous" but supported by some economists, DPP presidential candidate Chen Shui-bian (陳水扁) announced yesterday that, if elected, he would allow capital from China to flow into Taiwan on the condition that China showed goodwill.
In a speech at a securities company just before the Taiwan stock market opened for the first time after the Lunar New Year holidays -- Chen said he would adopt a more open attitude toward encouraging foreign investors, including those from China, to buy stakes in Taiwan's listed companies.
"With the precondition that China shows its reciprocal goodwill, I would open the door for Chinese investors to take part in Taiwan's economy," he said.
A high-level finance ministry official, who preferred to remain anonymous, said Chen's proposal was not feasible "because there is no way to gauge `goodwill.'"
Reaction from KMT presidential candidate Lien Chan's (
"Chen's proposal to let in Chinese funds is both extremely dangerous and irresponsible," said Wu Chung-li (
"He is completely ignorant of the [negative] impact on financial markets of this move and neglects the damage communist China could inflict on Taiwan with its `silver bullets.'"
However, some economists brushed off the "China threat" factor, on the grounds that there is no way to tell Chinese capital from that of other countries if Taiwan is to liberalize its markets for international investors.
Wu Hui-lin (吳惠林), a research fellow at the Chung-Hua Institute for Economic Research, said Chen's proposal is a step in the right direction. "National security is important by all means," he said. "But it should not be taken as a reason to block market liberalization and internationalization.
"Opening the market to foreign investors does not mean the market will be lawless and disorderly. It should still be regulated," he said.
"If people outside Taiwan, including Chinese, have a scheme to tamper with financial markets here, they won't be short of channels to flood Taiwan with money even if the markets are not officially open to them," Wu said, adding: "It is better to face the issue by opening up the market and put incoming and outgoing capital under management, than to keep the flow underground and unregulated.
"The point is that the market should be opened following market mechanisms under the framework of World Trade Organization, without discriminating or favoring Chinese or other foreign parties," Wu said.
"The more our financial market is open to outside investors, the more likely international investors will take Taiwan as a gem, and in turn improve our security," he said.
Yesterday Chen also reiterated that Taiwanese companies in China and elsewhere should be encouraged to list on Taiwan's stock market, to make it easier for them to raise capital.
"In addition to practical measures, we are trying to send a message of goodwill to China," said Wang Chi-huang (
Wu Chung-shu (吳中書), an economist at the Academia Sinica, said it would be fine to open Taiwan's financial markets to China if it was treated the same as other countries.
"But I'm still puzzled that there is so little substance in such a measure," he said, "because China is short of capital, and Taiwan is a capital exporter. I really don't think China will have too much spare money for Taiwan."
Chen yesterday also called for transparency in the management of the recently institutionalized "National Stabilization Fund" for the stock market.
Wu Hui-lin said such a tool -- conflicting with market mechanisms -- had better not be used by the government. Or at least, he said, it should be controlled through a strict and transparent mechanism.
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