Sun, Dec 12, 2004 page7

• Analysts see little change in Strait

  • By Jessie Ho and Kevin Chen / STAFF REPORTERS
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  Trade across the Taiwan Strait is likely to continue at its current pace despite the outcome of yesterday's legislative elections, which saw the the opposition parties retain their majority in the 225-member Legislative Yuan, according to analysts.

  China's growing economic strength leaves the government no choice but to gradually lift bans on cross-strait business regulations, said Chen Lee-in (陳麗瑛), a researcher of China Affairs at the Chung-hua Institution for Economic Research (中經院).

  With its growing economic power in recent years, China keeps attracting investors worldwide to its market, and Taiwan is no exception to the hype. It is estimated that over 1 million Taiwanese businesspeople are doing business across the Taiwan Strait.

  According to statistics from the Ministry of Finance, Taiwan exported US$58.57 billion in goods and equipment to Hong Kong and China for the first 11 months of the year, which accounts for 36.8 percent -- the largest piece -- of the nation's total exports in the period. The figure represents a 30.8 percent jump from the same period a year ago, the ministry said.

  While the pace of greater economic integration with China would likely be boosted by the win by the pan-blue camp, Hsu Sung-ken (許松根), an industrial economist at the Academia Sinica, said the elections results won't have an immediate and direct impact on cross-trade economic policies.

  "The key to cross-strait trade is not which political camp wins more seats in the legislature, but China's attitude, that means Beijing's insistence on its `one China' policy," Hsu said.

  "Taiwanese people are gradually shifting away from unification with China, and I don't think the pan-blue camp, even Legislative Speaker Wang Jin-pyng (王金平), dares to challenge people's will about this," Hsu said.

  On the issue of "three direct links" with China and the lifting of bans against high-tech investment in China, Hsu, an advisor for the government's policymaking Mainland Affairs Council, said the government has removed the US$50 million cap on Taiwanese investment in China and only curbs investment on some critical high-tech sectors, such as 12-inch semiconductor wafer manufacturing.

  "No immediate changes are foreseen in this regard, as that decision is up to the government and its ministries, not the legislature," Hsu said.

  "Even though the KMT had said before the elections that it wanted to have a say in a Cabinet reshuffle if it wins a majority, I don't think it's up to opposition parties to decide cross-strait trade policies," he said.

  Advanced Semiconductor Engineering Inc (日月光), for instance, had said it hopes that following the elections, the government may lift the ban on Taiwanese chip testers and packagers setting up plants in China, in a move to help domestic companies safeguard their leading market position.

  Advanced Semiconductor, the world's second-largest chip packaging service provider, and smaller rival Siliconware Precision Industries Co (矽品) provide services for companies placing orders with Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) and United Microelectronics Corp (聯電).

  TSMC has already constructed a low-end eight-inch wafer factory in Shanghai, which is expected to produce 5,000 units per month by the end of the year.

  CIER's Chen said economic co-operation with China becomes even more important when the world is shifting into regional economy, while Taiwan has made limited progress in inking free trade agreements (FTAs) because of pressure from China, Chen said.

  So far, Taiwan only has one FTA, with its diplomatic ally Panama.

  "Thus it can be seen that deregulating cross-strait business is the only way to go," Chen said.

  Steve Lin (林祖嘉), an economics professor at National Chengchi University, agreed that the election outcome seems to suggest the pan-blue camp would secure enough votes to influence policy in the legislature, and thus pave the way for opening up direct trade, postal services and shipping with China.

  But he also didn't expect that will happen too soon.

  "Obviously, President Chen Shui-bian (陳水扁) remains the key person in this regard," Lin said.

  Wu Chin-chung (吳進忠), chairman of the Taiwan Businessmen Association in Xiamen (廈門台商協會), however, said he only hoped that cross-strait relations will remain stable to avoid risks of doing business in China.

  Another Taiwanese businessperson in China, who does not want to be named, said he does not pin high expectations on a breakthrough in cross-strait business policies promoted after the reshuffle.

  "The legislature is an inefficient and incapable body in resolving sensitive cross-strait issues anyway ... I don't think the election outcome will make any difference," he said.
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