Sat, Mar 30, 2002 page3

• Cross-strait investments test ruling party's mettle

  WAFFLING ON WAFERS If economic investment in China is inevitable, it only makes sense to adjust policy as the market across the Strait continues to develop

  • By Ko Shu-ling / STAFF REPORTER
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  The government's relaxation of the ban on local wafer plants is a true test of the DPP government's political wisdom as it must exercise the utmost care in balancing national security and economic development.

  Although every opinion counts in a democracy, it is impossible to hammer out a public policy that pleases everyone. The bottom-line, however, is that the issue gets thoroughly debated before a final decision is made.

  Economy versus politics

  Over the past month, Taiwan's semiconductor industry has been at the heart of a heated political debate.

  Some say that greater freedom is needed if Tai-wan's chipmakers are to compete with foreign rivals in the world's third-largest semiconductor market.

  Many have voiced their concerns over national security and fear that Taiwan's industries will be hollowed out if the government allows local companies to relocate to China.

  Some even said that Taiwan's blind push for investment across the Strait may not only enhance Chinese power but also send a signal to the US that Taiwan is slowly moving from economic to political integration with China.

  While it is understandable why those concerns were raised, it does not make sense, however, that a democratic country stops its people from making efforts to pursue a better life.

  The unique political relationship between Taiwan and China, nevertheless, has complicated the issue.

  Lee Kuo-hsiung (李國雄), deputy director of the Institute of International Relations at National Chengchi University, said he believes the government has done a good job in handling the matter.

  "Instead of rushing to make a decision, the Cabinet listened to different opinions," Lee said.

  He added that it is impossible for a democratic country to ignore the free-market system in an era of globalization.

  "How do you expect to persuade your people to ignore a market which is so big and so close to you geographically?" he asked. "Besides, as the world economy becomes more globalized, the governments' power gradually decreases while market forces grow."

  In fact, the outflow of Taiwan's capital to China is not something that started today. It happened long before the government started to mull adjustments to its cross-strait trade policies.

  The government has been under constant and intense pressure to loosen or even eliminate barriers to direct economic exchanges with China.

  In light of this pressure, the Economic Development Advisory Conference was convened last August and proposed replacing former president Lee Teng-hui's (李登輝) "no haste, be patient" (戒急用忍) policy with the policy of "active opening and effective management" (積極開放, 有效管理) for increased economic relations with China.

  Although many have expressed concern about national security, attention has focused more on immediate economic problems because it is well accepted that liberalization is an option for reviving Taiwan's economy.

  "It's a fact that the sheer size of the Chinese market has such a substantial significance that no single country in the world can ignore it," Lee Kuo-hsiung said.

  If economic investment in China is inevitable, it seems logical to make adjustments accordingly as China's economy grows.

  The US has effective restrictions on certain security-related goods exported to China and uses sanctions when the use or export of certain products violates agreements.

  Us model

  There is also a full understanding among US companies that they are on their own should they fail in their operations abroad. Only if clear discrimination against US firms is practiced by a foreign country does their government intervene.

  The government's "effective management" mechanism should do just that.

  "Don't be afraid of opening up. Even President Chen Shui-bian (陳水扁) has said that Taiwan would be safer through internationalization," Lee said.

  "I don't think the government can stop local chipmakers from relocating to China if they really want to. Why not allow local investment in China and effectively manage it? Doesn't it sound appropriate and necessary?"
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