Vice President Annette Lu (
This "mainland fever," Lu said, has not only made Taiwan's economy over-dependent on China, but also seriously weakened its own fundamentals.
"Mainland fever has caused large sums of domestic investment to flow to China and has severely reduced investment here," Lu said in a long speech.
"Naturally it has caused stock and real estate prices to drop," said Lu, adding that investments in China have increased debt rates and reduced savings rates.
"This fantasy about the mainland has triggered uncertainty about the future of Taiwan, causing the relocation of capital and production bases."
Lu made the comments during a speech at a two-day government sponsored economic forum attended by two US Federal Reserve Bank presidents, a former IMF Asia chief, local officials and academics.
Minister of Finance Yen Ching-chang (
In contrast to Lu's view, economic pundits have recently attributed the slowdown to a combination of factors, including a US stock market decline, long-standing banking problems and sagging global demand for electronics goods.
Responding to Lu's statement on China-bound investment by Taiwanese businessmen, Lin Kun-chung (
Lu also used the occasion to try to cool enthusiasm among local firms about investing in China, saying they could be exposing themselves to great risk.
"Blindly following the mainland fever without knowing the risk behind it is not something a wise man does," Lu said.
Lu said that 40 percent of Taiwan's total foreign investment is in China, and two-thirds of that amount is invested in electronics and high technology.
Despite political rivalry, Taiwan businesses have poured more than US$40 billion into China, attracted by a giant market, cheap land and labor, and a common language and culture.
Fearing economic dependence on its giant neighbor, the previous KMT administration banned direct trade and travel with China and barred local investment in strategic sectors and infrastructure under the "no haste, be patient" (
Taiwan firms have clamored for looser China investment restrictions as the US economy -- the nation's top export market -- cools, while China's economy continues to grow at a brisk pace.
The government has agreed in principle to ease restrictions on investment in China and gradually permit direct trade, but details have yet to be hammered out.
MILESTONE: The foreign minister called the signing ‘a major step forward in US-Taiwan relations,’ while the Presidential Office said it was a symbol of the nations’ shared values US President Donald Trump on Tuesday signed into law the Taiwan Assurance Implementation Act, which requires the US Department of State to regularly review and update guidelines governing official US interactions with Taiwan. The new law is an amendment to the Taiwan Assurance Act of 2020 focused on reviewing guidelines on US interactions with Taiwan. Previously, the state department was required to conduct a one-time review of its guidance governing relations with Taiwan, but under the new bill, the agency must conduct a review “not less than every five years.” It must then submit an updated report based on its findings “not later
The Presidential Office today thanked the US for enacting the Taiwan Assurance Implementation Act, which requires the US Department of State to regularly review and update guidelines governing official US interactions with Taiwan. The new law, signed by US President Donald Trump yesterday, is an amendment to the Taiwan Assurance Act of 2020 focused on reviewing guidelines on US interactions with Taiwan. Previously, the department was required to conduct a one-time review of its guidance governing relations with Taiwan, but under the new bill, the agency must conduct such a review "not less than every five years." It must then submit an updated
CROSS-STRAIT COLLABORATION: The new KMT chairwoman expressed interest in meeting the Chinese president from the start, but she’ll have to pay to get in Beijing allegedly agreed to let Chinese Nationalist Party (KMT) Chairwoman Cheng Li-wun (鄭麗文) meet with Chinese President Xi Jinping (習近平) around the Lunar New Year holiday next year on three conditions, including that the KMT block Taiwan’s arms purchases, a source said yesterday. Cheng has expressed interest in meeting Xi since she won the KMT’s chairmanship election in October. A source, speaking on condition of anonymity, said a consensus on a meeting was allegedly reached after two KMT vice chairmen visited China’s Taiwan Affairs Office Director Song Tao (宋濤) in China last month. Beijing allegedly gave the KMT three conditions it had to
STAYING ALERT: China this week deployed its largest maritime show of force to date in the region, prompting concern in Taipei and Tokyo, which Beijing has brushed off Deterring conflict over Taiwan is a priority, the White House said in its National Security Strategy published yesterday, which also called on Japan and South Korea to increase their defense spending to help protect the first island chain. Taiwan is strategically positioned between Northeast and Southeast Asia, and provides direct access to the second island chain, with one-third of global shipping passing through the South China Sea, the report said. Given the implications for the US economy, along with Taiwan’s dominance in semiconductors, “deterring a conflict over Taiwan, ideally by preserving military overmatch, is a priority,” it said. However, the strategy also reiterated
RSS